Clinical research is indisputably expensive. Plenty of small life science companies go bankrupt discovering that. The real question is how expensive trials are.

Estimates of clinical research costs almost always draw upon just two sources: the Bain consulting firm or the Tufts Center for the Study of Drug Development, both of which have taken on a Rorschach-like importance. Whether you find any estimates of clinical research costs credible depends, in large part, on what you believe should be included in the tally and where you work. Both sets of numbers are politically charged, and neither has been updated recently.

The Chart

Now there is a new effort to determine the cost of developing new drugs. The effort is being funded by the U.S. National Science Foundation and run out of the National Bureau for Economic Research (NBER). The project will study the trends in the costs of industry-based clinical trials. The NBER has produced a large number of Nobel prize winners in economics, and generally includes the most eminent academic minds in the field.

The lead economist on the effort is Iain Cockburn, a professor at Boston University's business school. He has specialized in C-suite R&D strategy, the life sciences and intellectual property. Here is some of his peer-reviewed work.

Cockburn probably knows that the industry has memorized, after repeated viewing at every presentation at every event, the same obligatory chart. It has two intersecting lines: one with rising research costs, the other with a falling number of new drugs. Cockburn hopes to confirm that the first line is rising, and then understand why. He's not focusing on the second line.

High Level Look

"The government is very interested in getting a handle on R&D more broadly," Cockburn says. "If the total budget for the industry goes up every year, is it that [research] is just getting more expensive, and we're not doing any more [trials]? Or is that we are doing a lot more at the same price? Being able to answer that question is very important."

His research will provide a high-level look at the 1995-2005 time period; there will not be a hot-off-the-press quality to any of his findings. All of the underlying data have been anonymized so that no individual clinical program or sponsor firm will be assessed separately.

Cockburn sounds hopeful that clinical research is moving in the same direction as other industries: namely, that IT and globalization have helped keep a lid on costs. "We kind of hope the productivity has gone up, with the benefit of IT and instrumentation," Cockburn says. "We would like to believe you can get more procedures done." (Whether global trials are so unimaginably complex that they can't possibly be done on time was the topic of this series of articles on ClinPage last autumn.)d9A2t49mkex

Geographical Shift

Even though the economic research is at a high level of clinical development, Cockburn will attempt to zero in on the most profound aspects of the industry's economic predicament. Are trials becoming more difficult? Are there more tasks? What types of trials are contract research organizations (CRO) being used for? As Cockburn explains: "Is it that more is being done? Or is it that the price per unit is going up?"

Cockburn says the study won't examine specific elements of clinical trials such as investigator fees. "The overhead components—auditing, monitoring, data management—we're not focusing on that," he notes. 

Nor will the initial publication from his effort have highly specific cost figures comparing Singapore, say, to Argentina. But Cockburn is hoping to understand a more strategic question: whether cost savings are achieved by moving research offshore. "Are there cost savings or additional costs associated with multicenter trials? The notion that it's cheaper in South Asia or Eastern Europe may not stand up," he says.

Medidata Data

By now many readers are wondering where Cockburn and his colleagues are getting their data. Medidata, the electronic data capture firm, owns several databases of clinical trial costs and grants. In all, the firm has 15 million data points based on 27,000 protocols, 8,000 CRO contracts and 250,000 site grants.

"We're very fortunate to get access to this data," says Cockburn. "It's a very large and rich database. It goes back a long way in time. I will be surprised in the end if it's not representative of the activity in the industry as a whole." There's more information about one of Medidata's products here.

Cockburn sounds aware of but not intimidated by the politically sensitive aspect of the project, given that the industry and its critics may both attempt to wield any juicy findings to their own ends. He's eager to publish the first installment of his work before the end of the year.