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Cost of Trials

There’s been an interesting discussion about pharma R&D productivity and drug pricing on Twitter the last few days – here’s the starting point, from John Tucker. His thesis is that the hefty rate of inflation for medical services/hospitalization, where the data seem alarmingly solid, is one of the things driving the problem. That’s because it’s a surrogate for the expense of running clinical trials.  Starting back in the mid- to late-1980s, the costs of medical services began to truly diverge from the general consumer price index, and it’s never looked back. Even the 2008 recession (which put a speed bump into the CPI data) didn’t slow down medical inflation one bit.

Tucker goes on to show that (at least since 2005) that while (1) drug approvals have generally been rising, (2) trials, on average, are not getting larger, (3) the success rates of these trials have not changed appreciably, and (4) the number of Phase 2/Phase 3 trials has not changed, either. What has changed is the cost of running them. We can debate the connection to drug pricing in general, but the effect of this on drug-company financials would seem to be real, and companies either soak these rising expenses up or pass them on.

Another round of discussion on this point starts here. This brings in David Grainger and Bernard Munos, and one point that ends up being made is that if cost-of-trials is indeed increasing, as it seems to be, then it would follow that we might want to be pickier about what we put into those trials. But that’s not what’s happening. Munos, in particular, has been using the example of Alzheimer’s for some years now, and it’s a tough case to refute. If you have a disease whose underlying clinical rationales are so insecure, and whose trials are so long and expensive, with historic failure rates approaching 100%, then don’t do it. Do something else with that time and money. Put some of it into figuring out more basic info about Alzheimer’s, if you want to, but don’t push things into trials under such conditions.

That leads to this exchange:

Strong words, but there can really be no doubt that (1) incentives matter! and (2) it is easy to put in perverse ones that don’t do what you think they’re doing. It’s like running your med-chem department by rewarding people based on the number of compounds they register per year. Many of us have seen that tried, to one degree or another, and the same flippin’ thing happens every single time: people game the system by shoving easy amides/sulfonamides/etc. into the hoppers. On the macroeconomic level, it’s akin to collectivizing the farms: dang, collapsed agriculture again. Dang, filled the compound collection with self-similar junk again.

And at the recommend-to-the-clinic level, anyone with experience in this business has seen perverse incentives at work. I recall sitting in meetings and thinking “Now, why are we recommending this program/lead compound for clinical development, exactly?“, followed by the dispiriting thought “Oh yeah. Look outside. The leaves are dropping. End-of-year goals.” Lots of junk has been shoved along in order to check boxes, because those boxes are tied to bonuses, promotions, and other immediately tangible desirable things. The harm, meanwhile, is spread out over the years and the responsibility is diffused. Clinical trial failures happen, y’know – and besides, we did everything by the book and everyone signed off on it. Whaddya want us to do, not send stuff to the clinic at all? Never going to have any successes that way.

It’s true, you’re not. But (general principle time again) just because you can screw things up in one direction doesn’t mean that you can’t screw them up in the opposite one. If you put nothing into the clinic, you will run out of money. If you put everything into the clinic, you will run out of money. And if your clinical programs are disproportionately great big huge long megatrials, you are taking an even bigger risk of running out of money – especially if those trials costs are ratcheting up every year. We all know this. Doing something about it is harder.

57 comments on “Cost of Trials”

  1. Tox Med says:

    So, what is going on with CROs then? Is it possible that the spate of consolidations leading to mega CROs makes it difficult to shop around for a more cost effective one? Also keep in mind that most CROs specialize in disease areas and thus corner the market for that indication.
    Among non-clinical CROs the most recent venture was CRL acquiring MPI which was a smallish to medium serving niche CRO, and I wonder what will happen with Charles River pricing being forced onto MPI services..

    1. Emjeff says:

      As someone who does clinical development for a small company, my worry is not being priced out; rather, I am concerned that these mega-CROs will increasingly focus on large pharma at the exclusion of small/micro pharma. This is already a problem for us – it is quite clear that many of our projects get pushed to the back when a GSK comes in and starts throwing money around. We had a recent special population trial a year or two ago where recruitment was going well and then suddenly dried up. My suspicion at the time (and still) is that another study came in , and it was a bigger fish.

      1. Pastor Bentonit says:

        It is likely that the Big Guys get the better end of a CRO’s infrastructure. So to speak. Been there, seen that.

      2. anon2 says:

        It very well could be. Especially if there was an enrollment target bonuses.

        Also, it is true that CROs put the A team on big pharma/big projects. Everyone is promised the best resourcing, but time and time again I see knew CRAs and PMs get dumped on single study clients and the talent flocks to large studies where the larger contracts/porfolios mean hiring must be done, which means an increased chance of a promotion.

        If you are a small company you pretty much have to go with a small CRO.

        1. Alchemist says:

          Which is why, as a small biotech, we select medium-sized CROs and never the big players. There are a few good ones out there, but you need to look and properly vet them (which is easier said than done).

  2. Billy says:

    Clinical trials are expensive, no doubt. I’d be interested in learning how advertising impacts drug prices as I can hardly sit in front of my TV for 5 min without seeing a drug ad these days.

    1. Derek Lowe says:

      Advertising is, in theory, supposed to more than pay for itself by bringing in more money (or keeping more money from being left unearned).

      1. Ellis says:

        Advertising ends up in a Red Queen situation – running faster and faster to stay in the same place. If there are two equivalent products and no advertising then both get equal market share. If one advertises then it dominates the market and so the other must start to advertise to get back to evens – and an arms race begins. Of course some advertising will increase the total market and this benefits both competitors.

      2. Billy says:

        Right, but it pays for itself with real dollars from real patients. So it leaves me to wonder if drugs would be cheaper without it.

        1. ab says:

          By this rationale, Fords would be cheaper without marketing too. So would Coke. And dish detergent. And virtually every single thing you buy, ever. So why not eliminate marketing from everything and save all of us a pile of money? Why is this uniquely a pharma problem?

          1. Philip Skinner says:

            It’s not quite that simple though is it? The US is at least somewhat unique in allowing direct to consumer advertising. the consumer is the one taking the drug, but the doctor is traditionally the one prescribing it. It’s not like you go to a car broker who’s job it is to tell you which car you are going to get.

            Advertising costs for US drugs increased dramatically when direct to consumer advertising was allowed. I’m sure drug companies pushed for it, but it is a complete Red Queen situation now that they collectively carry larger costs for likely an equivalent share of the market.

          2. Isidore says:

            Is anyone aware of any hard numbers on the percentage of drugs prescribed by physicians that were requested or brought to the physician’s attention by the patient? This may not be difficult to come by, however determining how many of the patient queries were the result of advertising as opposed to word of mouth or the patient’s own research (WebMD, Google) would be very difficult to discern.

          3. ab says:

            But you still haven’t answered the question of why this wouldn’t be true of Coke and Pepsi? Why don’t we eliminate advertising for them and thereby lower the costs of those two products? Coke and Pepsi have got to be the ultimate advertising arms race.

            As an aside, does anyone actually watch a drug advertisement and think, OMG, nausea, suicidal thoughts, susceptibility to infection, depression, and possible death – I MUST have that product!!!?

          4. Wes says:

            I think that has been answered. Advertising does work, and it helps increase sales. Looking at small production runs, it seems to me that increased sales enables a decrease in cost. So it makes sense to advertise Coke & Pepsi. (Now if we’re asking about the overall costs to society based on increased advertising for these notably unhealthy beverages, we might reach a different conclusion, but I don’t think that’s what you’re asking.)

            What’s not as clear is whether that makes sense for pharmaceuticals, as far as the overall cost of health care is concerned. Do these ads help drive patients towards less costly treatment solutions? Do they increase patient health to the point that it increases their productivity in the workforce, or decreases the overall level of care (and cost) that they require? Do they increase unnecessary medication? Do they increase spending on branded versus generic purchases?

            If there are overall cost savings resulting from increased awareness of treatment solutions, that very well may result in the cost savings outweighing the cost of the marketing departments. The fact is that we don’t know, to my knowledge.

            I know they increase demand from patients, as I can assure you that if patients are demanding antibiotics for viral infections, they’re also demanding either branded vs the generic or a different drug than what they’re on based only off an advertisement (which may not be the best course or most cost-effective form of treatment for their situation.) Having worked in healthcare for 15 years, I can tell you that they’re definitely asking. And I doubt the small market I work in is enough of a return to run all these marketing departments, so I’m guessing this is the norm.

          5. Anonymous says:

            (I hope I picked the right Reply button.) I believe that advertising in professional journals (JAMA, NEJM, etc.) that targeted MDs as well as medically oriented brochures and “detailing” (and lunches and doo dads and holiday junkets) for medical professionals has been allowed for a long time, pre-1982. Direct to Consumer (DTC) advertising of Rx drugs was not allowed until 1985.

            But Eli Lilly started using Fake News to promote Oraflex, an NSAID in 1982. They paid celebrity endorsers (baseball players, champion figure skaters) to get interviews on the talk shows, including the morning talk shows back then (Good Morning, America; Today; etc.). Lilly fed the networks and other news outlets all sorts of advertising disguised as newsworthy “press kits” so they could have good interviews with celebs and run stories (on TV, radio and print, e.g., Readers DIgest).

            The result was the fastest ever launch of a new drug (total Rxs). Patients were showing up at their doctors’ offices asking for Oraflex even before the docs knew what it was. As “luck” would have it, there were several deaths and medical injuries directly attributable to Oraflex (e.g., acute liver damage). Launched in May ’82, Oraflex was off the market by August ’82. Among other problems, it turns out that Lilly had failed to inform the US FDA about problems and deaths in England (where it had been approved and launched months earlier).

            I believe that there were 24 or 25 criminal indictments against Lilly. At one of the hearings, a Lilly VP was asked why they didn’t report the deaths in England to the FDA. ‘We didn’t know about them.’ Why did Lilly not know about deaths from Oraflex in England? The VP defended himself by saying something like, ‘You don’t expect us to look under every stone, all over the world for every single problem that will harm our business, do you?’ The articles describing the deaths from Oraflex had been published in Lancet or BMJ. Those would be obscure places to look if your head was stuck up …. rather, in the sand.

            Lilly was once known as “Eli Lilly, The Ethical Drug Company.” They dropped the “Ethical Drug Company” part some time after the Oraflex incident.

            One of the problems with Oraflex (and Vioxx and other potentially good drugs) was their OVER-PRESCRIPTION to patients that should have remained on existing, safer treatments. The Rxs were driven by creating more CONSUMER demand via advertising or fake news advertising. Some doctors have reported that patients “empowered” by advocacy groups (often funded by Big Pharma) even DEMAND a particular drug and that the doctors will reluctantly relent and write the Rx.

            At this time, I think that the US and New Zealand are the only two countries to allow DTC of Rx drugs to consumers.

          6. Kaleberg says:

            People watching a Coke or Pepsi ad can just go to a store and buy some. People watching a pharmaceutical ad cannot. They have to go to a licensed professional who then determines if they can go to a drugstore and buy some. The whole process of selling pharmaceuticals is heavily regulated, and considering the stakes, that regulation makes a lot of sense.

            If you look at the medical care price index chart, you can see the curve starts to bend around 1985, when direct to consumer drug ads were first permitted. I don’t think they were the only factor in rising medical costs, but the timing is suggestive.

        2. bagger vance says:

          isn’t it “real dollars” from real insurance companies though? And thus we’ve passed the buck on again…

          As someone below notes, it’s hard to gauge a system’s performance when both incentives and costs are hidden.

      3. Drink from the Pipeline says:

        The fact that advertising pays for itself doesn’t mean that it doesn’t increase the cost of therapy: if anything, it assures that it will. Advertising drives up demand, and as in any other market system, increased demand allows sellers to increase the price at which they sell.

        1. Wes says:

          That’s a simplistic view, the pricing under increased demand depends on many factors. For instance, the cost of scaling production, the predicted duration of increased demand, distribution costs, etc. It all depends on where those lines intersect, in some cases you could have decreased costs. Such as if your per unit costs decrease with increased production and decreasing the cost of your end product will expand your market, then it will depend upon that sweet spot where those curves intersect on whether the cost will increase or decrease. If you look at the market, in many cases you’ll see increased production that decreases the cost of the end product. You’ll also find many where that isn’t the case, as perhaps increased production is dependent on a limited resource which increases in cost as demand for it goes up. So it’s not as simple as you posit,

  3. me says:

    Why is cost of trials (and healthcare cost generally in the US) going up so dramatically? Are a large group of people being paid too much? Is equipment/medicine becoming more expensive? Who is making off with all of this money?

    1. Emjeff says:

      My opinion? Increased regulation, particularly at the clinical and CMC levels. We have to do many more studies than we did in the past, and there are many more requirements in place now. All of this costs money, and there has been no systematic review by regulatory agencies on whether or not these new regulations affect the public health.

      1. CMCguy says:

        Emjeff a reply comment did not come through Friday regardless I do partly agree with you that increases regulations pays a significant role however pointed out largely due to the GCP requirements mandated as the GMP/Drug product is often less of overall contributor and ignored even though burden there continues to grow (and with more complex drugs may have more than nominal impact on overall trial expenses). Although must say running Clinical trails have become profit generators for both academic and private hospitals so now a cottage industry where, as next comment notes, per patient fees are extremely high and keep going up because companies are dependent on the hospitals and investigators to gather subjects and collect data.

    2. Anon2 says:

      They are expensive because they can be. Sites (clinics and hospitals) are going to charge as much as they can get away with.

  4. Insilicoconsulting says:

    Sponsors are increasingly looking to compute ROI of internal trials vs those conducted by CRO’s. But this data is only forthcoming if a company conducts at least 10% of the trials directly.

  5. Me (Not the same as the other me in the replies) says:

    The cost of medical care in the US? I think the basic idea is that healthcare in the US is not so heavily regulated, and hence is regulated under the general consensus of other areas, ie that markets are efficient and simple economics will determine who survives.

    Healthcare is not an efficient market – just like housing in Europe.

  6. Curt F. says:

    In a world teeming with financial innovation, it’s not clear to me why so little has trickled into the internal incentives companies provide their employees. Why not make a rule that a recommendation to move a candidate into clinical development, if accepted, means you must buy, at a cost of 10% of your yearly salary, a (say) 0.5% stake in the eventual revenues that arise from approved drugs? As Talib says, “skin in the game” and all that. The actual numbers might need to be tweaked, but if an executive you are already paying $x00,000 per year isn’t willing to put down $x0,000 of their own money to stand behind a candidate, then what should you conclude?

    Are major shareholders of Big Pharma taking any interest in modernizing the financial instruments used to incend executives? If not, why not? (I’m not saying this would magically solve all problems — I’m sure there would be ways to game this idea too, but the goal should be to provide incentives to employees / executives that match the incentives of the company, and although perfect matches are probably impossible, it sure seems like there would be plenty of things better than what companies are doing now.)

    1. Emjeff says:

      Virtually nothing would move into Phase 1 if that were put into place. C-suite executives do not like accountability.

      1. Hap says:

        Isn’t that what they’re being paid for, though? If they aren’t willing to be held accountable (despite holding others accountable for the same outcomes), then you have no way to control their behavior or to change behavior which is harmful to the company. That would seem like a recipe for losing investors’ money, which I assume is not why people invest it.

    2. tt says:

      I like the idea of re-thinking the incentive structure for the C-Suite, as the current one clearly rewards short term thinking and is at an obvious disconnect with a 10-12 year product development cycle in pharma. Perhaps extending stock reward vesting periods to 10+ years, and/or withholding income (deferred salary) and stage-gating it against clinical progression. You would also need to incentive the “upside” too in order to reward risk taking in the clinic (hence the options vesting) in addition to punishing clinical failures through salary withholdings.

    3. ab says:

      You need a carrot in addition to a stick, otherwise nothing will ever progress. With regard to both, who do you provide the incentive to? The bench chemist who made the drug? The chemistry program lead? The person who developed the critical in vitro assay that allowed SAR development? The person who invented the in vivo assay? The biology lead? The marketing analysis team that said this was a good area to work in? There are a lot of worker bees making these decisions, and they’re all critical. For stuff that looks promising, damn near half of even a large pharma will have had a hand in pushing something forward. Wanna sew serious discontent? Exclude a portion of them from the reward.

      1. Chris Phoenix says:

        Owning a share of the drug’s success would be a carrot – if you expect it to be successful.

    4. Anon2 says:

      One issue with that though is that you can do everything right upstream, but there are so many people downstream from discovery that can ruin it or at least reduce your reward. I am on this downstream side and see it all the time.

      Clin Dev: doesn’t get the science and chooses the wrong patient population or biomarker (remember BMS losing $20 billion in one day because their medical director chose the wrong biomarker cutoff? Prepperidge Farm remembers)
      Clin Ops: chooses bad sites and doesn’t enroll
      Manufacturing: fails a batch and you run out of study drug
      Med Writing: botches a module in the NDA
      Stats: runs ambitious SAP and no one can interpret the results
      Reg: misunderstands Competent Authority
      Bus Dev: tries to sell/partner out the compound to get a quick certain bonus rather than wait to see if it works

    5. Kaleberg says:

      This could actually be horrible. Look at Hollywood with its huge development costs, high variance of return and potential for blockbuster profits. Sound like any other industry we know? All we need is internal warfare over points and Hollywood accounting in which movies that take in billions, like the Lord of the Rings trilogy, technically losing money. Maybe the folks doing the work need to be more like the folks in the Hollywood trades. Stick with the guilds for good pay and enjoy the free food on set.

      1. Derek Lowe says:

        The Hollywood analogy is pretty good – but no one will sue if the movie gave them a headache or the plot didn’t make any sense. And Hollywood has copyright law on its side – imagine what movie prices would be if copyright terms ran the same as patents!

  7. David Campbell says:

    On 4th June 2009, Professor Sir Michael Rawlings, then Chairrman of NICE (which is responsible for ensuring that the British National Health Service remains affordable), gave his opinion of why cliinical trial costs are escalatnig, at (15 mins. in)

    1. DCRogers says:

      TL;DLT (too long, didn’t listen to…)

      Anyone care to summarize Rawlings’ opinions as to why clinical costs are escalating?

      1. David Campbell says:

        He lays a lot of blame on the uncritical acceptance by UK, US, and Japanese regulatory authorities, of the 1996 “Good Clinical practice” guidelines formulated by the International Conference on Harmonisation. These requirements were subsequently set in stone by incorporation into a European Union Clinical T rials Directive. He claims that in 2009, an international group of clinical academic scientists in 2009 produced recommendations which, if adopted, would lead to a 50% reduction in trial costs without loss of quality.
        He gives a case study on Tetrabenazene, (which was first synthesised in 1958, marketed in the UK in 1962, and grangfathered into th UK Medicines Act in 1972) used in Huntingdons Chopea. But when approval was subsequently appled for in the US, the FDA requestedchronic toxicity studies in two (!) animal species, and human trials also, despite over 45 years of use on thoisands of patients in Europe and the UK, He blames the eventtual twentyfold prce difference between US and UK partly on “excessive” FDA requirementsi.

  8. JPMorgan1907 says:

    Institutional investors (holders of most of the shares) should pay more attention to corruption in bonus systems for key personnel, and vote accordingly on the “say-on-pay” items in the proxy statements leading up to annual meetings.

    1. NJBiologist says:

      Remember that the only options in a say-on-pay vote are approve/do not approve. And even with that, do not approve pretty much never wins. (After JNJ’s annus horribilis, Weldon and the crew got something like a 51-49 approve vote.)

  9. Kelvin says:

    I just posted this, which I’ve been sitting on for a couple of years now:

    1. Dionysius Rex says:

      Hi Kelvin,
      Your analysis fails to include companies such as Gilead, Biogen, Vertex, Novo Nordisk, Bayer, Lundbeck, all of whom have very considerable sales. (there are surely many more)

      You can always find the trend you want if you ignore large parts of the data (see climate “science” for numerous case studies).

      1. Kelvin says:

        Fair point, some of the bottom up analysis does not include all companies, but does a forest cease to exist if a few of the smaller trees are not accounted for?

      2. Kelvin says:

        PS. I didn’t specifically choose to exclude any companies, just included all the biggest companies I could find data for to get an overall picture. But in any case the story is consistent with a more inclusive top down analysis.

    2. Bernard Munos says:

      Lots of food for thought. Always good to be challenged on our assumptions. Thanks for sharing.

      1. Kelvin says:

        Thanks Bernard, is there really anything surprising or controversial here? 🙂

  10. tlp says:

    Slide 185 “Curing heart disease and cancer would double costs as more people would die from more costly diseases”
    Thought along these lines, too. Thanks for crunching the numbers!

  11. respisci says:

    My experience in running clinical trials outside US is that they still cost so this is not just a US health care cost phenomenon.

    Studies are getting more complicated with more activities being required to be performed at each patient visit. This is in theory is not necessarily negative. From the study perspective the patient is having a visit so let us gather as much data as we can from this visit. However, each piece of data costs. MRI are expensive (why? An university site will charge internal researchers $X for a MRI and then 3 or 4 times more for pharma studies allowing the internal researchers to pay less as their grant funds are less). Blood is collected for safety monitoring (hematology, blood chemistry) but also a plethora of biomarkers (sometimes sent to 3 different external labs for specialized COSTLY assessments); patients are asked to complete 4 or more questionnaires for PRO (which may or may not lead to any meaningful interpretation); as for the physicians, along with performing a physical exam they are required to perform specialized tests for that disease indication and more physician time equals higher costs (physicians cost more than nurse which costs more than study coordinator etc). All these data collected need to be entered into a database, monitored (queried, queried, queried), reviewed and finally analysed. The GCP guidelines, while adding layers of additional work, exist to enhance patient safety and ensure the data collected are accurate. Depending on their experience with a recent regulatory agency audit, a pharma will focus on aspects of the GCP guidelines to the nth degree which results in study coordinators filling in more paperwork and getting more signatures than the time they took to cover the actual patient visit.

    Investigator Initiated Trials may cost less on paper but some of the steps described are covered by trainees or staff that are doing this as a side project and their salary costs are not captured as part of the study cost. My experience is that IIT are not run with the same oversight as pharma led studies, tend to enrol fewer patients and may even have nebulous endpoints (so in the end you look at the data and ask “did we even learn anything?”).

    All this to say that a systemic review would need to take place to show exactly what is costing more and whether that cost has WORTH. No study wants to cut back on safety and then have something happen to a patient that could have otherwise been avoided. I am probably naive but I believe that pharma will need to be more transparent about the actual cost of a trial and the development program for a drug before we can determine how we can lower the costs.

    1. john tucker says:

      The analysis I presented doesn’t depend on the absolute cost of clinical trials. It requires only that the overall cost of putting an average patient in a trial should increase at a rate comparable to the U.S. medical care inflation rate.

      This will hold if
      1) Most patients are enrolled in the U.S. or in countries with similar medical inflation rates, and
      2) If the number of patients enrolled in countries with much lower medical inflation rates is not rapidly increasing.

      This seems to have been the case over the period of the analysis, as U.S. approval generally requires that the phase 3 population be representative of U.S. racial makeup and exposure to U.S. standard of care.

      1. Anon says:

        John, firstly congratulations on showing clear evidence that intrinsic clinical trial costs have increased above inflation. I have no doubt that this contributes to the problem of declining R&D productivity.

        But then you wrongly assume that this must be the main and only driver of declining R&D productivity. You have no evidence for this. In fact, the inflation figure you quote is much smaller than the annual decline in R&D productivity, which is about 10-11% per year. You have made the classic mistake of cognitive bias – to see just the tip of the iceberg, and then assume and claim that is all there is.

        1. John Tucker says:


          I get about 50% to 70% being due to medical inflation depending on when you pick your start and stop points.

          If you regress research dollars / NME on calendar year you get a best fit value of $350M per NME in 1990 and $2.1B in 2015. This works out to an increase of 7.5% per year.

          The medical care CPI increased by an annual rate of 4.4% over this same period. If you take the ratio of these two numbers you get 59%.

          1. Anon says:

            Firstly, your 7.5% annual decrease in $/NME is inflation-adjusted, so you need to add that back in for comparability.

            Secondly, your 7.5% annual decrease in $/NME only looks at the cost side of the equation, and not the value of NMEs, which has also been declining. So add that in also.

            And thirdly, the 5 fold increase in clinical costs you show over 40 years, from 1980 to 2020, is implies 4.1% inflation in clinical costs, which accounts for only part of the rate of decline in R&D productivity.

          2. Anon says:

            7.5% annual increase, sorry.

        2. John tucker says:


          “Firstly, your 7.5% annual decrease in $/NME is inflation-adjusted, so you need to add that back in for comparability.”

          No, those are the raw numbers which are publicly available everywhere.

          “Secondly, your 7.5% annual decrease in $/NME only looks at the cost side of the equation, and not the value of NMEs, which has also been declining.”

          I don’t think that’s an easily defended position. Remember that in the pre- and early post-Hatch-Waxman era we had scores of cephalosporins, scores of NSAIDS, and some 20+ undifferentiated SSRIs approved. Many of the cephs and NSAIDs were withdrawn from the market simply because the sales were so bad. I think that tells you all you need to know.

          “And thirdly, the 5 fold increase in clinical costs you show over 40 years, from 1980 to 2020, is implies 4.1% inflation in clinical costs, which accounts for only part of the rate of decline in R&D productivity.

          Yep. If you read my note, that’s exactly what I said. I also pointed out that the numbers would vary depending on exactly which dates you chose. The 1980 date you chose is probably not ideal because it is pre-Hatch-Waxman, and most of those drugs were shameless me-toos.

  12. Gw says:

    The only advertising I get is for Mylan generics (on the French radio). I guess the idea is to get people to not mind generics (France , national health system and top up insurance, nearly everyone is covered). The effect if successful is obviously to push prices DOWN. Eg My mother was on a hormone blocker for breast cancer when a generic came on the market at half the price. Her insurance was paying so she and her doctor decided she might as well stay on the brand name…

    1. Vader says:

      “Her insurance was paying so she and her doctor decided she might as well stay on the brand name…”

      That’s as perfect an illustration of the perverse results of insulating folks from market signals as you’ll ever find.

  13. Tom Spencer says:

    Anybody know how the total cost of clinical trials is some recent time period compares with the total cost of drug company R&D not counting clinical trials. In other words, if we label all clinical trial costs as R&D expense, what fraction of R&D expense is clinical trials costs?

    1. David Campbell says:

      In his 2009 presentation, (link above at 12.09 p.m. on Feb 22), Professor Rawlings estimates the cost of clinical trials as 50% of drug deevelopment costs. On the accompanying slideshow, he cites Di Masi et al. 2003) “The price of innovation; :new estimates of drug development costs”, and Adams and Brentner (2006), “Estimating the costs of new drug development, is it really $802 million?” The accompanying slide show is on the Green Templeton lectures 2009 web page. The lecture itself is quite long, but is stylish in content and delivery.

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