We worked closely with Medidata to determine the appropriate methodology for aggregating the itemized costs that characterize the overall cost of a clinical trial. To obtain totals for each individual trial within a given phase, we grouped the cost components into per-study costs, per-patient costs, and per-site costs, where:
- Per-study costs is the sum of:
- Data Collection, Management and Analysis Costs (per study);
- Cost Per Institutional Review Board (IRB) Approval × Number of IRB Approvals (per study);
- Cost Per IRB Amendment × Number of IRB Amendments (per study);
- SDV Cost (per data field) × Number of SDV Fields (per study); and
- The total of all per-site costs listed below, multiplied by Number of Sites (per study);
- Per-site costs is the sum of:
- The total of all per-patient costs listed below, multiplied by Number of Planned Patients (per site);
- Site Recruitment Costs (per site);
- Site Retention Costs (per month) × Number of Site Management Months;
- Administrative Staff Costs (per month) × Number of Project Management Months; and
- Site Monitoring Costs (per day) × Number of Site Monitoring Days;
- Per-patient costs is the sum of:
- Patient Recruitment Costs (per patient);
- Patient Retention Costs (per patient);
- Registered Nurse (RN)/Clinical Research Associate (CRA) Costs (per patient);
- Physician Costs (per patient);
- Clinical Procedure Total (per patient); and
- Central Lab Costs (per patient);
To arrive at a best approximation of the cost total for the trial, two additional costs had to be added in: site overhead and all other additional costs not captured in the itemized categories listed above. We first added site overhead as a percentage of the sum of the above per-study costs (roughly 20 to 27 percent of the above per-study costs as estimated by Medidata). 9 According to Medidata, the computed per-study costs plus the 25 percent site overhead only accounts for approximately 70 percent of total trial costs. Still missing from this total are costs for sponsors to run the study and other costs not captured elsewhere. Thus, we estimated an additional cost category, “All Other Costs” as 30 percent of the sum of computed per-study costs and the 25 percent site overhead to ensure accuracy of our totals.
We applied the cost aggregation methodology outlined above to all trials within Phases 1, 2, 3, and 4. In the operational model developed, if the user specifies that the study will include more than one trial per phase, the cost totals for each trial are summed to get an overall total cost for the phase.
Adding the lengths of time associated with each trial within a phase was somewhat more complex, as there are a range of possibilities. One possibility is that all trials within a given phase are completed concurrently, in which case the total length of time for the phase would be equal to the maximum length of time needed to complete any individual trial within that phase. For example, if there were two Phase 2 trials, and one took 1.5 years, while the other took 2 years, the total length of Phase 2 would be 2 years, assuming the trials were completed at the same time. At the other extreme end of the spectrum, the trials within a phase might be completed sequentially with no overlap, in which case the lengths of time specified would need to be summed to arrive at the total phase length. In the previous example, this would mean that the total length of Phase 2 is 1.5 plus 2, or 3.5 years. To take into account both extremes and all possibilities in between, we assumed that the phase length in years across all trials associated with a given phase is the average of these two measures (the maximum trial length specified and the total of all lengths specified). It should be noted that if only one trial is specified for a given phase in the operational model, this average will simply be equal to the length given for that trial.
The operational model discounts the total costs for each phase back to Year 0 (before Phase 1 trials are started) using the real annual discount rate (15 percent for the default scenario). Further, the model assumes that all costs associated with each phase are incurred at the start of the phase; therefore, Phase 1 costs are not discounted, Phase 2 costs are discounted over the length of Phase 1, Phase 3 costs are discounted over the combined lengths of Phases 1 and 2, and so forth.
While we apply discounting to trial costs in the operational model, the analysis presented below is based on raw (i.e., un-discounted) cost figures. Further, we exclude Devices & Diagnostics as well as Pharmacokinetics categories from the analysis below as these are not within the scope of this study.10
9 Site overhead is not always applied to all costs in a negotiated clinical investigator contract by the clinical site. In some cases, the site may negotiate overhead only on certain portions of the contract such as clinical procedures. Thus, 25 percent of total per-study costs is likely to be an overestimate of actual overhead costs per study.
10 Because the data were available for both categories, we left them in the operational model.
3.1 Costs by Therapeutic Area
Table 1 presents the total costs for each of the therapeutic areas included in our model by clinical trial phase (assuming one trial per phase and not inclusive of failures). From the table, immunomodulation per-study costs ($6.6 million) are the highest in Phase 1 with costs of studies in ophthalmology ($5.3 million) and respiratory system ($5.2 million) ranking second and third, respectively. In Phase 2, hematology trial costs ($19.6 million) rank first, followed by pain and anesthesia ($17.0 million) and immunomodulation ($16.0 million). The most costly Phase 3 studies are in pain and anesthesia ($52.9 million) with studies in ophthalmology ($30.7 million) and cardiovascular ($25.2) area ranking second and third, respectively. In Phase 4, respiratory system trial costs ($72.9 million) rank first, followed by oncology ($38.9 million) and pain and anesthesia ($32.1 million) study costs. Overall, the therapeutic area with the highest clinical research burden across all phases is respiratory system ($115.3 million) followed by pain and anesthesia ($105.4 million) and oncology ($78.6 million) trials (see Figure 3). On the other hand, trials in central nervous system, dermatology, and genitourinary system tend to cost the least overall.
Table 1: Total Per-Study Costs (in $ Millions), by Phase and Therapeutic Area [a] [b]
[a] The numbers in parentheses represent the rank in descending order.
[b] The cost for each phase assumes that a single trial (i.e., study) is conducted.
[c] The category represents the New Drug Application (NDA)/Biologic License Application (BLA) filing fee for an application requiring clinical data and does not include any establishment or product fees that the filing entity might need to pay in addition.
[d] Totals may not add up due to rounding.
Figure 3: Clinical Trial Costs (in $ Millions) by Phase and Therapeutic Area
As can be observed from Table 1, Phase 2 costs are lower than Phase 3 costs for all but three therapeutic areas: gastrointestinal, hematology, and immunomodulation. This somewhat counterintuitive relationship is due to a variety of factors, including higher data collection costs, administrative staff costs, and site recruitment costs in Phase 2 than in Phase 3 for these therapeutic areas.
3.2 Costs by Trial Phase
To compare average costs by phase across all therapeutic areas, we computed a weighted mean cost, , and its weighted standard deviation, sij , , for each cost component, i, and clinical trial phase, j, where the weights are the total number of contracts (i.e., sum of investigator and contractor contracts contributing to the PICAS® and CROCAS® datasets11) such that
where wjk is the total number of contracts available for the phase and therapeutic area, k, combination; xijk is the reported mean for cost component i, clinical trial phase j, and therapeutic area k; is the simple average of cost component i for that phase j across all therapeutic areas;Ni is the number of therapeutic areas that are associated with the phase in question; and Ni' is the number of non-zero weights. As one would expect, the average per-study costs across all therapeutic areas increase as clinical development proceeds from Phase 1 to Phases 2 and 3 (see Figure 4).
Figure 4: Average Per-Study Costs by Phase (in $ Millions) Across Therapeutic Areas
Note: The error bars represent one standard deviation below and above the mean.
While average Phase 4 study costs are equivalent to those of Phase 3, there is high degree of variability in Phase 4 costs across the different therapeutic areas.
11 The number of contracts by therapeutic area and trial phase cannot be publicly reported because they are confidential and proprietary.
3.3 Costs by Cost Component
Table 2 presents clinical trial costs by cost component across all therapeutic areas by trial phase. Similar to our evaluation of costs by trial phase discussed in Section 3, when averaging costs across therapeutic areas, we weighted the data by the number of contracts available by therapeutic area. Excluding the All Other Costs and Site Overhead cost components as these are extrapolated numbers, in Phase 1, Clinical Procedure Costs ($476,000) are the highest, followed by SDV costs ($326,000) and Central Laboratory Costs ($252,000). In Phase 2, expenditures that contribute the most to overall costs in descending order include Clinical Procedure Costs ($1.5 million), Administrative Staff Costs ($1.3 million), Site Retention Costs ($1.1 million), Site Monitoring Costs ($1.1 million), Central Laboratory Costs ($804,000), and RN/CRA Costs ($441,000). Even though they are still sizable and higher in absolute terms than those in Phase 1, SDV Costs only constitute three percent (= $406,038 ÷ $13.35 million) of total per-study Phase 2 costs whereas in Phase 1 their share of total per-study costs is around nine percent (= $326,437 ÷ $3.80 million). Similar to Phase 2, Clinical Procedure Costs ($2.3 million), Administrative Staff Costs ($2.3 million), Site Retention Costs ($1.3 million), Site Monitoring Costs ($1.6 million), Central Laboratory Costs ($849,000), and RN/CRA Costs ($940,000) contribute the most to overall per-study Phase 3 costs. In Phase 4, Administrative Staff Costs ($3.3 million) rank the highest, followed by Site Retention Costs ($1.8 million), and Clinical Procedure Costs ($1.7 million). While not insignificant in dollar terms, Patient Recruitment Costs only account for 1.7 to 2.7 percent of overall costs across different clinical trial phases.
Table 2: Clinical Trial Costs, by Cost Component, Phase, and Therapeutic Area [a] [b]
NA = Not applicable. Note that the reported numbers represent weighted average costs and standard deviations.
[a] The numbers in parentheses represent standard deviations. [b] The cost for each phase assumes that a single trial (i.e., study) is conducted. [c] These are extrapolated figures based on those cost components for which estimates were available from Medidata. [d] Please note that Phase 1 study sites tend to have inhouse or local labs as opposed to central labs.
Our study suggests that therapeutic area as well as number and types of clinical procedures involved are the key drivers of costs in Phase 1 through Phase 4 studies. The therapeutic areas with the highest per-study costs in Phase 1 is immunomodulation ($6.6 million), in Phase 2 is hematology ($19.6 million), in Phase 3 is pain and anesthesia ($52.9 million), and in Phase 4 is respiratory system ($72.9 million). Figure 5 presents an overview of the different types of costs constituting each phase and their magnitudes. The denoted error bars represent one standard deviation below and above the mean value.
Figure 5: Per-study Costs across All Therapeutic Areas, by Cost Component and Phase
Excluding site overhead costs and costs for sponsors to monitor the study, the top cost drivers of clinical trial expenditures across all study phases are Clinical Procedure (15 to 22 percent), Administrative Staff (11 to 29 percent), Site Monitoring (nine to 14 percent), Site Retention (nine to 16 percent), and Central Laboratory (four to 12 percent) costs (see Table 2 above).