The Cost for a Drug, During the Clinical Trial Phase

While there is no ‘Run for the Roses’ in Churchill Downs’ Kentucky Derby this Spring, there is a major race in the world of drugs. And the stakes are much higher than any trophy.

Since the unforgiving COVID-19 began its march across the planet, all eyes have been riveted to the media; people are anxiously waiting for a silver bullet cure. And they want it delivered at warp speed. Epidemiologists and pharmaceutical companies around the world are scrambling to identify an existing drug that could safely and effectively treat patients suffering fr om the infection. A drug that has already been approved by the FDA and is ‘on the shelf’ would certainly accelerate the recovery process – physically and economically. Otherwise, researchers will need to start from scratch, and the growing death count reminds us that time is not on our side. The mandatory 3 Phases of experimental new drug tests move at glacial speed; a decade can pass before it wins FDA approval.

Examining the Costs

Due to COVID-19, the world’s population is essentially getting a crash course on the entire process – including clinical trials, placebos, etc. In addition to the timeline, there’s the exorbitant price tag. Johns Hopkins reports that the approximate cost of developing a new drug in recent years has been between $2 to $3 billion. It is important to keep in mind that not all drugs make it through all the phases, causing the return on investment to crater.

Not all drugs incur the same costs along the pathway to approval; multiple factors cause the costs to vary, including how expensive it is to conduct studies and trials. Cancer and immunology drugs are at the higher end of the pricing spectrum.

Enormous Costs of Missing the Mark

In the world of science, not every hypothesis is a winner – in any field of research. This is especially true with drug experiments. As many as 90% of drugs tested prove to be unsafe or ineffective and never reach the market. A team at the London School of Economics calculated the cost of failed research. They assumed a 14% success rate of experimental drugs entering Phase 1 clinical trials, and 35% and 59% entering Phases 2 and 3, respectively.

Those that don’t make the cut are tossed into a graveyard filled with other failed trials. These R&D failures create multi-pronged pain points. The money spent on those that failed is money that was not spent on drugs that could have possibly delivered favorable outcomes – and a healthy return on investment. With such staggering losses, it is no surprise that trial and errors drive costs up dramatically.

AI is Becoming a Major Biopharma Player

Even before COVID-19 became a household name, the healthcare industry was expanding its technology by integrating it with AI. This pandemic is a reminder that every tick of the clock is critical in discovering life-saving treatment. Thus, the health ecosystem is accelerating its investment in AI solutions, which will allow pharmaceuticals to develop more precise medicine. Further, it will slash the time between screening to preclinical testing, as it can rapidly identify and screen molecules and compounds. Even a 10% accuracy improvement in predicting which drugs can advance to the first phase could save lives where no cure currently exists. Additionally, it could shave off billions of dollars in drug development costs.

The search to find new ways to improve a drug’s effectiveness, while cutting time and costs, is continuous; this pandemic will subside, but another disease will emerge. The population will once again, look to the healthcare industry for a speedy prescription.