Report: Phase III Clinical Trials Behind Increase in the Cost of Pharmaceuticals

Posted 25 April 2012 | By Alexander Gaffney, RAC 

The US Food and Drug Administration's (FDA) insistence that pharmaceutical manufacturers take their products through extensive-and expensive-testing is driving up the price of drugs and the stakes of failure for companies.

That's the conclusion of a new paper from Avik S.A. Roy, a senior fellow at the Manhattan Institute for Policy Research, entitled "Stifling New Cures: The True Cost of Lengthy Clinical Drug Trials." 

Roy cites the dramatic rise in the cost to research and develop drugs that are eventually brought to market. In 1975, bringing a drug to market cost $100 million in 2012-adjusted dollars. By 2005, that figure had exploded to more than $1.3 billion, according to numbers from the Tufts Center for the Study of Drug Development.

"The biggest driver of this phenomenal increase has been the regulatory process governing Phase III clinical trials of new pharmaceuticals on human volunteers," hypothesizes Roy. "One reason: Phase III clinical trials have become far larger and more complex than they were in the past."

To test his theory, Roy looked at current R&D spend in several disease areas, and identified all clinical trials sponsored by the manufacturer, calculating the number of patients in all trials.

"We then cross-referenced these data with the average per-patient cost of clinical trials, as reported by a 2011 survey by the medical management consulting firm Cutting Edge Information," explains Roy. "These are the data that show that, in most cases, companies spent more than 90 percent of their development money per drug on Phase III clinical trials."

With the exception of oncology drugs, which can often win approval after successful completion of Phase II clinical trials, many of the drugs Roy looked at were spending the bulk of their research dollars in Phase III clinical trials.

"These are the data that show that, in most cases, companies spent more than 90 percent of their development money per drug on Phase III clinical trials," writes Roy. "In the field of obesity, the average was 91 percent; in diabetes, it was 93 percent; in cardiology, it was 94 percent."

Roy also notes some troubling trends emerging between 1999 and 2005. The median number of procedures per trial protocol went from 96 to 158 (+65%), the average number of clinical staff (measured in work-units) increased from 21 to 35 (+67%) and the average length of clinical trials went from 460 to 780 days (+70%).

Two important numbers decreased, though. The percentage rate of clinical trials participants completing the trial decreased from 69% to 48% (-30%), while the enrollment rate to get into the trial decreased from 75% to 59% (-21%).

All of these factors are contributing to a situation in which companies are being asked to do more-and spend more-with fewer resources, says Roy.

Not everyone is in total agreement with Roy's assessment, however. The Street's Adam Feuerstein poked at Roy's analysis in a Twitter posting, asking, "How much blame should be parsed to incompetent drug [sic] companies?"

Feuerstein further commented that "spiraling costs, delays and unproductive R&D" are unlikely factors to be pinned on FDA.

For Roy-and the Manhattan Institute's Project FDA, for which Roy was writing-this is a problem begging a legislative solution.

"Specifically, three aspects of the agency's current approach are out of date and create significant costs and delays in the development of useful drugs," says Roy.

Those three aspects are an approval system that looks primarily at acute diseases instead of manageable conditions, the absence of a progressive approvals system and the costliness of clinical trials and the ease at which FDA can demand additional Phase III studies.

All of these aspects, writes Roy, should be fixed by legislators.

Roy's analysis also adds to comments made by former FDA Commissioner Andrew von Eschenbach-also of the Manhattan Institute's Project FDA-who has called for additional funding to be appropriated to the agency and a conditional approvals system focused on safety, not efficacy.

The group has been calling for reforms at FDA, which it hopes will create a "faster and safer drug and medical device pipeline."

Read more:

Stifling New Cures: The True Cost of Lengthy Clinical Drug Trials

Forbes - How the FDA Stifles New Cures, Part I: The Rising Cost of Clinical Trials

Forbes - How the FDA Stifles New Cures, Part II: 90% of Clinical Trial Costs are Incurred in Phase III

Project FDA

Regulatory Focus - Former FDA Commissioner Says Lack of Resources to Blame for Lack of Innovative Approvals

Regulatory Focus - Former FDA Commissioner: Approve Drugs Based on Safety, Prove Efficacy Later

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