FDA: Early Stage Drug Development Costs Trigger Higher Drug Costs

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Pharmaceutical Technology, Pharmaceutical Technology-03-02-2018, Volume 42, Issue 3
Pages: 20

Drug companies must consider all factors impacting the cost of drugs, including high costs of early development stages.

In a series of speeches in the latter half of 2017, FDA Commissioner Scott Gottlieb said that high costs and delays in early development efforts are setting the stage for more expensive drugs-and drug program failures. The agency is introducing initiatives to improve drug development efforts, but industry also needs to change preclinical, development, and clinical trial efforts.

While researchers have been able to use science to reduce the time from a breakthrough discovery to the creation of patient therapies, the process for developing such opportunities is more costly, uncertain, and prolonged, especially for new drug development, he said.

“We’re on an unsustainable path, where the cost of drug development is growing enormously, as well as the costs of the new medicines. We need to do something now, to make the entire process less costly and more efficient. Otherwise, we won’t continue to realize the practical benefits of advances in science, in the form of new and better medicines,” he said (1).

The cost of a drug product is based on many factors, Gottlieb noted, including development expenses and the cost of the capital required to develop the drug; the greatest factor in the cost of capital is the risk of failure.

To support an investment with a high risk of failure, investors expect a higher potential return, which contributes to unaffordable drug products. If a drug development program will take a long time to get to market-and pay off-investors will pursue alternative funding opportunities that offer faster returns and fewer risks.

Access to affordable drugs is a public health concern and FDA must “consider all of the factors that impact the cost of new products. That includes the cost of discovery and development,” said Gottlieb (1).

The same policies that the agency pursued to advance the science of drug development and make that process more efficient must be directed toward lowering the cost of developing medicines, he said, and more focused clinical trials can help reduce overall development costs. However, he said, “on a relative basis, in many cases the cost of early stage drug development has grown at a proportionally faster rate than the cost of late-stage drug development” (1).

“By front-loading the cost of drug discovery, the broader biomedical community is making it harder to advance new ideas. It’s economically harder to capitalize the cost of an early-stage drug program, relative to funding a later-stage project. So, frontloading the costs are a recipe for reducing the amount of new ideas that can be advanced,” he said (1).

Gottlieb outlined broad strokes for FDA initiatives that emphasize the modernization of the agency’s science, technology, and information foundations to meet the demands of new therapies in development, including gene and cell therapies.


“FDA’s goal is to make sure that our policies are as scientifically advanced as the products we’re being asked to evaluate. We need to make certain our principles for regulation allow and facilitate beneficial new innovation while making sure that FDA continues to meet its gold standard for safety and effectiveness,” he said (2).

The Center for Drug Evaluation and Research is piloting the creation of a common review memorandum to ensure early, cross-disciplinary interaction among scientists and clinicians who have specialized knowledge in disease that informs product review.

The agency is encouraging early engagement with product developers, especially small biotechnology companies who may not be familiar with the regulatory filing process. Some sponsors sometimes overestimate the amount of information needed to file an investigational new drug application, front-loading the costs of development, he explained. FDA’s review staff may be able to recommend steps to streamline the early development process by eliminating unnecessary preclinical tests or by suggesting optimal pre-clinical or clinical designs, he said.

“Ideally, it would be easier to get products into development, with more of the costs pushed further out, after some of the initial pre-clinical work is already done, and there’s a better understanding of whether a new product has clinical promise,” he said.


1. FDA, Dr. Gottlieb’s Speech to the Regulatory Affairs Professionals Society (RAPS) 2017 Regulatory Conference, Sept. 11, 2017, Washington, DC.
2. FDA, Speech by Commissioner Gottlieb to Research America 2017 National Health Research Forum, Sept. 7, 2017, Washington DC.

Article Details

Pharmaceutical Technology
Vol. 42, No. 3
March 2018
Page: 20


When referring to this article, please cite it as R. Peters, “FDA: Early Stage Drug Development Costs Trigger Higher Drug Costs" Pharmaceutical Technology 42 (3) 2018.