Examination of Clinical Trial Costs and Barriers for Drug Development. 3 Analysis of Costs

07/25/2014

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.

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