For early-stage life science companies, selecting the right Contract Research Organization (CRO) is one of the most critical decisions in clinical development. At Danforth Advisors, having supported over 1,500 life science companies, we’ve found that what’s often overlooked is not who you choose, but how you structure the CRO contract. This foundational step can make or break the success of your clinical partnership. Implementing CRO contract best practices can help safeguard your investment, enforce accountability, and improve study outcomes.
CRO Contract Best Practices Tip #1: Build Expectations Into the RFP
One of the most overlooked CRO contract best practices is integrating key terms and expectations into the Request for Proposal (RFP), not just the final contract. By requiring CROs to respond to your proposed terms in the RFP stage, you filter out vendors unwilling or unable to meet your standards, giving you leverage before negotiations begin.
CRO Contract Best Practices Tip #2: Document the Selection Process for FDA Readiness
If your study comes under FDA review, you’ll need to justify your CRO selection. A best practice is to document your selection criteria, questions posed during the RFP process, and the responses received. This supports audit-readiness and demonstrates a thorough vetting process.
CRO Contract Best Practices Tip #3: Tie Payments to Performance with Milestone-Based Models
A key CRO contract best practice is to move away from time-based billing in favor of milestone-based payments. This aligns incentives with outcomes and helps ensure that deliverables, not delays, determine compensation. You can even include “earn-back” clauses to reward high-performing CROs with full contract value if they exceed expectations.
CRO Contract Best Practices Tip #4: Include Consequences for Missed KPIs
Defining Key Performance Indicators (KPIs) in your contract is only half the battle. A top CRO contracting best practice is to tie those KPIs to consequences, refunds, penalty clauses, or renegotiation triggers, so that performance has real weight. This sets clear expectations and helps both sides stay accountable.
CRO Contract Best Practices Tip #5: Protect Yourself with Sponsor-Only Termination Rights
Your contract should include termination for convenience, but that right should rest solely with the sponsor. Allowing the CRO to unilaterally terminate could jeopardize your clinical program. Fair terms for non-payment termination are reasonable, but they should include buffers, such as requiring two consecutive late payments before termination is permitted.
CRO Contract Best Practices Tip #6: Define and Control Change Order Authorization
One final best practice: don’t let change requests become liabilities. Specify who within your organization is authorized to approve change orders, and make clear that only approved, signed change orders, not informal requests, can result in billing. This avoids scope creep and financial surprises.
A well-structured CRO contract isn’t just a safety net; it’s a strategic framework for clinical success. Embedding CRO contract best practices throughout the selection and negotiation process helps ensure alignment, reduce risk, and maximize outcomes.
At Danforth Advisors, we support life science companies in building smart, performance-driven contracts that protect their investment and accelerate clinical execution. Need help designing your CRO strategy? Contact our team today.