New Estimates on the Cost of a Delay Day in Drug Development.

Two frequently cited figures by clinical research insiders and observers - the cost of missing a day to generate prescription drug sales and the cost of a day to conduct a clinical trial - are outdated and based on anecdotal evidence. In late 2023, the Tufts Center for the Study of Drug Development conducted empirical research to gather more accurate and granular estimates and to test whether average sales per day have changed over time. 645 drugs launched since 2000, and 409 clinical trial budgets were drawn from commercially available and proprietary data sets and analyzed. The results indicate that a single day equals approximately $500,000 in lost prescription drug or biologic sales, with daily prescription sales for infectious, hematologic, cardiovascular, and gastrointestinal diseases among the highest. The results also show that each year, the average sales per day of prescription drugs and biologics has decreased by approximately $80,000-$100,000. The estimated direct daily cost to conduct a clinical trial is approximately $40,000 per day for phase II and III clinical trials, with those in respiratory, rheumatology, and dermatology having the highest relative daily direct costs.

Assessing the Financial Value of Decentralized Clinical Trials.

BACKGROUND: Deployment of remote and virtual clinical trial methods and technologies, referred to collectively as decentralized clinical trials (DCTs), represents a profound shift in clinical trial practice. To our knowledge, a comprehensive assessment of the financial net benefits of DCTs has not been conducted. METHODS: We developed an expected net present value (eNPV) model of the cash flows for new drug development and commercialization to assess the financial impact of DCTs. The measure of DCT value is the increment in eNPV that occurs, on average, when DCT methods are employed in comparison to when they are not. The model is populated with parameter values taken from published studies, Tufts CSDD benchmark data, and Medable Inc. data on DCT projects. We also calculated the return on investment (ROI) in DCTs as the ratio of the increment in eNPV to the DCT implementation cost. RESULTS: We found substantial value from employing DCT methods in phase II and phase III trials. If we assume that DCT methods are applied to both phase II and phase III trials the increase in value is $20 million per drug that enters phase II, with a seven-fold ROI. CONCLUSIONS: DCTs can provide substantial extra value to sponsors developing new drugs, with high returns to investment in these technologies. Future research on this topic should focus on expanding the data to larger datasets and on additional aspects of clinical trial operations not currently measured.

The Financial Benefits of Faster Development Times: Integrated Formulation Development, Real-Time Manufacturing, and Clinical Testing.

PURPOSE: Faster drug development times get new therapies to patients sooner and financially benefit drug developers by shortening the time between investment and returns and increasing the time on the market with intellectual property protection. The result is enhanced incentives to innovate. We provide a real-world example of the financial gains from quicker development using recent estimates of drug development costs, returns, and estimates of time reductions from an alternative early-stage drug development paradigm. METHODS: We utilized data obtained from a drug development and manufacturing services organization to estimate the reduction in development time for drug sponsors from using an integrated platform of formulation development, real-time manufacturing, and clinical testing for 19 completed drug product development projects covering three key drug development activities (transitioning from first-in-human to proof-of-concept [FIH-PoC], modified release formulation development [MR], and enhanced solubility formulation development [ES]). A traditional drug development paradigm was taken as the base case and financial impacts of the alternative development program were determined relative to the base case. FINDINGS: The total after-tax financial benefits of shorter development times from integrating formulation development, real-time manufacturing, and clinical testing when applied across a broad portfolio of investigational drugs ranged from $230.5 million to $290.1 million, $196.4 million to $247.5 million, and $102.6 million to $275.5 million, per approved new drug for FIH-PoC, MR, and ES applications, respectively (2018 dollars). IMPLICATIONS: For the data we examined, this integrated development model yielded substantial financial benefits over traditional drug development.

Development Times and Approval Success Rates for Drugs to Treat Infectious Diseases.

We gathered data from three pipeline databases and other public sources on development stage and clinical trial metrics for 1,914 investigational drugs, biologics, and vaccines and 2,769 clinical trials intended to treat a wide variety of infectious diseases. We included new molecular entities (NMEs), new formulations, and new combinations. Clinical trial times decreased from 2000-2008 to 2009-2017, varied by disease class, and were longer for trials with more subjects or more sites. Clinical approval success rates were higher for this set of diseases than those in the published literature for drugs across all therapeutic categories. NMEs to treat HIV had a success rate (16.0%) that was similar to those for drugs in general, whereas NME success rates for influenza and pneumonia were much higher (48.1% and 50.5%, respectively).

Assessing the Financial Benefits of Faster Development Times: The Case of Single-source Versus Multi-vendor Outsourced Biopharmaceutical Manufacturing.

PURPOSE: The extent to which new drug developers can benefit financially from shorter development times has implications for development efficiency and innovation incentives. We provided a real-world example of such gains by using recent estimates of drug development costs and returns. METHODS: Time and fee data were obtained on 5 single-source manufacturing projects. Time and fees were modeled for these projects as if the drug substance and drug product processes had been contracted separately from 2 vendors. The multi-vendor model was taken as the base case, and financial impacts from single-source contracting were determined relative to the base case. FINDINGS: The mean and median after-tax financial benefits of shorter development times from single-source contracting were $44.7 million and $34.9 million, respectively (2016 dollars). The after-tax increases in sponsor fees from single-source contracting were small in comparison (mean and median of $0.65 million and $0.25 million). IMPLICATIONS: For the data we examined, single-source contracting yielded substantial financial benefits over multi-source contracting, even after accounting for somewhat higher sponsor fees.

Cost Drivers of a Hospital-Acquired Bacterial Pneumonia and Ventilator-Associated Bacterial Pneumonia Phase 3 Clinical Trial.

Background: Studies indicate that the prevalence of multidrug-resistant infections, including hospital-acquired bacterial pneumonia and ventilator-associated bacterial pneumonia (HABP/VABP), has been rising. There are many challenges associated with these disease conditions and the ability to develop new treatments. Additionally, HABP/VABP clinical trials are very costly to conduct given their complex protocol designs and the difficulty in recruiting and retaining patients. Methods: With input from clinicians, representatives from industry, and the US Food and Drug Administration, we conducted a study to (1) evaluate the drivers of HABP/VABP phase 3 direct and indirect clinical trial costs; (2) to identify opportunities to lower these costs; and (3) to compare (1) and (2) to endocrine and oncology clinical trials. Benchmark data were gathered from proprietary and commercial databases and used to create a model that calculates the fully loaded (direct and indirect) cost of typical phase 3 HABP/VABP endocrine and oncology clinical trials. Results: Results indicate that the cost per patient for a 200-site, 1000-patient phase 3 HABP/VABP study is $89600 per patient. The cost of screen failures and screen failure rates are the main cost drivers. Conclusions: Results indicate that biopharmaceutical companies and regulatory agencies should consider strategies to improve screening and recruitment to decrease HABP/VABP clinical trial costs.

Landscape of Innovation for Cardiovascular Pharmaceuticals: From Basic Science to New Molecular Entities.

PURPOSE: This study examines the complete timelines of translational science for new cardiovascular therapeutics from the initiation of basic research leading to identification of new drug targets through clinical development and US Food and Drug Administration (FDA) approval of new molecular entities (NMEs) based on this research. METHODS: This work extends previous studies by examining the association between the growth of research on drug targets and approval of NMEs associated with these targets. Drawing on research on innovation in other technology sectors, where technological maturity is an important determinant in the success or failure of new product development, an analytical model was used to characterize the growth of research related to the known targets for all 168 approved cardiovascular therapeutics. FINDINGS: Categorizing and mapping the technological maturity of cardiovascular therapeutics reveal that (1) there has been a distinct transition from phenotypic to targeted methods for drug discovery, (2) the durations of clinical and regulatory processes were significantly influenced by changes in FDA practice, and (3) the longest phase of the translational process was the time required for technology to advance from initiation of research to a statistically defined established point of technology maturation (mean, 30.8 years). IMPLICATIONS: This work reveals a normative association between metrics of research maturation and approval of new cardiovascular therapeutics and suggests strategies for advancing translational science by accelerating basic and applied research and improving the synchrony between the maturation of this research and drug development initiatives.

Analysis of Review Times for Recent 505(b)(2) Applications.

BACKGROUND: Annual review statistics released by the Food and Drug Administration (FDA) and a number of studies indicate that the review process improvements introduced under various versions of the Prescription Drug Use Fee Act (PDUFA) have been successful in decreasing average times for marketing approval of new molecular entities (NMEs). Similar statistics are not available, however, for non-NME new drug applications. These application types, such as those covered under section 505(b)(2) of the Food and Drug and Cosmetic Act, represent more than half of all new drug application (NDA) submissions annually and they are primarily based on previously approved drugs. To our knowledge, this is the first study to gather review statistics on 505(b)(2) designations. METHODS: For this study, we analyzed total review times and review designations for 284 505(b)(2) NDA approvals between 2009 and 2015. RESULTS: Our results show that overall, the 505(b)(2) regulatory pathway results in longer review time than for NMEs despite the intent of the 505(b)(2) designation to simplify and streamline the review process. Several illustrative examples and the implications are discussed. CONCLUSIONS: For drug developers, the important take home message is that-as for any program at the FDA-shorter review times and fewer FDA requirements under a 505(b)(2) designation should not be anticipated or expected. The study results serve as benchmark data providing insights into regulatory submission strategy and planning.

Innovation in the pharmaceutical industry: New estimates of R&D costs.

The research and development costs of 106 randomly selected new drugs were obtained from a survey of 10 pharmaceutical firms. These data were used to estimate the average pre-tax cost of new drug and biologics development. The costs of compounds abandoned during testing were linked to the costs of compounds that obtained marketing approval. The estimated average out-of-pocket cost per approved new compound is $1395 million (2013 dollars). Capitalizing out-of-pocket costs to the point of marketing approval at a real discount rate of 10.5% yields a total pre-approval cost estimate of $2558 million (2013 dollars). When compared to the results of the previous study in this series, total capitalized costs were shown to have increased at an annual rate of 8.5% above general price inflation. Adding an estimate of post-approval R&D costs increases the cost estimate to $2870 million (2013 dollars).

The roles of patents and research and development incentives in biopharmaceutical innovation.

Patents and other forms of intellectual property protection play essential roles in encouraging innovation in biopharmaceuticals. As part of the "21st Century Cures" initiative, Congress is reviewing the policy mechanisms designed to accelerate the discovery, development, and delivery of new treatments. Debate continues about how best to balance patent and intellectual property incentives to encourage innovation, on the one hand, and generic utilization and price competition, on the other hand. We review the current framework for accomplishing these dual objectives and the important role of patents and regulatory exclusivity (together, the patent-based system), given the lengthy, costly, and risky biopharmaceutical research and development process. We summarize existing targeted incentives, such as for orphan drugs and neglected diseases, and we consider the pros and cons of proposed voluntary or mandatory alternatives to the patent-based system, such as prizes and government research and development contracting. We conclude that patents and regulatory exclusivity provisions are likely to remain the core approach to providing incentives for biopharmaceutical research and development. However, prizes and other voluntary supplements could play a useful role in addressing unmet needs and gaps in specific circumstances.

Pharmaceutical R&D performance by firm size: approval success rates and economic returns.

The R&D productivity of pharmaceutical firms has become an increasingly significant concern of industry, regulators, and policymakers. To address an important aspect of R&D performance, public and private data sources were used to estimate clinical phase transition and clinical approval probabilities for the pipelines of the 50 largest pharmaceutical firms (by sales) by 3 firms size groups (top 10 firms, top 11-20 firms, and top 21-50 firms). For self-originated compounds, the clinical approval success rates were 14.3%, 16.4%, and 18.4% for top 10 firms, top 11-20 firms, and top 21-50 firms, respectively. The results showing higher success rates for smaller firms were largely driven by outcomes for the small-molecule drugs. Adjustments for the relatively small differences in therapeutic class distributions across the firm size groups showed that the success rate for small-molecule self-originated drugs was 6% below average for top 10 firms and 17% above average for top 21-50 firms. Although success rates for small firms were higher, this advantage was offset to some degree by lower returns on approved drugs, suggesting different strategic objectives with regard to risk and reward by firm size.

The Impact of Collaborative and Risk-Sharing Innovation Approaches on Clinical and Regulatory Cycle Times.

During the past decade, high risk, cost, and inefficiency have driven pharmaceutical and biotechnology companies to enter into collaborative and shared innovation approaches, including mergers and acquisitions, joint development, and in-licensing. These approaches can interrupt the drug development process and affect program-level clinical and regulatory cycle times. To examine these potential impacts, detailed development histories were obtained for 289 new molecular and biologics entities that received FDA approval between 2000 and 2011. Approximately half the drugs analyzed had their clinical development activity interrupted by a collaborative or shared innovation approach, with in-licensing as the most common. The total duration (clinical plus approval phases) for interrupted development programs was 20% longer-an additional 14.8 months (median)-than that of uninterrupted development programs ( P < .05). Approval phase length differences between uninterrupted and interrupted programs were not statistically significant. The results of this study provide important benchmarks and new insights for portfolio planning, forecasting, and management.

Innovating by developing new uses of already-approved drugs: trends in the marketing approval of supplemental indications.

BACKGROUND: Much of the literature on trends and factors affecting biopharmaceutical innovation has focused overwhelmingly on the development and approval of never-before approved drugs and biologics. Little attention has been paid to new uses for already-approved compounds, which can be an important form of innovation. OBJECTIVE: This paper aimed to determine and analyze recent trends in the number and type of new or modified US indication approvals for drugs and biologics. We also examine regulatory approval-phase times for new-use efficacy supplements and compare them to approval-phase times for original-use approvals over the same period. METHODS: We developed a data set of efficacy supplements approved by the US Food and Drug Administration (FDA) from 1998 to 2011 that includes information on the type, approval-phase time (time from submission to the FDA of an application for marketing approval to approval of the application), and FDA therapeutic-significance rating for the approved application, which we obtained from an FDA Web site. This data set was merged with a Tufts Center for the Study of Drug Development (CSDD) data set of US new drug and biologics approvals. We developed descriptive statistics on trends in the number and type of new-use efficacy supplements, on US regulatory approval-phase times for the supplements, and on original new drug and biologics approvals over the study period and for the time from original- to new-use approval. RESULTS: The total number of new-use efficacy-supplement approvals did not exhibit a marked trend, but the number of new pediatric-indication approvals increased substantially. Approval-phase times for new-use supplements varied by therapeutic class and FDA therapeutic-significance rating. Mean approval-phase times were highest for central nervous system compounds (13.8 months) and lowest for antineoplastics (8.9 months). The mean time from original to supplement approval was substantially longer for new pediatric indications than for other new uses. Mean approval-phase time during the study period for applications that received a standard review rating from the FDA was substantially shorter for supplements compared to original uses, but the differences for applications that received a priority review rating from the FDA were negligible. CONCLUSIONS: Development of and regulatory approval for new uses of already-approved drugs and biologics is an important source of innovation by biopharmaceutical firms. Despite rising development costs, the output of new-use approvals has remained stable in recent years, driven largely by the pursuit of new pediatric indications. FDA approval-phase times have generally declined substantially for all types of applications since the mid-1990s following legislation that provided a new source of income for the agency. However, while the resources needed to review supplemental applications are likely lower in general than for original-use approvals, the approval-phase times for important new uses are no lower than for important original-use applications.

Competitiveness in follow-on drug R&D: a race or imitation?

The development of 'follow on' or 'me too' drugs - generally defined as a drug with a similar chemical structure or the same mechanism of action as a drug that is already marketed - has attracted contrasting views. Some have argued that follow-on drugs often provide useful alternative or enhanced therapeutic options for particular patients or patient subpopulations, as well as introducing price competition. Others, however, consider that the development of such drugs is duplicative and that the resources needed would be better directed elsewhere. Implicit in some of this criticism is the notion that the development of me-too drugs is undertaken after a first-in-class drug has made it to market and proved commercially successful. In this Perspective, using analysis of development and patent filing histories of entrants to new drug classes in the past five decades, we provide new evidence that the development of multiple new drugs in a given class is better characterized as a race, rather than the imitation of successful products.