Are drug R&D costs ex­ag­ger­at­ed for ef­fect? Re­searchers peg the me­di­an price of piv­otal suc­cess at an eco­nom­i­cal $19M

One of the most fre­quent­ly cit­ed stats in the biotech biz re­volves around the claim that it can take more than a decade and $1 bil­lion-plus to get a drug to mar­ket. For lob­by­ists, it’s a chance to un­der­score the high cost of R&D that goes in­to a new treat­ment — and help con­sumers and pay­ers swal­low the bit­ter pill that comes with big prices at­tached to the ther­a­pies that pass muster at the FDA.

But does it ac­cu­rate­ly rep­re­sent the true cost of R&D to­day?

One set of re­searchers de­cid­ed to take a telling snap­shot of one key met­ric in drug de­vel­op­ment, and you might be sur­prised to learn what they found.

Joseph Ross

Pub­lish­ing in JA­MA In­ter­nal Med­i­cine, the group sized up the 138 piv­otal tri­als that were need­ed to get an ap­proval on 59 nov­el drugs ap­proved in 2015 and 2016. They used a glob­al clin­i­cal tri­al cost as­sess­ment tool used by CROs and phar­mas to make their es­ti­mates. 

The me­di­an es­ti­mat­ed cost of the full range of stud­ies: $19 mil­lion.

The spread start­ed at a low of $5 mil­lion for some very small stud­ies test­ing drugs for very rare dis­eases — with no con­trol group — and soared to $346.8 mil­lion for a non-in­fe­ri­or­i­ty study. Of the 138 to­tal, 26 were un­con­trolled, which is def­i­nite­ly cheap­er. The mean es­ti­mat­ed cost of those un­con­trolled stud­ies was $13.5 mil­lion com­pared to $35.1 mil­lion for a place­bo con­trol or ri­val drug in the mix.

The mantra in the biotech in­dus­try in par­tic­u­lar — where you’ll find the small­est R&D bud­gets — has been small­er, faster, cheap­er when it comes to stud­ies. And that mantra may be play­ing out in new tri­al de­signs that are squeez­ing the cost of clin­i­cal tri­als, par­tic­u­lar­ly for tru­ly nov­el drugs.

The au­thors say the num­bers pro­vide “a dif­fer­ent per­spec­tive to the wide­ly held as­sump­tion that elab­o­rate and ex­pen­sive clin­i­cal tri­als are the main rea­son for the high costs of de­vel­op­ing a new drug.”

In a com­men­tary, Yale’s Joseph Ross cau­tioned against con­sid­er­ing the study a guide to de­vel­op­ment costs, as it’s re­strict­ed to the suc­cess­ful piv­otal tri­als. He adds:

(I)t sug­gests that the stronger the ev­i­dence that is gen­er­at­ed, which is most use­ful to in­form clin­i­cal prac­tice, the more it costs. We get what we pay for, and high qual­i­ty clin­i­cal tri­al da­ta are well worth the in­vest­ment to make sure we pri­or­i­tize spend­ing our health­care re­sources on ther­a­pies that have been shown to ben­e­fit pa­tients.

PhRMA took a look at these num­bers, though, and im­me­di­ate­ly bris­tled at the im­pli­ca­tions. The study, says a spokesper­son, ig­nores the full range of costs that go in­to de­vel­op­ing a new drug, from pre­clin­i­cal through ap­proval. And what about all the fail­ures com­pa­nies have to en­dure along the way? That adds enor­mous­ly to the cost of drug de­vel­op­ment, says a spokesper­son.

This study’s nar­row find­ings should not be used to make sweep­ing gen­er­al­iza­tions about the in­vest­ment bio­phar­ma­ceu­ti­cal com­pa­nies make in the de­vel­op­ment of new ther­a­pies. The study ig­nores the ma­jor­i­ty of costs re­lat­ed to the re­search and de­vel­op­ment (R&D) of a new med­i­cine, rang­ing from ex­ten­sive pre-clin­i­cal re­search, clin­i­cal tri­als, glob­al co­or­di­na­tion of clin­i­cal tri­als, de­vel­op­ment of man­u­fac­tur­ing meth­ods and mul­ti­ple oth­er as­pects of de­vel­op­ment, sug­gest­ing a nar­row view of the R&D process and risk com­pa­nies face at the out­set of an un­cer­tain project.

More fun­da­men­tal­ly, the study ex­cludes the sig­nif­i­cant cost as­so­ci­at­ed with un­suc­cess­ful drug can­di­dates and tri­als. De­vel­op­ing in­no­v­a­tive new med­i­cines is a long and com­plex process fraught with more set­backs than suc­cess­es. Less than 12 per­cent of med­i­cines en­ter­ing a phase one clin­i­cal tri­al will ul­ti­mate­ly be ap­proved for use by pa­tients. Set­backs are an in­evitable part of the R&D process, and they must be fac­tored in­to the cost of dis­cov­er­ing new med­i­cines.

Maybe the moral to this sto­ry is that fail­ure is pricey, but late-stage suc­cess can be rel­a­tive­ly cheap. And that puts a dif­fer­ent spin on the big val­ues we’ve been see­ing for ex­per­i­men­tal drugs with some hu­man da­ta to back them up.

 

MedTech clinical trials require a unique regulatory and study design approach and so engaging a highly experienced CRO to ensure compliance and accurate data across all stages is critical to development milestones.

In­no­v­a­tive MedTech De­mands Spe­cial­ist Clin­i­cal Tri­al Reg­u­la­to­ry Af­fairs and De­sign

Avance Clinical is the Australian CRO for international biotechs providing world-class clinical research services with FDA-accepted data across all phases. With Avance Clinical, biotech companies can leverage Australia’s supportive clinical trials environment which includes no IND requirement plus a 43.5% Government incentive rebate on clinical spend. The CRO has been delivering clinical drug development services for international biotechs for FDA and EMA regulatory approval for the past 24 years. The company has been recognized for the past two consecutive years with the prestigious Frost & Sullivan CRO Best Practices Award and a finalist in Informa Pharma’s Best CRO award for 2022.

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