Examination of Clinical Trial Costs and Barriers for Drug Development. 1 Introduction and Background


In calendar year 2012, Food and Drug Administration (FDA) Center for Drug Evaluation and Research (CDER) approved 39 novel new drugs (i.e., new molecular entities (NMEs) and new biological entities (NBEs), including both novel drugs and biologics).1 While 39 approvals marks the highest number of NMEs/NBEs approved since 2004, drug companies are not filing as many applications with FDA for new drug approvals as they have in the past. Over the past 10 years (2003 to 2012), the number of NME/NBE approvals per year has fallen from the previous decade’s average of 30 to 25.7 (see Figure 1). The average yearly number of NME/NBE filings has also fallen slightly over the same time period. A reduction in the drug application pipeline means fewer novel therapies in future years.

Figure 1: New Molecular Entity (NME) and New Biologic Entity (NBE) Filings and Approvals

Figure 1: New Molecular Entity (NME) and New Biologic Entity (NBE) Filings and Approvals

Source: (U.S. Food and Drug Administration, 2013; Jenkins J. K., 2011) Notes: CDER data as of 11/30/2012. Since applications are received and filed throughout a calendar year, the filed applications in a given calendar year do not necessarily correspond to an approval in the same calendar year. Certain filed submissions are within their 60-day filing review period and may not be filed upon completion of the review.

In 2004, to help drive new drug development and increase applications for novel new products, FDA launched its Critical Path Initiative, a strategy to help advance pharmaceutical innovation. Further, in 2011, Secretary Sebelius identified as one of the priority goals of the HHS, “accelerating the process of scientific discovery to patient care,” which includes building a national network of clinical research centers to enable clinical trials of promising compounds.

Developing a new drug is a costly endeavor and the ever-increasing cost of clinical research is often cited as one of the main reasons for the slowdown in FDA application filings. It takes approximately 10 to 15 years to bring a new drug from the laboratory to the pharmacy shelf (English, Lebovitz, & Giffin, 2010). During the initial years of non-clinical testing, the sponsor completes synthesis and purification of the drug and conducts limited animal testing. Approximately one out of one thousand compounds in preclinical testing appears promising enough to induce the sponsor to file an Investigational New Drug (IND) application (Eisenstein, et al., 2004). If the FDA reviews the IND and determines that it is reasonably safe to proceed, the sponsor then initiates the first phase of clinical research.

The clinical drug development stage consists of three phases. In Phase 1, clinical trials using healthy individuals are conducted to determine the drug’s basic properties and safety profile in humans. Typically, the drug remains in this stage for one to two years (DiMasi, Hansen, & Grabowski, 2003). In Phase 2, efficacy trials2 begin as the drug is administered to volunteers of the target population. At the end of Phase 2, the manufacturer meets with FDA officials to discuss the development process, continued human testing, any concerns the FDA may have, and the protocols for Phase 3, which is usually one of the most extensive and expensive parts of drug development. According to one source, mean phase lengths are 21.6 months (1.8 years) for Phase 1, 25.7 months (2.1 years) for Phase 2, and 30.5 months (2.5 years) for Phase 3 (DiMasi, Hansen, & Grabowski, 2003). Once Phase 3 is complete, the manufacturer files a New Drug Application (NDA). The period between completion of Phase 3 and drug approval typically lasts one to two years; including six to 10 months for the NDA review itself (or more if the drug is not approved after the first review). Toward the end of the NDA review stage, FDA and the drug sponsor meet with an advisory committee made of experts to present data and solicit advice on drug safety, effectiveness, and labeling. Once approved, the drug may be marketed in the U.S. with FDAregulated labeling (Lipsky & Sharp, 2001). Sometimes additional studies are conducted following FDA approval, during general use of the drug by medical practitioners. These studies are referred to as Phase 4 studies in this study but are also known as post-marketing studies (Lipsky & Sharp, 2001).

The increasing cost of clinical research has significant implications for public health as it affects drug companies’ willingness to undertake clinical trials. Some researchers (Collier, 2009) argue that the rising clinical trial costs have made the industry as a whole more risk averse and less willing to take chances on novel medicines. Many drug companies are now conducting clinical trials in other countries, such as China and India, where costs can be as much as 60 percent lower. Clinical research centers are also more closely scrutinizing the types of clinical trials they will take on, with the fear that certain projects could put the center in a deficit (Collier, 2009). To increase clinical trial efficiency and reduce costs, companies have been looking at establishing effective surrogate endpoints3—as opposed to clinical endpoints, which take longer and are more difficult to monitor—to assess failures before moving to costly Phase 3 trials. They are also looking for ways to move more rapidly to electronic data capture (EDC). To improve the recruitment process, drug companies are also investigating the use of genetic markers as a way of screening who the product is most likely to be effective with and who is likely to have significant side effects before accepting human subjects into studies.

Clinical trials can be sponsored by a variety of organizations, including industry, government agencies such as the National Institutes of Health (NIH), universities, and clinical research networks. Drug companies conduct clinical trials for a variety of reasons, including demonstrating safety and efficacy for new compounds, expanding the list of indications for previously approved compounds, improving market position by demonstrating superiority to other existing compounds, increasing the amount of safety and efficacy evidence for payer reimbursement, among other things.

This study examines the decision-making process for those clinical trials that are:

  • Designed to demonstrate safety and efficacy for new compounds, and
  • Sponsored by industry.

The primary objectives of the study are: 1) to better understand sponsors’ strategies in the design and execution of clinical trials, 2) to identify factors that may delay, hinder, or lead to unsuccessfully completed trials, and 3) to develop an operational model of clinical trial decision-making to enable examination of what-if scenarios by end-users.

1 The number represents applications for New Molecular Entities (NMEs) filed under New Drug Applications (NDAs) and therapeutic biologics filed under original Biologic License Applications (BLAs).

2 According to a technical review prepared for the Agency for Healthcare Research and Quality (AHRQ), the distinction between efficacy and effectiveness trials is defined as follows: “Efficacy trials (explanatory trials) determine whether an intervention produces the expected result under ideal circumstances. Effectiveness trials (pragmatic trials) measure the degree of beneficial effect under “real world” clinical settings” (RTI International, 2006).

3 While clinical endpoints are target outcomes that are measured directly (such as deaths), surrogate endpoints are intended to show the effect of the drug on a physiologic process or marker that is strongly correlated with a particular disease. For instance, CD4 cell counts might be used to assess the effectiveness of an antiviral medication in treating patients with human immunodeficiency virus (HIV) (Lipsky & Sharp, 2001).

View full report


"rpt_erg.pdf" (pdf, 1.89Mb)

Note: Documents in PDF format require the Adobe Acrobat Reader®. If you experience problems with PDF documents, please download the latest version of the Reader®