Stifling New Cures: The True Cost of Lengthy Clinical Drug Trials

Manhattan Institute for Policy Research:  Avik S. A. Roy, Senior Fellow, April 27, 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. Read More