IDEAS home Printed from https://ideas.repec.org/a/spr/hecrev/v11y2021i1d10.1186_s13561-021-00302-6.html
   My bibliography  Save this article

Can adaptive clinical trials help to solve the productivity crisis of the pharmaceutical industry? - a scenario analysis

Author

Listed:
  • Jörg Mahlich

    (Health Economics and Outcomes Research, Janssen, Pharmaceutical Companies of Johnson & Johnson
    University of Düsseldorf)

  • Arne Bartol

    (Government Affairs, Janssen, Pharmaceutical Companies of Johnson & Johnson)

  • Srirangan Dheban

    (Health Economics and Outcomes Research, Janssen, Pharmaceutical Companies of Johnson & Johnson)

Abstract

Aim The productivity of pharmaceutical research and development (R&D) investments is declining due to high failure rates in clinical research. Recently, the US Food and Drug Administration (FDA) acknowledged that adaptive designs can make drug development more efficient and less costly. Our objective is to simulate cost-saving effects and estimate the impact on global R&D expenditures as well as possible outcomes measured in life-years gained. Methods Based on published drug-development cost data we calculate potential cost savings derived from variations in clinical success rates that result from employing adaptive trial designs. In a subsequent step we estimate how those cost changes affect global R&D expenditures and outcomes. Results Our calculations indicate that an adaptive trial design with the potential to increase success rates of clinical trials by 4 percentage points could lower development costs for a new drug from 2.6 to 2.2bn USD. On a global scale, this cost reduction would free up an additional 4.2bn USD for investment into pharmaceutical R&D to bring about drug innovations that in turn would be capable of generating up to 3.5 million life-years. Conclusion New clinical trial designs are crucial to improving productivity within the pharmaceutical industry and to fostering a sustainable health-care system.

Suggested Citation

  • Jörg Mahlich & Arne Bartol & Srirangan Dheban, 2021. "Can adaptive clinical trials help to solve the productivity crisis of the pharmaceutical industry? - a scenario analysis," Health Economics Review, Springer, vol. 11(1), pages 1-10, December.
  • Handle: RePEc:spr:hecrev:v:11:y:2021:i:1:d:10.1186_s13561-021-00302-6
    DOI: 10.1186/s13561-021-00302-6
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1186/s13561-021-00302-6
    File Function: Abstract
    Download Restriction: no

    File URL: https://libkey.io/10.1186/s13561-021-00302-6?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Hartwig, Jochen, 2008. "What drives health care expenditure?--Baumol's model of 'unbalanced growth' revisited," Journal of Health Economics, Elsevier, vol. 27(3), pages 603-623, May.
    2. Fabio Pammolli & Massimo Riccaboni & Laura Magazzini, 2010. "The productivity crisis in pharmaceutical R&D," Working Papers 06/2010, University of Verona, Department of Economics.
    3. Stephan Eger & Jörg Mahlich, 2014. "Pharmaceutical regulation in Europe and its impact on corporate R&D," Health Economics Review, Springer, vol. 4(1), pages 1-9, December.
    4. Wiggins, Steven N, 1981. "Product Quality Regulation and New Drug Introductions: Some New Evidence from the 1970s," The Review of Economics and Statistics, MIT Press, vol. 63(4), pages 615-619, November.
    5. Daron Acemoglu & David Autor & David Dorn & Gordon H. Hanson & Brendan Price, 2016. "Import Competition and the Great US Employment Sag of the 2000s," Journal of Labor Economics, University of Chicago Press, vol. 34(S1), pages 141-198.
    6. Olson, Mary K., 2004. "Are novel drugs more risky for patients than less novel drugs?," Journal of Health Economics, Elsevier, vol. 23(6), pages 1135-1158, November.
    7. Blind, Knut & Petersen, Sören S. & Riillo, Cesare A.F., 2017. "The impact of standards and regulation on innovation in uncertain markets," Research Policy, Elsevier, vol. 46(1), pages 249-264.
    8. Peltzman, Sam, 1973. "An Evaluation of Consumer Protection Legislation: The 1962 Drug Amendments," Journal of Political Economy, University of Chicago Press, vol. 81(5), pages 1049-1091, Sept.-Oct.
    9. John Vernon, 2003. "The relationship between price regulation and pharmaceutical profit margins," Applied Economics Letters, Taylor & Francis Journals, vol. 10(8), pages 467-470.
    10. Jörg Mahlich & B. Burcin Yurtoglu, 2019. "Returns on different types of investment in the global pharmaceutical industry," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 40(1), pages 16-36, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Chris Sampson’s journal round-up for 8th March 2021
      by Chris Sampson in The Academic Health Economists' Blog on 2021-03-08 12:00:01

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Patricia M. Danzon & Eric L. Keuffel, 2014. "Regulation of the Pharmaceutical-Biotechnology Industry," NBER Chapters, in: Economic Regulation and Its Reform: What Have We Learned?, pages 407-484, National Bureau of Economic Research, Inc.
    2. Mary Olson, 2013. "Eliminating the U.S. drug lag: Implications for drug safety," Journal of Risk and Uncertainty, Springer, vol. 47(1), pages 1-30, August.
    3. Anna Chorniy & James Bailey & Abdulkadir Civan & Michael Maloney, 2021. "Regulatory review time and pharmaceutical research and development," Health Economics, John Wiley & Sons, Ltd., vol. 30(1), pages 113-128, January.
    4. Dani Rodrik, 2018. "Populism and the economics of globalization," Journal of International Business Policy, Palgrave Macmillan, vol. 1(1), pages 12-33, June.
    5. Evgeny N. SMIRNOV & Sergey A. LUKYANOV, 2019. "Assessment of the transforming impact of global value chains on international trade," Upravlenets, Ural State University of Economics, vol. 10(3), pages 36-46, July.
    6. Giuntella, Osea & Rieger, Matthias & Rotunno, Lorenzo, 2020. "Weight gains from trade in foods: Evidence from Mexico," Journal of International Economics, Elsevier, vol. 122(C).
    7. Malmaeus, J. Mikael & Alfredsson, Eva C., 2017. "Potential Consequences on the Economy of Low or No Growth - Short and Long Term Perspectives," Ecological Economics, Elsevier, vol. 134(C), pages 57-64.
    8. Alcalá, Francisco & Solaz, Marta, 2018. "International Relocation of Production and Growth," CEPR Discussion Papers 13422, C.E.P.R. Discussion Papers.
    9. Haiwen Zhou, 2018. "Impact of international trade on unemployment under oligopoly," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 27(4), pages 365-379, May.
    10. Rodríguez-Pose, Andrés & Sotiriou, Alexandra, 2021. "Chinese vs. US trade in an emerging country. The impact of trade openness in Chile," CEPR Discussion Papers 16297, C.E.P.R. Discussion Papers.
    11. Felipa de Mello-Sampayo & Sofia de Sousa-Vale, 2014. "Financing Health Care Expenditure in the OECD Countries: Evidence from a Heterogeneous, Cross-Sectional Dependent Panel," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 61(2), pages 207-225, March.
    12. Akinwande Atanda & W. Robert Reed, 2019. "Not Evidence for Baumol’s Cost Disease," Working Papers in Economics 19/05, University of Canterbury, Department of Economics and Finance.
    13. Sexton, Richard J., 1979. "A Theory On Information And Its Application To The Effect Of Labeling On Food Products," Staff Papers 13450, University of Minnesota, Department of Applied Economics.
    14. Tomasz Rokicki & Aleksandra Perkowska & Marcin Ratajczak, 2020. "Differentiation in Healthcare Financing in EU Countries," Sustainability, MDPI, Open Access Journal, vol. 13(1), pages 1-17, December.
    15. Daron Acemoglu & David Autor & David Dorn & Gordon H. Hanson & Brendan Price, 2014. "Return of the Solow Paradox? IT, Productivity, and Employment in US Manufacturing," American Economic Review, American Economic Association, vol. 104(5), pages 394-399, May.
    16. Giorgio Barba Navaretti & Lionel Fontagné & Gianluca Orefice & Giovanni Pica & Anna Cecilia Rosso, 2019. "TBTs, Firm Organization and Labour Structure," Working Papers 2019-14, CEPII research center.
    17. Keum, Daniel & Meier, Stephan, 2020. "License to Fire? Unemployment Insurance and the Moral Cost of Layoffs," IZA Discussion Papers 13497, Institute of Labor Economics (IZA).
    18. Vincenzo Atella & Jay Bhattacharya & Lorenzo Carbonari, 2008. "Pharmaceutical Industry, Drug Quality and Regulation: Evidence from US and Italy," NBER Working Papers 14567, National Bureau of Economic Research, Inc.
    19. James Riedel, 2018. "The costs and benefits of exchange rate protection in China," Asian-Pacific Economic Literature, Asia Pacific School of Economics and Government, The Australian National University, vol. 32(1), pages 3-17, May.
    20. Bates, Laurie & Santerre, Rexford, 2013. "Is the U.S. Private Education Sector Infected by Baumol’s Cost Disease? Evidence from the 50 States," MPRA Paper 52300, University Library of Munich, Germany.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:hecrev:v:11:y:2021:i:1:d:10.1186_s13561-021-00302-6. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: http://www.springer.com/economics/journal/13561 .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com/economics/journal/13561 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.