Strategies for controlling increasing trial expenses in the pharmaceutical industry

The pharmaceutical industry has been struggling to manage its escalating clinical trial costs in recent years as prices keep climbing, forcing companies to find ways to control their expenses. Following a period of financial prosperity in 2021, the sector experienced a downturn in investment over the subsequent three years. Meanwhile, the cost of research has been steadily increasing, creating a challenging situation for companies that have yet to bring a product to market.

Data from GlobalData’s Trial Cost Estimates model reveals that both single-country and multi-country trial costs have been on the rise every year from 2014 to 2024. This upward trend in expenses, coupled with various global political changes, indicates that costs are likely to continue increasing, prompting the industry to rethink its strategies for managing trial expenses effectively.

A critical factor contributing to the escalating costs of clinical trials is the expenses related to personnel. According to Jeff Fischer, CEO of Longhorn Vaccines & Diagnostics, the costs associated with contract research organizations (CROs) are principally driven by the rising wages of staff. In an effort to mitigate these expenses, Longhorn has shifted its focus towards pre-clinical and Investigational New Drug (IND) studies to conduct more in-house research and minimize the number of patients and data required. Fischer emphasizes the importance of gaining a thorough understanding of a drug’s effects and identifying the ideal patient population before advancing to clinical trials as a means of controlling costs.

While such strategies can help reduce expenditures in Phase I and Phase II studies, their impact on Phase III trials remains limited. Fischer acknowledges that Longhorn’s clinical trials need to encompass all patient groups to ensure a comprehensive evaluation of safety signals and efficacy to prevent post-approval issues such as the clotting concerns observed with Covid-19 vaccines. Consequently, conducting large-scale studies with specific therapeutics becomes an unavoidable necessity to meet regulatory requirements and ensure patient safety.

In addition to climbing personnel costs, Jason Jones, the global business development lead for Cellular Origins, notes that material costs are also on the rise. Cellular Origins specializes in technology for the efficient manufacturing of cell and gene therapies and envisions a future where companies are more accommodating and conducive towards sponsors to expedite the approval of therapies. While the price hikes are not confined to pharmaceuticals or raw materials, there has been a surge in costs associated with the equipment and devices essential for manufacturing such therapies. Jones suggests that leveraging automation in manufacturing processes could potentially drive down expenses in the long run.

Cell and gene therapies, albeit less costly than large-scale studies for prevalent diseases due to their limited patient pool and reliance on real-world data, necessitate the expertise of highly trained personnel. The logistics involved in coordinating patients at hospitals, particularly with autologous therapies, and transporting frozen cell products worldwide for manufacturing and subsequent delivery back to patients add a layer of complexity to the overall process.

In conclusion, the pharmaceutical industry is facing a significant challenge in managing the escalating costs of clinical trials. By addressing the drivers of rising expenses such as personnel and material costs, and reevaluating research strategies to optimize outcomes and minimize risks, companies can better navigate the shifting landscape of clinical trials and maintain their competitive edge in the market.