annual state of clinical development costs
DESCRIPTION
Annual State of Clinical Development Costs - Dr. Glass_1-10-12TRANSCRIPT
January 10, 2012 | Philadelphia, PA
The Annual State of Clinical Development Costs
1
Harold Glass PhD
Research Professor, University of the Sciences
Visiting Professor, Kings College London
President, TTC
I. The detail of the industry challenge may be more severe than we appreciate
II. Drug development cost management is increasingly more important:
A. CROs and site costs B. Use of CROs C. Use of new geographies D. Use of Standard of Care payment
Agenda
2
I. The Industry Challenge
3
• R&D productivity and relative sales generation have declined, while spending has increased
Eras of Scarcity and Abundance
4
• Cheaper genetics, now 78% of volume • More aggressive payers, e.g. the German AMMOG law • Rarer science • The average 5th year sales for an individual drug (in
constant 2010 dollars) fell from $575 million in the Era of Abundance to $430 million in the Era of Scarcity, a decline of more than 15%
The Old Model is Under Stress
5
Hewitt, Jeff, David Campell, and Jerry Cacciotti. "Beyond the
Shadow of a Drought." Oliver Wyman. (2011): 1-16. Print.
• Whatever the details of the industry challenge, the demand for prescription drugs will inexorably grow.
• The industry’s basic business model is different: Coke, Tide, Ivory Soap, Harley Davidson, et. al.
• A study noted in a 2011 Oliver Wyman analysis that in 62 of the 127 diseases studied, representing 57% of global pharma sales, headroom for new drugs was limited.
Standard of Care in Disease is High and Rising
6
II. Drug Development Cost Management: Costs
7
• Companies are looking for new ways to achieve better incremental value for money spent on clinical trials • Use of CROs • Greater use of sites in new geographies • Use of Standard of Care to increase
payments to sites but reduce sponsor company costs
Cost Management
8
II. A. Drug Development Cost Management: CROs
and Site Costs
9
• According to TTC estimates CRO spending reached $11.5 billion in 2010.
• Frost and Sullivan estimates that the spending will exceed $20 billion by 2017.
• Some early phase project spending slow downs by affect CRO spending.
• Our data show that there is much room for CRO growth.
CRO Outsourcing
10
In Recent News…
Global clinical grant spending totaled $13.1 billion in 2010, with the US
representing 58% of the total
11
Breakdown: Phase I $0.7 billion Phase II $2.4 billion Phase III $9.2 billion Phase IV $.8 billion
12
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0.90
1.00
United States
United Kingdom
Germany France Poland China India
1.00
0.82
0.69 0.62
0.50
0.36 0.32
Index of Cost Per Visit in Clinical Trials by Country (All TAs, Phase I-IV, Year 2009-2011)
Comparative Cost Per Visit
• The cost in new geographies are increasing the most quickly
Cost Trends
13
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
6%
9%
11% 12%
17%
• Overhead rates remain an issue for many professionals managing clinical studies
US Overhead Rates
14
0%
5%
10%
15%
20%
25%
30%
25th
50th
75th
20% 23% 25%
25% 26% 30%
Actual Overhead
Officially Reported Overhead
• Overhead rates are sometimes a concern in other countries as well, for instance the UK
UK Overhead Rates
15
0%
5%
10%
15%
20%
25%
30%
35%
40%
25th
50th
75th
21% 25%
30%
20%
30%
40%
Actual Overhead
Officially Reported Overhead
Global Clinical Grant Spending
Top Areas of Spending
Top 5 TAs (Phase 1-3) Top 5 TAs (Phase 4)
Oncology 23% Central Nervous System
and Mental Disorders 40%
Central Nervous System and Mental Disorders
22% Cardiovascular Diseases 20%
Cardiovascular Diseases 18% Endocrine 10%
Endocrine 10% Infectious Diseases 7%
Infectious Diseases 7% Genitourinary Diseases 4%
…
Oncology 3% 16
• Generalized linear model with gamma distribution and log link
• GrantPlan® database with 73,174 domestic grants and 44,651 foreign grants from 2009 through present
• Represents 43 CROs and sponsors • Dependent variable – cost per patient • Primary independent variable – whether or not a CRO
negotiated the grant costs • Control variables – number of visits, therapeutic area,
phase, study type, and patient type
CRO vs. Sponsor Grant Spending
17
Methodology
• Gamma distribution • Independence of
observations • Correct link function • Lack of influential
outliers
CRO vs. Sponsor Grant Spending
18
Assumptions
• CRO and Sponsor Company practices differ.
CRO vs. Sponsor Grant Spending
19
Asia Eastern Europe
Latin America
United States
Western Europe
Relative Costs of CRO negotiated budgets
132.9% 106.0% 107.6% 93.4% -
P-Value <0.001 <.002 <0.001 <0.001
Site Startup Admin Costs
20
Percent of Startup Costs Itemized
Phase II 35%
Phase III 35%
Phase II-III 35%
• How often are site startup costs itemized by phase?
Site Startup Admin Costs
21
• How often are site startup costs itemized by TA? Percent of Startup Costs Itemized
Blood Disorders 50% Cardiovascular 39% Central Nervous System 41% Dermatology 46% Digestive System 17% Endocrine and Metabolic Diseases 31% Genitourinary System 32% Infectious Disease 36% Musculoskeletal System and Connective Tissue 53%
Oncology 33% Ophthalmology 3% Pain 54% Respiratory 33% Transplantation 0% All 35%
II. B. Drug Development Cost Management: Use of
CROs
22
• Marketing makes extensive use of advertising agencies
• One hears many of the same criticisms about agency turnover
• Agencies themselves often have relationships with the sponsor with durations no longer than CROs with pharmaceutical companies
Commercial Outsourcing
23
• Yet agency staff are more often a part of the brand team than CROs are with the sponsor company project team
• The agency is measured on increased brand sales
• Making money is an accepted motive
Commercial Outsourcing
24
• Two dimensions of outsourcing • Scope of work
• What will a company be asked to do ranging from a part of one study to a complete study, to a functional area, to major portions of all outsourcing
• Degree of Exclusivity • How many companies will be asked to bid
ranging from
CRO Usage
25
• As with other studies done examining the use of outsourcing, participants in this study thought CRO usage would increase
CRO Usage
Expected Use of CROs in the Next Five Years
Increase
77%
Remain the
Same 19%
Decrease
4%
26
• The “better” companies tend to be smaller and located in Europe, but do not spend more on project oversight
Outsourcing Management
Ability to Manage the CRO Relationship
27
9%
36%
9%
45%
Somewhat
poorer
About the
same
Somewhat
better
Clearly
better
CRO Usage
Percentage of Outsourced/In-Sourced Usage by Clinical Trial Activity
Patient
Enrollment On-Site
Monitoring Data
Management Biometrics Report Writing
Percentage with Some Element of Outsourcing 32 34 38 23 21
Average Percentage Outsourcing Across all studies 32 34 39 23 21 28
CRO Usage
Percentage of Outsourced Usage for Each Clinical Trial Activity by Size of R&D Operations
Patient
Enrollment On-Site
Monitoring Data
Management Bioetrics Report Writing
Major Company R&D Expenditures Equal to or over US $2 billion 21 24 32 12 12
Medium R&D expenditures equal to or over US $7-to less than US $2 billion 50 60 49 45 43
Small R&D expenditures under US $7 billion 70 70 59 42 43 29
US Site Preferences • What type of organization do you prefer to run your
trials? Many sites are indifferent. This is even more true outside the US.
Total Office Based Academic
Medical Center Hospital
Pharmaceutical Company
34% 32% 39% 36%
No Preference 43% 44% 40% 39%
CRO 23% 23% 21% 25%
30
II. C. Drug Development Cost Management: Use of
New Geographies
31
• Factor analysis results • Medical innovation
• Financial considerations
• Study specific issues
Reasons for Participating in a Clinical Trial
32
Medical Innovation
Investigator Survey Results – Medical Innovation
US Investigators LA Investigators
Asia Pacific Investigators
Individual survey items Rated very important
Rated very important
Rated very important
The opportunity to work with a potential new therapeutic option for subjects who have not responded to available treatment, or for whom there are no approved treatments 87% 85% 74%
The chance to take part in innovation research, whether or not the research specifically relates to my patients 59% 79% 54%
The opportunity to share with other physicians outside the clinical trial what is learned from my participation in the clinical trial 49% 71% 49%
The opportunity to interact with other physicians involved in the clinical trial 38% 70% 52%
• Investigators around the world take part in medical innovation
Financial Considerations
• Finance is important but second to innovation
Investigator Survey Results - Financial Considerations
US Investigators
LA Investigators
Asia Pacific Investigators
Individual survey items Rated very important
Rated very important
Rated very important
The prospect of additional studies from the sponsoring pharmaceutical company 47% 53% 29%
To supplement the revenues/income of my practice/institutions/department 43% 45% 26%
The amount of money required by my site to start the study until we receive payment from the organization running the study 30% 34% 23%
34
Study Specific Considerations
• These considerations vary by geography Investigator Survey Results - Study Specific Considerations
US Investigators LA Investigators
Asia Pacific Investigators
Individual survey items Rated very important
Rated very important
Rated very important
My own site experience working in the specific indication of the potential study 70% 82% 61%
My experience with the sponsoring company or CRO on previous work I have done with that company or CRO 43% 34% 37%
My level of confidence in other drugs already on the market from that company 28% 55% 34%
The sponsoring pharmaceutical company, rather than a CRO, is actually running the day-to-day operations of the study 19% 61% 23%
A large, multinational pharmaceutical company is sponsoring the study 19% 47% 28%
35
II. D. Drug Development Cost Management:
Standard of Care
36
• Based upon a global study of 2,300 sites, there is no evidence that paying above the industry median improves data quality, reduces study completion time or improves site performance • This is true at the study level
• And with one exception at the site level
Payment Practices
37
• We conducted a web-based survey of active US sites, supplimented by follow-up telephone and on-site interviews
SOC Site Survey
38
0 50 100 150 200 250 300 350 400
Other
Academic Institution
Hospital
Clinic
Private Practice
Respondent Site Type
Non-Dedicated Research Site
Dedicated Research Site
• These are sites which conduct a large number of clinical trials
SOC Site Survey
39
0
50
100
150
200
250
0 - 5 6 - 10
11 - 15 16 - 20
21 or more
Within the past two years, how many clinical trials did your organization take part in?
• Many sites are regularly using coverage analysis for clinical trial budgets
SOC Site Survey
40
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
All Sites
Dedicated Clinical Research Sites Academic Institutions
79 82 86
Percent of sites that conduct coverage analyses
• Many sites already submit claims for patients in clinical trials
SOC Site Survey
41
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
All Sites
Dedicated Clinical Research Sites Academic Institutions
65 65 70
Percent of sites that regularly bill 3rd party payers for clinical trials
• Sites routinely perform coverage analysis in many therapeutic areas
SOC Site Survey
42
0% 10%
20% 30%
40% 50%
60% 70%
80% 90%
Digestive Systems
Genitourinary System
Dermatology
Pharmacokinetics
Respiratory
CNS
Devices and Diagnostics
Ophthalmology
Musculoskeletal and …
Infectious Disease
Blood Disorders
Cardiovascular
Transplantation
Oncology
For investigators working in specific TAs, how often do they routinely perform coverage analyses in that TA?
• The main reason sites do not do a coverage analysis is because they are not asked.
SOC Site Survey
43
0% 10%
20% 30%
40% 50%
It will inhibit patient recruitment
The potential saving do not …
It is too time consuming
It will delay the negotiation …
It is too difficult to determine …
The sponsor does not require it
What is the main reason a site does not conduct coverage analyses?
• Third party payers pay faster than pharmaceutical companies
SOC Site Survey
44
Average Number of Weeks Until Payment
Pharmaceutical Companies
Third Party Payers
16.2 10.8
• Outside of oncology some companies are reluctant to achieve the cost savings possible through the incorporation of Standard of Care • Some worry about slower site start-up times,
although there is no evidence of this. • Nearly two-thirds of respondents feel the
process is too time-consuming • Most express the need for more data.
SOC Usage
45
• There is confusion about Standard of Care from a scientific perspective and from a clinical grant management point of view
• An analysis of industry protocols demonstrated that over 20% of grant payments can still be covered by Standard of Care
SOC Usage
46
• Many of the research sites are used to applying Standard of Care • NIH – requires SOC • Many states require 3rd party payments for
some or all of FDA approved clinical trials • Virtually every clinical site routinelly processes
claims with 3rd party insurers • Resistance is often greater within the sponsor
company than at the sites
Already in Place…
47
SOC Analysis – Type II Diabetes Study
28431754DIA3004_8DEC09 Study Duration 66 Weeks
Number of Visits 17
Number of Patients ~500
Number of Procedures 17
Number of SOC Procedures 8
Number of Expensive Procedures 0
Total Cost for Procedures Per Patient before SOC (w/ overhead) $6,060 USD
Total Cost for Procedures Per Patient after SOC (w/ overhead) $4,276 USD
Total SOC Savings Per Patient $1,785 USD
Total SOC Savings for All Patients $892,500 USD
Total % of SOC Savings 29% 48
TTC Corporate Headquarters 4548 Market Street Suite M-20 Philadelphia, PA 19139 (215) 243-4103 (Tel) (215) 895-4001 (Fax)
TTC European Headquarters 136 Delaware Road London, W9 2LL UK 44 (0)7792 145 831 (Tel) 44 (0)2086 584 033 (Fax)
Visit our website @ www.ttc-llc.com
Thank You For Your Participation!
49