A common refrain from drug companies is that high drug prices are necessary for them to recoup huge investments made in developing their products. But a new study finds that one key component of drug development costs – the clinical trials used to secure their approval by regulators like the US Food and Drug Administration and European Medicines Agency – is a lot smaller than previously thought.
The study, published Monday in the Journal of the American Medical Association, looked at 59 drugs that won FDA approval in 2015 and 2016 on the back of 138 pivotal – meaning designed for regulatory approval – clinical trials. It found that despite estimates for clinical trial costs as high as $648 million for trials of new cancer drugs and $2.8 billion for broader drug company development costs for a wider variety of medicines, the median cost of running a pivotal trial was only $19 million.
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An important takeaway from the study is that companies do not need to spend very much to generate strong evidence in support of a drug, said lead author Thomas Moore, a professor of epidemiology and biostatistics at George Washington University, in a phone interview. “The cost of good evidence is not very high, and the idea that we could save money by settling for bad evidence is a very bad bet,” he said. In particular, he referred to trials of with small patient populations, short durations or that use endpoints that don’t reflect drugs’ true benefits to patients. “Shortcuts may be cheaper,” he said. “But are they smarter? Probably not.”
“Our study provides a different perspective on the widely held assumption that elaborate and expensive clinical trials are the main reason for the high cost of developing a new drug,” Moore and the other researchers wrote. “These data suggest that high-cost trials occur but usually when drug effects are small or a known drug already provides clinical benefit. On the other hand, pivotal trials for novel drugs with substantial clinical benefit can be conducted at a lower cost.” The authors, who also included researchers from Johns Hopkins University, used an online tool for estimating costs available to contract research organizations and drugmakers.
The study found that costs were lowest for drugs that the FDA approved based on uncontrolled trials without comparison groups, randomization or blinding. Trials were also more expensive when the new drug’s benefits were similar to those of drugs already available and with well-established benefits. And lastly, pivotal trials’ costs appear to comprise a modest portion of the estimates for overall drug development costs.
Trials without control groups had estimated mean costs of $13.5 million, compared with $28.8 million for placebo-controlled studies and $48.9 million for those with active controls, meaning the control group received an existing treatment. Patient enrollment was another factor influencing costs, with a median $5.9 million for trials with 100 or fewer patients and $77.2 million for those with more than 1,000. There was also a significant difference in cost when it came to duration of treatment, with treatment durations of 26 weeks or fewer costing a median $19.7 million, while those of more than 26 weeks cost $51.7 million.
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Still, one limitation to the study was that it didn’t account for costs drugmakers incur when trials fail, which can contribute to costs of drugs that do succeed, Moore said. The inclusion of only two years’ worth of data and exclusion of costs for things like manufacturing and hiring CROs were also limitations, according to the paper.
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