Blog »

+A -A
Avik Roy: Stifling New Cures: The True Cost of Lengthy Clinical Drug Trials April 24, 2012

Though the United States urgently needs new treatments for common illnesses such as heart disease, stroke, and diabetes, the nation’s system for drug approval discourages innovation and investment, especially for our most pressing public health challenges. In this paper, we find that the main culprit is the high cost of Phase III clinical trials, which are required for FDA approval of most drugs. We examined drug development in four major public health areas and discovered that for any given drug on the market, typically 90 percent or more of that drug’s development costs are incurred in Phase III trials. These costs have skyrocketed in recent years, exacerbating an already serious problem.

The enormous cost and risk of Phase III trials create incentives for researchers and investors to avoid work on medications for the chronic conditions and illnesses that pose the greatest threat to Americans, in terms of health spending and in terms of the number of people affected. This avoidance, in turn, harms overall U.S. health outcomes and drives up the cost of health care.

In this paper, we examined drug development in three such areas: obesity, adult-onset diabetes, and cardiovascular disease. We also examined the less burdensome regulatory situation in drugs for rare diseases, as an opportunity for contrast. We find that the current Phase III trial system forces pharmaceutical and biotechnology companies to take enormous financial risks and burdens them with needless and unpredictable regulatory delays. The current system has, in particular, prevented start-up biotech companies, mostly based in the United States, from challenging the dominance of large, multinational pharmaceutical concerns. It also, perversely, encourages more innovation in drugs for very rare diseases than it does in drugs for common conditions that afflict hundreds of millions of Americans.

Continue reading…