One of the most expensive passages in the long road that a new drug must take to reach the marketplace is the series of mandatory clinical trials. This past summer a "life-sciences advisory company," Value of Insight Consulting, based in Fort Lauderdale, Florida, provided a close look at the factors that make clinical trials so expensive–and so risky.
"Optimizing Global Clinical Trials," by Todd Clark, reports on the details of a complex model built with Monte Carlo software that was intended to help a pharmaceutical developer working out product strategy for clinical trials. The company’s goal was to choose a country from which to launch trials for a specific drug for a specific kind of cancer. Because the primary factor in locating clinical trials is probable patient enrollment, the report provides country-by-country risk assessments for 54 factors ranging from epidemiological data to satisfaction with existing cancer therapies.
For myself, having no idea how clinic trials are organized, Clark’s report is eye-opening. It gives a very clear picture of the constraints under which pharmaceutical development takes place and of the huge budgets behind the process–which helps to justify the high costs of drugs. Risk analysis should have a very happy home in this industry because the value-at-risk is very high and the probabilities are pretty sorry. As Clark reports, “On average, drug sponsors can spend over 13 years studying the benefits and risks of a new compound, and several hundred millions of dollars completing these studies before seeking FDA’s approval. About 1 out of every 10,000 chemical compounds initially tested for their potential as
new medicines is found safe and effective. . . ."
Amazingly enough in light of all this, Clark reports that the number of clinical trials is growing. It doesn’t take any statistical analysis to derive from this last fact that when a drug makes it to market and makes it big there, the return on investment is a whopper.