Closely related to the cost of clinical trials is the length of time it takes to complete them, which has also increased in recent years. Between 2000 and 2005, pharmaceutical companies experienced a three percent median increase in development cycle times and a nearly 11 percent increase in regulatory cycle times (Getz K. A., 2006). Though the most recent data released by FDA in the fiscal year (FY) 2011 Prescription Drug User Fee Act (PDUFA) Performance Report indicate that median times to approval for priority and standard applications have decreased by a few months since FY 2008 (U.S. Food and Drug Administration, 2012), 12 the drug development process as a whole is still lengthy. DiMasi, Hansen, & Grabowski (2003) calculated that the average length of time from the start of clinical testing to marketing is 90.3 months (7.5 years), and the entire process, from discovery to registration with the FDA, takes 10 to 15 years for a typical drug (English, Lebovitz, & Giffin, 2010).
Lengthy timelines directly contribute to lower revenues over the course of a drug’s lifecycle, increasing the financial burden of drug development. For instance, long trials mean large human labor costs, as investigators and staff must be compensated for many hours. Long development times also reduce the time a drug has under patent protection, thereby opening the door for generic competitors and reducing the amount of revenue that can be earned. Additionally, the potential for study results to impact medical practice may be reduced over time as changes in clinical practice or the standard of care might make the new drug obsolete (English, Lebovitz, & Giffin, 2010). The timing of investments and returns also factors into the total cost of drug development. As DiMasi, Hansen, & Grabowski (2003) explain:
Once a timeline is established and out-of-pocket costs are allocated over that timeline, the expenditures must be capitalized at an appropriate discount rate. The discount rate should be the expected return that investors forego during development when they invest in pharmaceutical R&D instead of an equally risky portfolio of financial securities. Empirically, such a discount rate can be determined by examining stock market returns and debt-equity ratios for a representative sample of pharmaceutical firms over a relevant period. The resulting discount rate is an average company cost-of-capital (DiMasi, Hansen, & Grabowski, 2003).
The authors estimated that half of the total average cost of bringing a new drug to market—which they estimated at $802 million—was attributable to opportunity costs associated with foregone investments over the drug development period ($403 million) (DiMasi, Hansen, & Grabowski, 2003).
There are a number of factors contributing to the length of clinical trials, and several of these are also discussed in other sections. For one, industry’s focus on treatments for chronic diseases (see Section 4.1) creates a need for long trials to demonstrate safety for drugs that are meant to be taken over an extended term. As discussed in the following sections, long trials face additional challenges with patient and investigator retention, which can in turn cause costly holdups (Weisfeld, English, & Claiborne, 2011). Numerous administrative and regulatory barriers also create delays that protract the clinical trial approval process in the United States (see Section 4.5 for more details). Additionally, the “one-off” ad hoc nature of trial organization contributes to long trial initiation timeframes, as investigators, staff, study sites, and other resources are retained for the purposes of a single trial and then disbanded. In the absence of a consistent trial infrastructure, each clinical trial requires that these resources be assembled anew, a process that can take years (Eisenberg, Kaufmann, Sigal, & Woodcock, 2011; English, Lebovitz, & Giffin, 2010).
Although various technological advances and opportunities for centralized coordination have the potential to shorten drug development timelines, the clinical trial business model has not yet evolved in such a way that would take full advantage of them (Kramer & Schulman, 2011). For example, electronic data capture (EDC) improves efficiency by replacing paper forms and manual data queries with electronic forms and checks; however, not all companies have adopted EDC as a replacement for paper records (Neuer, Warnock, & Slezinger, 2010), and other efficiency gains made possible by this technology—for instance, in patient screening and recruitment—have not yet been realized (Kramer & Schulman, 2011). Site monitoring is another example; according to a recent survey of 65 organizations, 83 percent reported using centrally available data to evaluate site performance, but only 12 percent of respondents actually made frequent use of centralized monitoring to replace time-consuming on-site visits (Morrison, et al., 2011). A third example is the unwillingness of some research sites (academic institutions, most notably) to defer to central IRBs to allow for streamlining of the ethics review process.
According to the literature and the interviews with drug company representatives, this industrywide inertia is rooted in a desire to avoid perceived regulatory risk. That is, companies, investigators, and reviewers continue to take actions that add time and cost but are not value-added, simply because those actions have proven successful in the past (Kramer & Schulman, 2011). Getz (2006) reported that some companies, including Bayer, Astra-Zeneca, Allergan, Boehringer-Ingelheim, and Merck, have found ways to achieve speed advantages (development cycles shortened by up to 17 months and regulatory cycles shortened by up to 3 months) relative to average performers. According to the author, these advantages can be attributed at least in part to terminating projects sooner, collaborating more actively with global regulatory agencies, using information technology and electronic data management technologies consistently and widely, and using CROs more (Getz, 2006). Additionally, partnerships and networks, such as the Pediatric Oncology Experimental Therapeutics Investigators Consortium (POETIC), have succeeded in increasing efficiency by bringing resources together and allowing multiple trials to be conducted without building the infrastructure up from scratch each time. Still, adoption of these models and practices is the exception rather than the standard.
12 See also Brooks, C. (2012). According to this report, analysis of 4,300 global clinical trials across multiple therapeutic areas indicates the trend toward longer trial durations has reversed and clinical trials are now being completed in less time.