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The Latest on Drug Failure and Approval Rates

We now have an updated look at clinical success rates in the industry, and it’s a timely topic. Last year there were 59 approvals by the FDA (a new record), and the year before was good as well. So the question is always whether such numbers are artifacts, random noise, or part of a real trend.

This article compares the success rates at the beginning of the 2010s with the 2015-2017 period, so we’re missing last year’s record haul in this data set. But even so, there are differences. First off, though, the chances of success for a compound entering Phase I trials have not increased: it’s still slightly under 10%, same as other estimates over the last couple of decades. That (to me, although it’s not just me!) is probably the single more important figure in the pharmaceutical industry. No other major business type operates under such a high failure rate, and it’s the source of so many things that makes ours distinctive. And I mean “distinctive” in all its senses, ranging from impressive to infuriating. Greater than 90% failure in the central, crucial process of the whole industrial drug discovery business: fix that and everything changes.

But that said, this landscape of failure might be changing. If you can get a compound all the way to Phase III, the historical success rate at that point has been a bit under 50%. But recent cohorts have been showing increased success from Phase III, which is interesting. I have no idea if this is an artifact, but you can be sure that people will be running the numbers with the 2018 set (and this year’s eventual approvals, etc.) to see if it’s a trend that holds up or not. Phase II to Phase III success has been running at pretty much the same levels, though.

The way these numbers can add up is that there are far fewer compounds in that Phase III set, so increased success there doesn’t lift the much larger overall numbers all that much. The reasons for these failures appear to be unchanged: 75 to 80% are due to problems with efficacy and/or safety. And that, to me, is the second most important figure in the pharmaceutical industry, showing just how much we don’t know about what we’re doing. What targets to pick, what else they might do when we affect them, what other things our compounds might do when we try: find a way to understand and predict those things better and everything changes. As for breakdown by therapeutic area, CNS and cardiovascular drugs are at the bottom of the probability of success list at Phase III, followed by musculoskeletal and oncology drugs. Respiratory, metabolic, and anti-infective drugs are all notably higher (these are for the whole 2010-2017 period).

Meanwhile, and this might be surprising, the number of drugs in early-stage development has apparently been dropping steadily since the 2009-2011 period. That’ll be an interesting wave to watch as it works its way through the big python of drug development. Are we doing fewer but better projects? Wait and watch. We may already be seeing it; the number of compounds in late-stage development declined in the 2015-2018 period for the first time in years. So those Phase III-to-approval success rates do need to hold up.

Finally, the share of these new drugs that have been brought to market by the large pharma companies has been declining every year since 2013. I’m not quite ready to opine on that, though, because that still just takes the numbers back to 2010 levels, so it’s not like some unprecedented shakeup. But it’ll be interested to see if that trend continues, and at that point I’m sure we’ll all have opinions to share freely!

24 comments on “The Latest on Drug Failure and Approval Rates”

  1. In Vivo Veritas says:

    “Greater than 90% failure in the central, crucial process of the whole industrial drug discovery business”.
    And that only comes after YEARS of chemistry, in vitro work, in vivo efficacy and toxicity, etc……
    Remind me again why drugs are so expensive?

    1. Chrispy says:

      Drugs are expensive because they CAN be. There appears to be little connection between the costs of developing a particular drug and its cost to the patient. It is all about what the market will bear.

      I think your point is that drugs HAVE to be expensive to support this whole house of cards, and I don’t disagree. This is why ham-handed efforts to reduce the costs of drugs come with all kinds of unintended consequences.

      1. Isidore says:

        “House of cards” implies that the whole drug discovery enterprise is a sham. While there are no doubt scam artists among the many working in the industry, like in all human endeavors, I do not think that this is at all widespread. Now, if you want to argue that the whole process is inefficient no one would dispute it, but then, to the inevitable follow up question of how to change or improve it, there wouldn’t be many answers.

      2. Whiteyonthemoon says:

        More money is put into marketing drugs than drug research. Strong restrictions on marketing budgets would push the cost of drugs off a cliff. Unintended consequences might be fewer stress balls with Lessmoneyforyuzumab written on them, pens reading Mycoxafailin, and other pieces of plastic bound for landfills; fewer Teslas in the parking lot near the marketing department (and perhaps more near the lab); doctors writing prescriptions based on evidence…

        1. Derek Lowe says:

          But keep in mind, that marketing budget is supposed to bring in more money than you’re spending. And that revenue is what funds research (among other things). It’s not just a ritual bonfire of cash. I have no particular love for the marketing departments, but they’re not supposed to be cost centers.

          1. sort_of_knowledgeable says:

            The argument is that marketing is a cost center on the industry level because they are not bringing in new users the way say advertising for apple products might. Instead they are trying to convince people to ask their doctor about drug B instead of drug A. Tobacco companies supposedly became more profitable after cigarette advertising was banned because cigarette ads were less effective in creating new smokers than in getting an existing smoker to switch brands.

          2. Skeptical says:

            Derek,
            Some of the comments in this thread have a “Reply” link and some don’t. For instance, the comment by sort_of_knowledgeable in reply to yours doesn’t, at least in my browser.

            Is there a reason for this?

          3. Sulphonamide says:

            But is it not fair to say (not my original thoughts – paraphrased by something postulated by everyone’s “favourite” stirrer Ben Goldacre) that marketing as a whole doesn’t lead to pharma as a whole selling any more drugs for any particular disease, it merely determines which specific drugs people tale (a zero sum game) and distributes sales according to who has the most cunning marketing and not necessarily who has the best drug. So if marketing were banned, pharma as a whole would still make the same amount of money for each disease but would have to rely on something a bit more concrete to determine which ones sell and which do not….like the data. Ben loudly argued that the sole purpose of marketing is to pervert evidence-based medicine….and I find it hard not to disagree. So if marketing (at least direct to the consumer – not sure which countries other than the USA permit this) were banned, then all that money would be saved and the pharmaceutical industry as a whole wouldn’t lose a cent. Feel free to pile on in, I would genuinely be grateful to hear what I am misunderstanding here (clearly the results generated by clinical trials do not usually – sofosbuvir perhaps being an obvious exception – constitute the sort of concrete data most of us ignorantly assumed existed for each disease).

        2. Hap says:

          At least recently, part of that money that marketing generates has come from overselling what drugs they do make – essentially monetizing pharma’s reputation. Maybe pharma would have lost its reputation anyway (because people would be angry over high drug prices if they couldn’t easily pay them no matter what the cause and someone has to be blamed), but overmarketing hasn’t helped. It may have made it more difficult to get drug approvals (by increasing regulatory barriers to approval).

          Chemists would be cranky about marketing because whatever wrong marketing does is ignored if not rewarded (the $8B in fines on drug companies didn’t come out of marketing’s pockets, and the people who did wrong but got bonuses for their sales prowess probably never had to pay anything back). It’s like being in management – when people pay for whatever failures happen (whether their fault or not) while others don’t pay for any failures (even their own), the fairness of the system seems to be a legitimate object for frustration.

      3. zero says:

        Ham-handed efforts to increase the price of drugs beyond any defensible level have led to a reaction in kind. There was a time when smart reform could have been done if the industry was willing to play ball, but we’re essentially at the angry mob stage. Things are very likely to get worse before they get better. (If they get better.)

  2. dearieme says:

    “Greater than 90% failure in the central, crucial process … after YEARS of chemistry, in vitro work, in vivo efficacy and toxicity, etc”

    As an outsider I take my hat off to the perseverance of you folk. You all know, I assume, that the Golden Age is over, and still you persist.

    I am puzzled, though, that any young people enter the field.

    1. MrXYZ says:

      The art and science of drug discovery is fascinating and you have a chance to make a difference for human health (albeit with all the caveats given above). Combine that with some decent paying jobs, in general, and the chance to work with other talented and creative people and what’s not to like.

      1. Graham says:

        …until you get laid off, can’t find another job in the same field, and need to go for retraining after spending years getting that PhD.

        1. Semicon ChemE says:

          “…until you get laid off, can’t find another job in the same field, and need to go for retraining after spending years getting that PhD.”

          The integrated circuit industry has survived many predictions of the end of scaling, and we have never had a clear vision of whether scaling will continue in 5 years, but we keep innovating new methods to overcome the limitations that were past roadblocks. The reality is there really will be a point that further scaling of semiconductors doesn’t make financial sense anymore, and it will be interesting/scary to see what happens then. Until then, I will work on some crazy technology that wasn’t remotely possible a few years ago.

          1. loupgarous says:

            ” The reality is there really will be a point that further scaling of semiconductors doesn’t make financial sense anymore, and it will be interesting/scary to see what happens then. Until then, I will work on some crazy technology that wasn’t remotely possible a few years ago.”

            Nextbigfuture.com’s got regular stories of researchers finding whole new kinds of material science for computer circuits. If only one or two of them pan out (say, nanocircuitry involving graphene, superconductive nanopipes ditto… ) pan out, then you may have to retool to work in the industry after getting a PhD in silicon/germanium/GaAs tech, but you’ll have a head start in figuring out how to apply the new tech.

            Likewise for med-chem guys who leave Pharma – whole new applications for organic chemistrty are popping up all over. The political push against the way meat is made now could create hiring opportunities for people who know how protein is made and can lay down the ground floor of the new meat industry. Not to mention the burgeoning possibilities for applications of graphene.

        2. AGMMGA says:

          One could argue that if you are not continuously retraining as a PhD, you are doing it wrong…

          (Still, I see your point. Retraining on the job beats retraining on the dole, hands down…)

  3. Earl Boebert says:

    Some interesting observations here:

    https://www.theregreview.org/2019/05/07/kaplan-21st-century-cures-act/

    Also, in my opinion Pharma is suffering from the same adverse effects of financial engineering (e.g., stock buybacks instead of investing in staff or facilities) as the rest of industry — the destruction of Boeing being a signal example.

  4. mallam says:

    Approvals, 59, after approximately 10 years each from beginning to end, for all the companies, all the money spent. How many are going to be truly life altering with no other existing option vs me too’s with only small differences between what’s already approved?
    How many are “portfolio extensions” as what’s already been on the market approaching patent expiration? After almost 40 years associated with the industry in differing roles, it’s still amazing to me how so few approvals per year can support so many companies profits, pay dividends, give upper management huge salaries and bonuses without more scrutiny on US drug pricing and benefit to human health for approval. Is there any other industry where such expenses are incurred with so unpredictable return, highly risky acquisitions, frequent reorganizations (more in some companies than others) and uncertainty in new products?

  5. Kling says:

    In face of overwhelming odds of failure, why would anyone choose drug discovery as a career? Would you volunteer to joined the army if you knew the chance of winning the war was only 10%?

    I started out with just liking science, it morphed Into running science groups, then evaluating science companies, now coping with the science fall-out from politics of inept corporate executives being misled by VCs sponsoring utter crap. Smiles and handshakes to enormous waste of time money and effort. Did not know the arc of my career would amount to this. I have not met a single scientist that wishes their children to follow in their footsteps.

    The pay is good, though, if you can survive the recurring layoffs

    1. NJBiologist says:

      “In face of overwhelming odds of failure, why would anyone choose drug discovery as a career? Would you volunteer to joined the army if you knew the chance of winning the war was only 10%?”

      It is possible to do good (sometimes even noble) work in a losing fight. See, for example, new recruits to the Camden, NJ police department….

    2. Derek Lowe says:

      Neither of my children went into science, but I would have had no problem with them doing so – although I would have given the best advice I could about how to go about it. If you’re doing drug discovery, you can’t go around deciding that you’re a failure if you don’t go out and cure patients, because those odds really are long. I’ve never put a drug on the pharmacy shelves myself, but I’ve advanced knowledge in several disease areas (some more than others!) I’ve taken some good swings, and I’m continuing to, against some really hard targets, in the full knowledge that others have failed and what we’re doing may just fail in a new way. That’s no reason not to do it. Quite the opposite.

      1. Nate says:

        In my cube farm, some of us were integral parts of developing life saving products on the market. Others have never been so fortunate. However, when we come together as a team, we acknowledge that everyone contributes to the success of the team and the larger company. So even though one has not personally touched the particular molecule, you can take pride in advancing the team, culture, or field. Even folks at other companies can take pride by having indirectly advanced the field to better enable each others’ success.

        1. Kling says:

          Sorry to have misled this conversation train from the start. I do believe alleviating human suffering as one of the most noble causes we can commit to. My earlier research in company 1 eventually helped company 2 to create a multi-billion blockbuster product (company 1 was eaten by a Pharma and digested into pulp and excreted). I also saw another project end up in positive phase 2, before funds ran out and R and D people let go to bridge the funding gap. Doing good is a great accomplishment. However there are many other ways to do medical good too where the odds are not so bad, medical devices for example, success rates are at 70% or so I hear. Whilst none of my direct research ever made it to the shelves, my engineer friend who invents relatively simple guide wires has had some products used on tens of thousands of life saving procedures.

  6. NJBiologist says:

    I’m curious about those phase III-to-completion numbers. My memory, which is a bit error prone, records the 2000s as a time of unbridled optimism for new targets, with an awful lot of programs having modest evidence of success in phase II getting to phase III. Is it possible that this depressed the success rate for phase III, and what we’ve been seeing is regression to the mean?

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