Soaring Clinical Trials Costs And Effects On Drug Prices

Ryan Haake | PharmaThought | August 5, 2014

The cost to bring a new drug to market has skyrocketed over the past several decades and, in large part, is due to the rising cost of clinical trials. In 2013, Forbes magazine estimated it would cost a company over $350 million for one drug to reach patients. Taking into consideration an estimate that 95% of drugs in a company’s portfolio fail, Forbes calculated that large pharmaceutical companies can spend between $1.2 and $5 billion to get a single drug to enter the market. [1,2] Other sources have estimated drastically different costs ranging from $100 million to $800 million not taking into effect capital depreciation costs. [3] Regardless of discrepancies in total cost estimates, these costs have risen dramatically in the past 20 years; in general, rising by 7.4% over inflation each year and costs of clinical trials are largely responsible [4]. These rising costs burden several facets of the healthcare system: drug prices increase costs paid by patients and insurance providers, innovation and scientific progress is hampered by creating a cost-prohibitive environment for drugs to even enter Phase I clinical trials, and pharmaceutical companies face increasingly high hurdles to profits. Despite addressing rising drug development costs being of critical importance to reduce overall healthcare costs, the Affordable Care Act (ACA) and other legislative efforts have focused on general costs of drugs, but less on the inefficiencies within the clinical trial system.

The costs accumulated from clinical trials vary by disease indication, but generally weigh in around a few hundred million dollars per drug. Phase III trials alone account for roughly 40% of the entire amount spent to bring a drug to market. This is, in part, due to inefficiencies within the clinical trials system including long trial length, an increasing number of procedures within a given trial, and continually increasing work burden of trial staff...