Are high-cost prescription drugs the price of innovation? Disclose the costs of clinical trials

With 40 percent of Americans struggling to afford prescription medicines and many rationing or delaying initiation of lifesaving drugs, it’s clear something has gone terribly wrong. The goal of medical research and development (R&D) is to discover, develop, and deliver tools that meet pressing public health needs, but high prices prevent U.S. patients from accessing medicines critical for their care. In other more resource-limited or disaster-stricken places around the world, the crisis in access is even starker: some important diseases are neglected altogether by the market, while the drugs that do exist are priced out of reach. 

For decades, pharmaceutical companies have argued that the prices set for medicines need to be high because bringing new drugs to market is incredibly expensive. Yet key evidence behind this claim remains a closely held secret. Pharmaceutical companies leave the public in the dark about how much drug development actually costs. The Pharmaceutical Research Transparency Act of 2022, a new bill introduced recently in both the House and Senate, seeks to correct this information asymmetry. It would provide the public with access to crucial R&D cost information and a clearer sense of whether drug pricing is fair.  

It is the last stages of the R&D process that pharmaceutical companies typically describe as the most expensive part – particularly clinical trials, which bring new products out of the lab and provide crucial evidence of how safe and effective they are for actual patients. Yet detailed information about the costs of clinical trials is not publicly available.  

The Pharmaceutical Research Transparency Act would tackle this long-running problem in two ways. First, it would create a public database of detailed, disaggregated clinical trial cost data for all drugs subject to FDA review. Drug manufacturers, government labs, universities, and other entities that sponsor these trials would then be required to submit such cost data within a year of trial completion. Second, the Act would mandate that drug manufacturers report disaggregated clinical trial costs in their annual securities filings. Together, these elements would dramatically increase public knowledge of the costs of clinical trials and overall R&D expenditure.  

The Act would build upon a 2007 federal law that mandates researchers publicly register and report clinical trial results to ClinicalTrials.gov, a public website maintained by the NIH. Although not perfect, ClinicalTrials.gov has been a major win for public health, facilitating knowledge-sharing, helping avoid costly and inefficient duplication of research, and curbing dangerous “cherry-picking” of data by pharmaceutical companies, which previously hid major problems of safety and efficacy. Mandating disclosure of clinical trial cost data would similarly make it harder for pharmaceutical companies to use hidden data to justify setting unaffordable prices for therapies. 

The little that we currently know about R&D expenditures – revealed by recent Congressional investigations, for example – suggests that pharmaceutical companies exaggerate their true spending on R&D. Pharmaceutical companies’ revenues are increasingly “re-invested” into executive compensation, stock buybacks, and dividends rather than R&D. 

Sharing the true costs of clinical trials would yield many benefits. Cost transparency would allow purchasers of health technologies to interrogate claims about pharma’s need to recoup R&D costs through high prices. Ultimately – when cost transparency is coupled with the capability to negotiate prices – purchasers can bargain more effectively for fair prices. Cost transparency will be indispensable for Medicare drug price negotiation — a  widely popular proposal currently being considered in Congress — to have its desired cost-saving impact. It would similarly serve nonprofit groups like Doctors Without Borders that purchase medicines for use in humanitarian operations and advocate for equitable global access to medical innovations. Clinical trial cost disclosure would also strengthen alternative models of R&D, such as public and philanthropic-led drug discovery, by sharpening estimates of the true costs of late-stage clinical research. Currently, these costs are commonly guessed at, based on opaque data from drug companies’ limited self-reporting. (More thorough, exceptionally transparent data on the costs of clinical trials is shared by not-for-profit developers such as the Drugs for Neglected Diseases initiative, but they fund a tiny fraction of trials.) 

If Congress does not act, the Biden administration can, without waiting for Congress. The U.S. is the largest funder of biomedical research in the world, with taxpayer dollars not only providing the basic science bedrock on which most R&D is built but playing a major and often underappreciated role in the late-stage development of novel health technologies, including trials of biologics and gene therapies. The National Institutes of Health (NIH) alone spends billions each year on clinical trials, but does not currently disclose detailed, disaggregated cost data. In short, the U.S. government holds an enormous, mostly untapped reservoir of useful data on the true costs of clinical trials. And it has a responsibility to the public to ensure a full and clear accounting of the way that public money is spent. 

We, along with many other groups committed to lowering drug prices and aligning medical innovation with public health needs, recently called on the Department of Health and Human Services (HHS) and its agencies, including NIH, to disclose the costs of all clinical trials they fund or conduct in disaggregated detail. Such disclosure is within the agency’s legal authority. Yet the reply we received from HHS was boilerplate, expressing no specific plan or intent to share cost data. HHS, NIH, and President Biden should embrace the proactive disclosure of trial cost data we called for in our letter. Any nominee for the vacant NIH director position should prioritize this reform. 

Amidst the ongoing pandemic, at a time when the U.S. government continues to invest additional billions of dollars to develop tools to fight COVID-19 and other infectious threats, transparency and accountability in drug discovery and development have never been more important – both for the American public and the larger global community. Disclosure of clinical trial costs is an essential next step toward ensuring fair prices for drugs, fair public returns on public investments in R&D, and fair, equitable access to the fruits of scientific progress.

Ava Alkon, PhD, MPH is a policy advisor for Doctors Without Borders/Médecins Sans Frontières (MSF) USA. Christopher Morten, JD, PhD is an associate clinical professor of law at Columbia Law School and director of Columbia’s Science, Health, and Information Clinic. He is also a visiting fellow of Yale Law School’s Global Health Justice Partnership. MSF USA commissioned a key report on clinical trial cost transparency from Dr. Morten and the NYU Technology Law & Policy Clinic, which published in August of 2020.  MSF subsequently published a companion advocacy briefer in January 2021 calling for this reform.  Reshma Ramachandran, MD, MPP is a family medicine physician and fellow in the Yale National Clinician Scholars Program. She leads efforts on drug pricing and FDA policy for the national non-profit organization, Doctors for America.