Impact of clinical development on oncology drug prices
In our oncology focus month, Ryan McGuire takes a look at the impact of clinical development on cancer drug prices and the factors involved in the current improved success rate for cancer treatments.
High-priced prescription drugs have been making headlines for years, but soaring insurance premiums have put drug costs back in the spotlight. Currently there are six approved drugs in the US with wholesale price tags above $300,000. Although only one of them is a cancer treatment — Allos Therapeutics’ Folotyn — cancer drugs are at the heart of the pricing debate.
Many cancer treatments today test the $100,000-per-year cost threshold. To the general public, these prices seem difficult to justify, but executives from nearly every pharmaceutical company consistently cite the same three justifications for high costs:
1) Bringing new medicines to market requires enormous investment of clinical development resources.
2) Companies face a limited amount of time to recoup R&D costs in market exclusivity periods that usually last between 5 and 12 years.
3) Uncommon diseases have smaller patient pools, meaning fewer potential customers.
For the sake of this article, we can assume that the economic forces behind reasons 2 and 3 make profitable cancer drug development an extremely difficult challenge. The simple truth is that far more drug companies lose money each year compared to the select few that are able to generate profits. Using data from a recent study, published in a report titled “Oncology Clinical Trials: Drug Development Resources and Case Studies”, this article will take a look at resource benchmarks for 29 different oncology trials to examine the clinical investment needed to develop cancer drugs1.
Based on the report’s trial data, it costs a combined average of $56.3 million to usher an oncology treatment through a single phase 1, phase 2 and phase 3 clinical trial. Compounding the true cost of development is the eight years it takes on average to pass through all three phases. These data do not include pre-clinical testing, additional clinical testing or regulatory filing — events that obviously add to both time and cost of development.
The high cost of oncology trials
Total costs for oncology drug trials can be staggeringly high, but they are also highly variable — dependent on cost drivers such as number of patients and required medical procedures in the protocol. The data illustrate high cost variability, with cancer trial price tags ranging from $400,000 for a small, healthy volunteer phase 1 trial up to $88 million for a large multicenter phase 3 melanoma trial. The average total cost for phase 1, phase 2 and phase 3 trials in the report is $4.4 million, $10.2 million and $41.7 million, respectively1.
When executives point to high clinical development costs affecting pricing decisions, this is what they are talking about. But while total cost figures are entertaining to look at, they do not provide much insight into the operations of any given clinical trial. It can also be a fool’s game trying to compare trials based on total cost alone — other factors are always in play, and they contribute to the complexity of any clinical study.
The number one driver of a clinical trial’s overall cost, for example, is patient enrollment. Of the 29 oncology trials examined in the study, there was a correlation coefficient of .84 between patient enrollment and total cost (where 0.5 = weak correlation, 0.8 = strong correlation and 1.0 = perfect correlation). In order to more accurately compare trials of different sizes, we rely on per-patient costs — calculated by dividing total trial cost by the number of patients enrolled — as the go-to operations benchmark.
“Total costs for oncology drug trials can be staggeringly high, but they are also highly variable…”
With the number of patients factored into the equation, the average cost per patient does not rise exponentially through the different phases of development as was the case with total trial cost. Not surprisingly, phase 1 oncology trials experienced the lowest average per-patient costs of all three phases at $45,200. The low number of required patients in phase 1 compared to later stages limits the number of investigator sites and operations staff needed — which lowers per-patient costs in the process. In addition, the potential for phase 1 protocols to include safety testing on healthy volunteers lowers per-patient costs. Compared to the medical procedures cancer patients must endure in later-stage trials, toxicology and pharmacokinetic laboratory work done on phase 1 healthy volunteers typically costs much less.
On the surface, phase 3 trials are much more expensive than phase 2 trials. On a total cost basis, phase 3 trials ($41.7 million) stand four times higher than the average cost for phase 2 trials ($10.2 million). But much of those cost differences are the result of higher patient enrollment during phase 3. On a per-patient basis, phase 3 trials in the study cost $74,800 — only 7% higher than phase 2 trials ($69,700).
In oncology trials, required medical procedures and primary endpoints used in proof of concept studies do not vary greatly from those required in confirmatory, or pivotal, studies. The rise in average per-patient cost between phase 2 trials and phase 3 trials totals $5,100. This growth is largely the result of increased staffing levels and other clinical infrastructure adjustments. Activities such as data management and clinical trial supply also undergo jumps to accommodate the 400% average increase in patient enrollment from phase 2 to phase 3.
The long road through oncology development
Money is only one of the scarce resources a company needs to advance its investigational product through to regulatory approval. The other resource, sometimes forgotten in discussions of the industry, is time. Everything about clinical development is a race against time. Patents issued for investigational drugs last only 20 years. The longer it takes to bring a drug to market, the less time a company has to recoup investment costs without the interference of generic competition. Drug development is also a race against competition. Being the first to market in a new drug class can mean a great deal to the commercial success of a product.
“Everything about clinical development is a race against time.”
The complex nature of modern-day cancer treatments not only adds to trial costs but also trial duration. Assay development and the initiation of centralized clinical trial supply can delay trial start up, while required medical procedures in the protocol like diagnostics, biopsies and body scans can increase patient enrollment times. It is also quite common for cancer trials to require MRIs at regular intervals to assess endpoints like tumor shrinkage. These follow-up visits add months and sometimes years onto total trial duration.
Average durations for phase 1 and phase 2 oncology trials were fairly similar — 27.5 months and 26.1 months, respectively. In other therapeutic areas, a phase 2, proof-of-concept trial can easily be two or three times longer than its phase 1 counterpart. But regulations permit the use of actual patients in a phase 1 trial after a basic safety profile has been established in disease areas with unmet clinical needs. That explains why in some cases phase 1 oncology trials take longer than phase 2 trials. Essentially, clinical managers add additional patient arms to test for both safety and efficacy during phase 1.
Phase 3 trials have an average duration of 41.3 months, 58% longer than the average phase 2 trial. The biggest hurdle for clinical managers to overcome in pase 3 is patient recruitment. Pivotal trials require large numbers of patients to achieve statistically significant results on which the company can make efficacy claims. For rare types of cancer, patients can be difficult to find and enrollment often slows to a crawl. One of the phase 3 trials in CEI’s study extended enrollment an additional 21 months, for a total duration of 81 months, but still fell 75 patients short of its recruitment goal of 500 patients.
Improved success rate for cancer drugs
One way to keep prescription costs down is to increase clinical success rates. Inevitably a drug is priced not only to recoup its own development costs but also to pay for the failed drug programs that never reach the market. The fewer clinical failures a company has, the lower it can comfortably price its marketed drugs.
“The good news is that all this time and money is not going to waste — the pharmaceutical industry is getting better at developing oncology treatments.”
The good news is that all this time and money is not going to waste — the pharmaceutical industry is getting better at developing oncology treatments. A new study from the Tufts Center for the Study of Drug Development found that clinical success rates for new cancer drugs steadily grew in a 12-year period spanning the mid-90 through the mid-2000’s. In that time, the chances of an investigational cancer treatment gaining marketing approval started at only 9.9% but soon doubled to 19.8%.
Certainly, there are many factors that have influenced the clinical success rate of cancer products, but the willingness to invest in R&D certainly plays a significant role. More importantly, though, it indicates that as clinical development costs rise, pharmaceutical companies are getting smarter with their money; in other words, they are betting on more Secretariats, Orbs and Funny Cides as opposed to also-rans. Although it is not a silver-bullet, improved clinical candidate selection can greatly impact the drug prices of the future. This factor — along with many others — will continue to contribute to the myriad forces driving costs in oncology clinical development.
About the author:
Ryan McGuire is a proud graduate of Rutgers University with a degree in Finance. Born and raised in New Jersey, Ryan moved to North Carolina in 2008 to start a new career with the pharmaceutical research benchmarking firm Cutting Edge Information.
Since joining, CEI Ryan as led research projects in topic areas such as: medical affairs, digital marketing, clinical operations, patient recruitment, lifecycle management, investigator-initiated trials (IITs), medical publications and medical information. Ryan earned the award for research report of the year at CEI in both 2010 and 2011 – recognizing his role as project leader for the highest selling report in that calendar year.
What factors influence the clinical success rate of an oncology treatment?