CROs driving up drug costs, says report

By Kirsty Barnes

- Last updated on GMT

Related tags: Drug development, Pharmacology, Pharmaceutical industry

Rising contract research organisation (CRO) and investigator fees
are being blamed in a new report as largely contributing to the
skyrocketing cost of new drugs.

According to survey data published by market research firm Cutting Edge Information, big pharma industry executives rated vendor fees 4.1 and investigator fees 4.0 out of 5.0 as having the highest impact on clinical development costs.

Interestingly these two factors beat other more widely recognised cash burning factors including patient recruitment, technology adoption and integration, and clinical investigator recruitment and retention.

Drug development times, especially the clinical phase, have almost tripled in the last four decades - as a result, the average cost of developing a new drug has been skyrocketing and is now said to be as high as $1bn (€0.8bn) and expected to reach $1.9bn by 2013.

Meanwhile, the number of new drugs have not significantly increased despite new technology advances and investments.

In a bid to cope, pharma firms have been increasingly outsourcing many aspects of their drug development and as a result the CRO industry is now thriving, with new companies regularly springing up to take advantage of the business boom.

This latest data would suggest, however, that outsourcing to CROs may no longer be as cost-friendly as it once seemed.

"Pharmaceutical companies are not entirely to blame for the rising cost of prescription drugs in the US,"​ said the report, titled: "Clinical Operations: Accelerating Trials, Allocating Resources and Measuring Performance."

"The fees that CROs and clinical investigators charge for their services during clinical trials are the top two factors driving up drug development costs today."

However, the report's findings are in contrast to the widely held believe that CROs actually help drug companies to reduce R&D development time and cost without sacrificing clinical success rate.

That was certainly the view of Dr Christopher Milne, associate director of the Tufts Center for the Study of Drug Development (CSDD) in Boston, who told delegates at the recent Pabord conference in London that he believes outsourcing is the best option in achieving these objectives.

A previous report involving big pharma appears to agree. According to an earlier Tufts study, during 2003-05, clinical trials for new drug candidates successfully carried out by the ten top selling US drug companies rose by 52 per cent, following a 21 per cent decline from 1993-97 to 1998-02.

Indeed, the adoption of outsourcing certain processes in the R&D process has contributed to success, primarily through the ability to slash clinical trial turn around times, said Milne.

Quantifying the contribution CROs have made to these statistics was the focus for Milne, who pointed towards a pioneering study by Joseph Dimasi.

According to the study, to reduce drug development costs by $100m, drug developers must reduce the current time taken to develop the drug by 18.9 per cent. To reduce costs by $200m, developers would need to reduce time taken by 41.3 per cent.

The study went further. In order to save $100m, developers would expect a clinical success rate reduction of 25.2 - 25.6 per cent - a massive drop considering the success rates are relatively low even with a generous budget.

A $200m reduction would result in a clinical success rate reduction of 30.4 - 31.7 per cent.

Related topics: Clinical Development

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