Clinical Trial Costs Are Rising Rapidly
19 CommentsBy Ed Silverman // July 26th, 2011 // 9:39 am
As drugmakers scramble to replenish their pipelines, they are encountering all sorts of difficulties, including rising costs for clinical trials. And this is happening across all phases. Why? There is increasing competition for trial sites and clinical research organizations that can yield reliable, high quality data, according to a recent survey.
And so, 32 percent of those surveyed pointed to higher costs for enrolling patients and 25 percent cited vendor fees. Expenses for recruiting trial sites was named by 14 percent, followed by 12 percent who fingered technology costs, according to Cutting Edge Information, which surveyed 21 drugmakers, 12 biotechs, nine device makers and 23 contract research organizations.
Meanwhile, staffing for drug development is rising. For instance, Phase IV staffing increased by 85 percent from 2008 to 2011, while Phase IIIa doubled. Phase IIIb staffing rose 57 percent, Phase II staffing jumped 106 percent and Phase I staffing spiked 108 percent. One big reason – more clinical research associates. In 2008, the average Phase II trial employed 3.6 clinical research associates, but that rose 9 in 2011. The average ratio of CRAs per site was 10 in Phase IIIb and 6.3 in Phase IIIa.
As for the average per-patient trial costs across all therapeutic areas, in Phase I, costs rose from $15,023 in 2008 to $21,883 in 2011. In Phase II, the cost rose from $21,009 to $36,070. In Phase IIIa, the cost increased from $25,280 to $47,523 and in Phase IIIb, cost jumped from $25,707 to $47,095. Finally, Phase IV expenses rose from $13,011 to $17.042.
“Everybody is working hard to control those costs. The biggest thing on the horizon is trying to get a handle on earlier go-no-go decisions,” Cutting Edge chief operating officer Adam Bianchi tells us. “The competition for quality sites is creating a lot of headaches. You have a greater number of sites worldwide than ever before, but not all are yielding quality data that companies want.
Consequently, more clinical trial work is being outsourced all the time. For Phase I trials, 58 percent is now outsourced compared with 35 percent in 2008. In Phase II, the figure is 63 percent, up from 36 percent. In Phase IIIb, 54 percent is outsourced versus 46 percent, and in Phase IV, 51 percent is now outsourced, compared with 43 percent three years ago.
A few other nuggets: The recent average cost per patient for a cardiovascular trial in Phase IIIa was $21,750 and $6,830 in Phase IIIb. The cost for Phase II was $33,700. In oncology, the average per patient trial cost for Phase IIIa was $57,207 and $65,900 for Phase IIIb. For Phase II, the average cost was $73,303. For drug to treat central nervous system disorders, Phase IIIb costs were $41,824 and Phase IIIa costs were $33,768, on average per patient. Phase II was $28,197. And for diabetes, Phase IIIb costs were $10,700, Phase IIIa costs were $12,667 and Phase II costs were $8,854.
pic thx to austinsdkeyscouter on flickr
cornell
interesting
Ex CRO Insider
Costs will continue to go up as Pharma utilizes larger, multinational CROs with big infrastructures and greater overhead. Much of the industry is consolidating now to increase the number of multinational CROs. Perhaps some initial competition with the consolidation will help drive pricing down in the short-term.
original industry insider
Dear ex, from the data I’m seeing CRO’s are running bigger backlogs these days as companies balk on starting new work. Some of this may be financial. Not one to brag, but as medical director I was always able to negotiate tighter budgets with CRO’s than our contracts person because I was being evaluated based on this. In fact when I was with Abbott I considered it a badge of honor when PI’s complained about what a cheap company we were. The BS line from the CRO’s is that the PI’s bid up the cost of studies to get the best price for themselves. The reality is that PI’s are starved for cash these days and the sponsor can get as good a deal as the sponsor is willing to push for. Contracts depts in pharma companies are not incentivized to save the sponsor money. They are a turnkey operation and a waste of money IMHO.
One of my gurus in clinical research was the late Dr. W. Leigh Thompson, Scientific Director at Lilly. Dr. Thompson’s mantra was “if you’re going to fail, fail fast”. I still practice this principle today.
Daniel
Interesting article – where is this survey from? As another poster mentioned, the general policy in pharma is to fail as early as possible in the clinical program.
Ed Silverman
Hi Daniel,
The survey is from Cutting Edge Information, which is cited in the second paragraph.
Hope this help,
ed
original industry insider
Daniel, if fail fast were indeed being practiced then it wouldn’t be so bad. In fact, there is a record number of drugs failing in Phase III. Gone are the days when science-driven companies like Merck had Phase III failure rates of 5-10%. Nowadays too many compounds are being pushed into Phase III that have no business getting past Phase II. The reasons are manifold.
Premal
Intersting article where can I get the acutal details of the study.
Clinical Research Site
Part of the reason study budgets have increased is because the complexity of studies has increased. From a site perspective, the average psych study visit used to take an hour or so. Now you have subject visits that take 2-5 hours and most of that time is spend with PhD or MD.
As pharma companies have had to differentiate their products from those already on the market they create protocols with more assessmentsand endpoints.
Ed Silverman
Hi Premal,
You would have to contact the market research firm that provided me the data, which is called Cutting Edge Information.
As a journalist, they allow me to read the study and grab a certain amount after I’ve identified an angle that I would like to pursue. But I’m not free to provide a link to the entire study.
Hope this helps,
ed
Ryan McGuire
Hi Premal, this is Ryan McGuire, lead author of the study that Adam referenced. You can go to the main project page at http://www.cuttingedgeinfo.com/research/clinical-development/trial-operations/ for more information. We can connect there if you have more questions.
Thanks for your comment and I look forward to your feedback.
-Ryan
original industry insider
CRS, I agree. However, the need for differentiation has led to too many endpoints that bog down studies, increase costs and create statistical nightmares. As I was first taught, and still belive the cleanest, simplest, cheapest and most streamlined protocols are those that seek to answer a single primary endpoint, and then statistically power that study to make sure you maximize your chances of meeting your goal. You also get to market faster with a single indication.
My strategy even with a NME is to go to market with a single indication, then use marketing muscle to drive brand awareness. While all this is going on you use your Phase IIIB program to develop 3-4 new indications, which you then launch into the marketplace 18-36 months after the primary approval, when brand awareness is it at its highest. BTW, this is also the most cost-effective way to do things.
original industry insider
Another way to vastly reduce clinical trial costs is to structure CRO and investigator contracts on a pay-per-performance basis. This simple principle seems to have been lost over the years. Otherwise a savvy PI knows that he can reel in as much or even more money for a study that fails to meet enrollment goals as he/she can for a successfully enrolled study.
Russian CRO
Why don’t use local CRO’s in emerging markets like Russia, China, India etc. or alliances of such CRO’s which already exist. The per-patient cost in these countries are times lower, and data quality is high and proven by EMEA and FDA inspections. As a result you can get the same result as with global CRO at a fraction of cost.
I clearly understand that sponsors now prefer one-stop shopping, even though everyone is talking about new models, innovation etc., we are trying to promote this idea for years at different international conferences, everyone is excited, but nobody buys. The question to professionals – isn’t idea worth trying? Is there any future for local CROs?
Ex CRO Insider
Dear Original Industry Insider,
You are absolutely correct, CROS are running bigger backlogs but the issue is twofold: 1) the backlogs are soft and many tend to drop off by the end of the year 2) the economy is not helping with regard to companies moving forward on studies. CRO margin’s are still low compared to other industries in healthcare, a struggling 11% today. As CRS stated trials are much more complex with oncology leading the number of trials by indication currently. Oncology, like CNS, has very complex protocols, hundreds of CRF pages, narratives out the wazoo. So not only are the sites struggling to try to make some money but so are the CROs when they are negotiated heavily to the point where many aren’t even making money on the studies. I expect this will be happening in short order with some of the recent M&A companies entering the world of large CROs. By the way, pay for performance studies are becoming increasingly rare among large CROs that is why many large CROS are moving into strategic partnership deals with Pharma as a way to secure business.
original industry insider
Thanks, Ex CRO Insider. However, what puzzles me is this. We know that sponsors are doing mega delas with CRO’s like Covance and Quintiles to essentially run the entirety of their Phase III programs. You’d think there would be some economies of scale there, but there seem not to be.
Another place where I think CRO’s take advantage of sponsors is after the study starts, when there be a minor change to a protocol which the CRO sees as a chance to turn into cash using the old CRO trick of “work order change” or whatever they call it these days. Sometimes legit, most of the time not. The CRO has to be smart enough to budget extra slack into their numbers. My policy is to pay a flat rate to the CRO up front and not have them nickel and dime me. Of course their response is usually to put their least talented CRA’s on the job, just like body shops put their least experience mechanics on warranty work.
In the end it all boils down to negotiatiating skills. My impression is that CRO’s find negotiating hard deals with PI’s to be rather unpleasant (a task that I relish), and would rather go back to the sponsor for more money than jaw down the PI to reasonable levels.
Also, I can usually slash a proposed CRO budget by 20-30% straighaway by slashing the monitoring visits by 1/3 or more. We used go visit every 4-6 weeks pre computer age. With today’s technology and software with EDM and CTMS systems less frequent monitoring is necessary.
On pay for performance. CRO’s insist on WAY too much frontloading of payments to the PI. My philosophy is that as long as the PI is not losing money during the study, you backload the payments as much as possible, AND you withhold final payment until all AE’s have been resolved. You’d be surprised how quickly that gets their attention.
These ideas are nothing new, but theyu’ve stood the test of time.
Doug
What is the definition of outsourced in this context?
original industry insider
Working with a Russian or Eastern European CRO is akin to me slipping the head waiter an extra $50 to get a choice table at a mediocre but trendy Chicago restaurant. The location is different but the food is still lousy.
SPCSF
What do these costs per patient represent?
Payment to investigators, CRO fees, indirect costs and direct costs of employees at pharma companies? etc?
batty
Just got over this for a lecture to give.
Prepared a nice graph out of the information (of course with copyright) and thank you for the data.
To OII: The main field of CT’s is no more at the US and the food is also not lousy (and you know this :-)). Eastern countries have a rising number of applications due to the increasing number of good working (and standardized) hospitals. Actually the EMA region is momentarily the most productive area, but this will change soon, as many eastern countries are applying to ISO-standards…