“FDA is relying on 20th century regulatory science to evaluate 21st century medical products,” declared Food and Drug Administration Commissioner (FDA) Margaret Hamburg back in October 2010. One result: As biotech and medical discoveries accelerate, the number of new drugs approved by the agency remains basically flat. 

2010 study in the Journal of Clinical Oncology by researchers from the M.D. Anderson Cancer Center in Houston, Texas found that the time from drug discovery to marketing increased from eight years in 1960 to 12 to 15 years in 2010. Five years of this increase results from new regulations boosting the lengths and costs of clinical trials. The regulators aim to prevent cancer patients from dying from toxic new drugs. However, the cancer researchers calculate that the delays caused by requirements for lengthier trials have instead resulted in the loss of 300,000 patient life-years while saving only 16 life-years. If true, this is a scandal.

How much higher are the costs of getting a new drug through the FDA gantlet? A new study, "Stifling New Cures: The True Cost of Lengthy Clinical Drug Trials," by Manhattan Institute senior fellow Avik Roy points out that in 1975 the pharmaceutical industry spent about $100 million on research and development (R&D) before getting a new drug approved by the FDA. By 1987, that had tripled to $300 million and that has since quadrupled to $1.3 billion. But even these figures may be too low. Roy cites calculations done by Matthew Herper of Forbes, who divides up the R&D spending of $802 billion by 12 big pharma companies since 1997 by the 139 drugs that have since gotten FDA approval to yield costs of $5.8 billion per drug.

Currently, new pharmaceuticals typically go through Phase I trials using fewer than 100 patients to get preliminary information on the drug’s safety. Phase II trials involve a few hundred subjects and further evaluate a new drug’s safety and efficacy. Phase III trials enroll thousands of patients to see how well it works compared to either placebo and/or other therapies and to look for bad side effects.

“The biggest driver of this phenomenal increase has been the regulatory process governing Phase III clinical trials of new pharmaceuticals on on human volunteers,” notes Roy. Between 1999 and 2005, clinical trials saw average increases in trial procedures by 65 percent, staff work by 67 percent, and length by 70 percent.

Not only do FDA demands for bigger Phase III clinical trials delay the introduction of effective new medicines, they dramatically boost costs for bringing them to market. Roy acknowledges that pre-clinical research that aims to identify promising therapeutic compounds absorbs 28 percent of the R&D budgets of pharmaceutical companies. Setting those discovery costs aside, Roy calculates that the Phase III trials “typically represent 90 percent or more of the cost of developing an individual drug all the way from laboratory to market.” 

Roy’s analysis focuses on four therapeutic areas—obesity, diabetes, stroke, and heart ailments—plus “orphan diseases.” Unlike the first three, which are chronic conditions that afflict millions, orphan diseases afflict relatively small numbers of people. His analysis looks at 12 major new drugs across these categories and finds 90 percent of their entire development costs are the result of Phase III trials. Roy notes that the FDA is much more reluctant to approve a new drug that will be taken by millions than one that only a few thousand patients will need. So, orphan drugs can get by with smaller trials and get approved with greater speed. Consequently, pharmaceutical companies have been shifting their research priorities from drugs that could help millions to those that treat thousands. 

Roy’s solution is to permit drug companies whose new medicines have passed Phase I and Phase II trials to market them conditionally to physicians and patients. “Under conditional approval, patients in most need can benefit from a new drug, and companies can generate a modest amount of revenue that can help fund Phase III trials for full approval,” argues Roy. He points out that such a conditional approval process resembles the agency’s current accelerated approval process. The agency accelerates approval when a Phase II study is “reasonably likely to predict a real clinical benefit.” Say, when a cancer drug shrinks tumors or an HIV treatment reduces the viral loads of patients.

Speeding up drug approvals saves lives. A 2005 National Bureau of Economic Research study found that, on balance, the faster FDA drug approvals made possible by new funding legislation passed in the 1990s saved far more lives than they endangered. In fact, new drugs saved up to 310,000 life-years compared to 55,000 life-years possibly lost to the side effects of drugs that were eventually withdrawn from the market.

Conditional approval would accelerate access to more drugs, especially drugs that aim to treat the common diseases that afflict more of us. Not only would conditional approval get drugs faster to sick people willing to take a risk on a new treatment, sales of the drug would help fund the Phase III trials needed for full approval. Roy gives an example of a drug whose annual market would be $2 billion annually if it were shown to be effective. Perhaps the sickest 10 percent would decide to spend their own money to take the conditionally approved drug yielding $200 million that can pay for the full Phase III drug trial. This process reduces the financial risks faced by drugmakers and encourages them to test and bring even more therapies to market. Risk-averse physicians and patients can wait until the results of the Phase III trials are in.

Roy uses the accelerated approval of the cancer drug Avastin as an example of how this could work for other drugs. In this case, the FDA accelerated the approval of Avastin in 2008 as a treatment for breast cancer. However, clinical trial results eventually found that patients taking the drug did not live longer or have a better quality of life. The FDA withdrew its approval for this use in 2011. Roy points out that the drug is still on the market for other indications which means that physicians and patients who believe that Avastin can be useful for treating breast cancer can still access it. Of course, both private insurance companies and federal health insurance schemes are unlikely to pay for treatments that clinical trials find to be ineffective.

Roy is not alone in his advocacy for conditional approval. In a February 14 Wall Street Journal op-ed, former FDA Commissioner Andrew von Eschenbach argued that “after proof of concept and safety testing, the [new therapeutic] product could be approved for marketing with every eligible patient entered in a registry so the company and the FDA can establish efficacy through post-market studies.” Just such a system could be incubating in the FDA’s new Sentinel computer tracking system that looks for side effects in drugs once they’ve gone onto the market. Last year, some researchers asserted that the smoking cessation drug Chantix increased the risk of heart attacks. Based on its Sentinel analysis of the relevant databases, the FDA concluded this year that Chantix does not boost the risk of heart attacks.

Given the rapid evolution of bioinformatics, it might one day be possible to roll out most new pharmaceuticals after the equivalent of Phase II trials. Since medical and prescribing records will be online, drug researchers could compare people who choose take conditionally approved new drugs with a population that does not, matched for various confounders such as age, other medical conditions, behaviors, etc. Essentially, the health care system itself might become a gigantic Phase III trial for new treatments.

Delaying access to new drugs kills people. As Competitive Enterprise Institute general counsel Sam Kazman has observed [PDF], “Whenever FDA announces its approval of a major new drug or device, the question that needs to be asked is: If this drug will start saving lives tomorrow, then how many people died yesterday waiting for the agency to act?” Roy’s proposal is a good first step toward moving the drug approval process into the 21st century. 

Ronald Bailey is Reason's science correspondent. His book Liberation Biology: The Scientific and Moral Case for the Biotech Revolution is now available from Prometheus Books