Use Case 34: Cost of drug approval process

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Use case summary


  • Need data on cost of drug approval process to the FDA, both historically and on an ongoing basis. This is to be used in conjunction with a model identifying optimal pharmaceutical investment decisions, as described here: Adding the cost component to the existing investment model could also inform policy decisions, such as the value of accelerating the drug approval process.


  • Value to customer: Creates better model for use in investment and policy applications
  • Value to industry/public: Adding the cost component to the existing investment model could also inform policy decisions, such as the value of accelerating the drug approval process


  • University of Chicago (Booth School of Business, Harris School of Public Policy)

Current data and limitation

Types of Applications

  • Investigational New Drug (IND): Current Federal law requires that a drug be the subject of an approved marketing application before it is transported or distributed across state lines. Because a sponsor will probably want to ship the investigational drug to clinical investigators in many states, it must seek an exemption from that legal requirement. The IND is the means through which the sponsor technically obtains this exemption from the FDA.  more
  • New Drug Application (NDA): When the sponsor of a new drug believes that enough evidence on the drug's safety and effectiveness has been obtained to meet FDA's requirements for marketing approval, the sponsor submits to FDA a new drug application (NDA). The application must contain data from specific technical viewpoints for review, including chemistry, pharmacology, medical, biopharmaceutics, and statistics. If the NDA is approved, the product may be marketed in the United States.  For internal tracking purposes, all NDA's are assigned an NDA number.  more


Short term workaround

IND activity

Distinct count of new INDs received during the calendar year and previously received INDs which had an incoming document during the same period: INDs with Activity page

PDUFA reports

The Prescription Drug User Fee Act (PDUFA) requires FDA to submit two annual reports to the President and the Congress for each fiscal year: 1) a performance report and 2) a financial report

  • PDUFA Annual Reports and Plans
  • Measure changes in workload demand for reviewing drug applications: An Evaluation of the PDUFA Workload Adjuster Fiscal Years 2009 - 2013. This was done in the context of adjusting fees for PDUFA.
    • Definitions:
      • Commercial IND Workload is measured as the number of active IND applications, meaning those that have additional data submitted at least once in the previous 12 months.
      • Adjustments will be made based on the number of new NDA/BLA applications and active INDs each FY.
      • The Secretary shall contract with an independent accounting firm to study the adjustment for changes in review activity applied in setting fees and revenue amounts starting FY 2009

FTE reports

People (FTEs) employed by FDA by year and center


  • While might provide glimpses into drug approval activity, although it's not complete (especially for Phase 1 trials) and mixes in non-IND trials.
  • Citeline has counts of active compounds under development, including breakdown by Phase.

Long term implementation

  • At this time, there are no metrics that provide exact fixed and variable costs that could be plugged into a model. So existing sources need to be used as a proxy.

  • Caution: Conclusions about accelerating reviews and approvals may not be applicable globally across all drugs.
    • The speed of approval may best be driven by therapeutic context, as is the difference between cancer and alzheimer's drugs.
    • Per presentation on pharmaceutical innovation given at Brookings, there's discussion on why different drugs have such different pathways to approval. The points are outlined starting slide 26:

Therapeutic context helps explain variation in R&D costs

  • Therapeutic context reflects:
    • Characteristics of the disease (the What)
    • Level of scientific knowledge (the Why)
    • Existing treatment options (the How)
  • Relevant because it is the context for the regulator’s determination whether benefits outweigh the risks
  • Therapeutic context has implications for R&D cost through:
    • Its impact on study design
    • Its impact on the timing of trials

Therapeutic context is an important driver of drug development cost

  • Implications for researchers:
    • When studying R&D costs and/or drug development timelines, account for the what, why, and how of therapeutic context
  • Implications for policymakers:
    • The “What” of therapeutic context is a given
    • The “How” or how we treat is a measure of our past success
    • But the “Why” can be affected with investments in scientific infrastructure
  • Consider stratifying the analysis and conclusion by therapeutic context, in order to have more meaningful policy recommendations