Clinical trials don’t fail fast enough

New technologies could help your life sciences organization develop strategies that reduce expenses.

The roughly $2.6 billion1 spent on developing one new drug reflects the fully capitalized costs of studying compounds that ultimately fail to reach the market. For each drug that becomes available, about $1.4 billion2 represents direct out-of-pocket costs. That means about $1.2 billion was spent on time and resources that led to clinical trial failures.

Despite this daunting math, drug development continues because a single successful drug launch can represent more than $1 billion in revenues per year3, the patents can last up to 20 years4 after approval and the drugs have the potential to improve the lives of patients. However, as companies try to manage their bottom lines and optimize successes, they must make trade-offs.

To understand how that $1.2 billion might be spent, we need to unpack the clinical development process a bit. The chance that a new drug will enter clinical development and become a registered drug is 12 percent5. Additionally, 45% of trials require at least one extension6, and the cost of a delay can be up to $8 million per day7. Without delays, the typical costs to develop a drug are $4 million for Phase One, $13 million for Phase Two and $20 million for Phase Three8. Those costs increase even more when multiple studies and late-stage failures are considered.

The sooner companies can determine if a development phase should be called off, the sooner they can save money and dedicate those savings to more promising projects. Sophisticated analytics combined with deep insights into current scientific literature and other proprietary data may allow companies to, for example, halt a Phase Two trial after an ambiguous Phase One result. If the drug failed in Phase Two, that failure alone would lead to a cost of $17 million9.

Failure is a natural and necessary part of the process for developing new drugs. But with evolving technologies, pharmaceutical companies have more opportunities to reduce the impact failure has on their bottom line.

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1. McNamee, Laura M., Michael Jay Walsh, and Fred. D. Ledley. “Timelines of translational science: From technology initiation to FDA approval.” PloS ONE, 12, no. 5 (2017).
2. Ibid
3. Form 10-K 2018, Pfizer Inc., retrieved from SEC EDGAR website:
4. “How Long Does Patent, Trademark or Copyright Protection Last?”, July 7, 2016.
5. Wu, Haoyang et al. “MD-Miner: a network-based approach for personalized drug repositioning.” 6BMC Systems Biology, 11, Suppl 5 (2017): 86.
6. Treweek et al. “Making randomized trials more efficient: report of the first meeting to discuss the Trial Forge platform.” Trials, 16 (2015).
7. “Accelerating Clinical Trials – Budgets, Patient Recruitment and Productivity.” PRWeb, 2004.
8. “Examination of Clinical Trial Costs and Barriers for Drug Development.” U.S. Department of Health & Human Services. July 25, 2014.
9. Total costs of Phase One and Phase Two from “Examination of Clinical Trial Costs and Barriers for Drug Development.” U.S. Department of Health & Human Services. July 25, 2014.