Biopharmaceutical innovation is difficult, expensive, time-consuming, and risky. More so now than ever. A 2014 study by Tufts University’s Center for the Study of Drug Development calculated that a mere one in eight (11.8%) of all drugs that enter clinical trials are ultimately approved by the U.S. Food and Drug Administration. The drug development gamble appears to be getting riskier. A report released on May 25th by the Biotechnology Innovation Organization (BIO), the biotechnology industry’s national trade group, finds that fewer than one in ten (9.6%) of drugs that enter clinical trials will gain approval by the U.S. Food and Drug Administration.
The BIO study provides the most comprehensive analysis, to date, of clinical trials in the biopharmaceutical industry, analyzing 9,985 clinical and regulatory phase transitions across 1,103 companies. Focusing on research and development (R&D) success between 2006 and 2015, the study calculates the Likelihood of Approval (LOA) from Phase I. Figure 1, below, captures the success rates across all clinical trials.
Success rates in Phase II are by far the lowest (30.7%), followed by Phase III (58.1%). This is the point at which costs increase and decisions must be made about whether or not to terminate the project. BIO reports that 35% of all R&D spending is now spent on Phase III development, and Phase III trials account for 60% of total clinical trial costs. Not surprisingly, Phase III clinical trials are the longest and most costly.
Importantly, success varies greatly across disease areas. The BIO study examines R&D success by disease area. Figure 2, below, depicts their findings. Considering the 14 disease areas analyzed, Hematology shows the highest Likelihood of Approval from Phase I at 26.1%, while Oncology drugs had the lowest at 5.1%. Notably, high prevalence chronic diseases had a lower LOA from Phase I at 8.7%, relative to the overall dataset (9.6%). At the other extreme, (non-oncology) rare diseases enjoy a LOA from Phase I of 25.3%, a rate that is 2.6 times that of the LOA for all diseases, and three times greater than that of chronic diseases with high populations.
Clearly, the scientific challenges of biopharmaceutical research are immense and admittedly contribute to these low success rates. As described in the BIO study:
Greater flexibility with alternative and novel surrogate endpoints, the utilization of adaptive clinical trial design, improved methodologies for assessing patient benefit-risk, and improvements in communication between sponsors and regulators could help improve the success rates reported in this study. Simultaneously, improvements in basic science can enable better success rates. For example, more predictive animal models, earlier toxicology evaluation, biomarker identification and new targeted delivery technologies may increase future success in the clinic.,
Less obvious is the role of uncertainty in intellectual property rights in decisions to terminate research programs. Specifically, the study notes, “[c]ompetition, IP litigation, and other market factors could result in the termination of a program.” As described in my earlier contribution, intellectual property rights protections enable innovators to recover the tremendous investments of time and money, which are necessary for biopharmaceutical R&D. Without IP protection, the low probability of success – probabilities that the BIO study shows are falling – makes it difficult to justify spending the resources needed to develop new treatments and therapies.
IP protections are even more important given that the number and complexity of clinical trials required by the approval process have multiplied considerably, as shown in Table 1, below.
Moreover, as the costs of clinical trials rise, these costs are increasingly born by the biopharmaceutical industry. The Johns Hopkins Bloomberg School of Public Health reports that the biopharmaceutical drug and medical device industry now funds six times more clinical trials than the federal government.
Fundamentally, biopharmaceutical research is increasingly difficult, risky and expensive. As such, strengthening the intellectual property protections that incentivize these innovations is essential, including safeguarding the data generated by clinical trials through data exclusivity protections. Without a rigorous, effective IP regime, the incentives to invest in the risky, expensive, time-consuming drug development process erode.
The BIO report is a call to action. Biopharmaceutical IP must be protected, at home and abroad.
As President Obama continues to push the Trans-Pacific Partnership (TPP) Agreement, the statistics on R&D success are reminded that the Agreement must strike a balance between incentivizing innovation and ensuring access to medicines. Acknowledging that shortened periods of data exclusivity protection improve access to competing biosimilar drugs, greater access won’t mean much if innovation is stymied and new drug development stalls. Given the importance of intellectual property rights to economic growth and technological development, the as well as the wider benefits of biopharmaceutical research, we must ensure that biopharmaceutical research continues – and that requires strong IP protections.
 The BIO study defines a phase transition as “the movement out of clinical phase – for example, advancing from Phase I to Phase II development, or being suspended after completion of Phase I development”.
 As described in the BIO study, the “LOA success rate is simply a multiplication of all four Phase success rates, a compound probability calculation. For example, if each phase had a 50% chance of success, then the LOA from Phase I would be 0.5*0.5*0.5*0.5 = 6.25%”.
 Source: Thomas, David W., et al., “Clinical Development Success Rates 2006-2015,” Biotechnology Innovation Organization, June 2016, p.7.
 Source: Thomas, David W., et al., “Clinical Development Success Rates 2006-2015,” Biotechnology Innovation Organization, June 2016, p.8.
 Please consider the definition of surrogate endpoints from my earlier IPWatchDog piece: Fundamentally, surrogate endpoints are outcome measures that reflect important milestones, though they are not of direct practical importance. Consider the following examples: measures of cholesterol may be used in clinical trials where cholesterol reduction is used as a proxy (surrogate endpoint) for reduced mortality; blood pressure is frequently used as an outcome in clinical trials since it is a risk factor for stroke and heart attacks. Physiological or biochemical markers are frequently used as surrogate endpoints since they are quickly and easily measured and are assumed to predict important clinical outcomes. (www.medicine.ox.ac.uk/bandolier/booth/glossary/surrog.html ) According to the Williams et al. study, “A major factor determining the duration of a clinical trial is the amount of time needed to observe statistically significant differences in treatment outcomes among enrolled patients, known as the “follow-up period.” The length of the follow-up period largely depends on two factors: the natural progression of the disease, and the clinical trial endpoints required by government regulators. . . Conventionally, clinical trials evaluate whether a candidate product provides a clinical benefit to mortality—be it overall survival or a closely related measure such as “disease free survival,” which measures time until cancer recurrence. However, in recent years there has been increased interest in using surrogate endpoints as a substitute for the standard clinical endpoints in a drug trial. In the case of hypertension, for example, lower blood pressure is accepted as a surrogate for the clinical endpoint of preventing cardiovascular complications. . . blood cell counts and related measures have been accepted surrogate endpoints for hematologic malignancies (leukemias and lymphomas).”
 Thomas, David W., et al., “Clinical Development Success Rates 2006-2015,” Biotechnology Innovation Organization, June 2016, p.23.
 Thomas, David W., et al., “Clinical Development Success Rates 2006-2015,” Biotechnology Innovation Organization, June 2016, p.22.
 The complexity of the clinical trials results from a variety of factors including a shift in focus from acute to chronic illness, collection of increasingly intricate data elements, closer attention to each element of trial design, and concern about potential requests from regulatory agencies. Source: Getz, K.A., R.A. Campo, and K.I. Kaitin. “Variability in Protocol Design Complexity by Phase and Therapeutic Area.” Drug Information Journal, 2011, vol.45, no.4, pp. 413–420.
 Source: PhRMA. “Biopharmaceuticals in Perspective,” Spring 2013.
 Desmon, Stephanie. “Industry-financed clinical trials on the rise as number of NIH-funded trials falls: Researchers raise concerns about trends in research funding as commercial ventures run six times more trials than academic investigators,” The HUB at Johns Hopkins, 16 December 2015.