by Jennifer Stacey, SVP of Clinical Sciences & Operations, TriNetX

January 2023 – It should be no surprise that profitability is the primary goal for pharmaceutical companies, as it allows them to continue to fund research and development (R&D) of new drugs, pay dividends to shareholders, and support their business operations. The truthful way to look at pharma’s profitability comes down to this: Did they take their assets to market over the last few years, and if so, did they do it successfully? To achieve profitability and success, pharma needs to generate revenue by selling products while investing in R&D to keep their pipelines strong. However, the typical R&D investment is a substantial amount of money, and it is often challenging for pharma to recoup the development costs through the sales of their launched drugs without inflated prices. This practice leaves many of us asking: Can we correct this cycle?

First, let’s better understand why the financial future of drug development and commercial sales continues to advance into heightened uncertainty. The cost of bringing a new therapy to market ranges from hundreds of millions to upwards of $10 billion depending on the therapy’s complexity and the type of disease it is designed to treat. A 2014 study by the Tufts Center for the Study of Drug Development estimated the total life cycle cost of developing a new drug to be almost $3 billion, and now nearly a decade later, this figure continues to climb with steep increases in all development costs—research, regulatory, production, and marketing—over the last several years.

To compound this issue, the success rate of bringing a drug to market remains around 10% despite continual efforts to improve each of these aspects of the drug development process. Overall, the price of a marketed drug is influenced by limited competition, potential market size, lack of pricing regulations, and the need to recoup those R&D costs. So how is pharma recouping the millions to billions spent on R&D and covering the expenditures for the 90% that fail? Historically, this has been achieved by hiking prices, which has caused some companies to be accused of price gouging and implementing aggressive pricing strategies that keep patients from affording potentially life-altering or life-saving treatments. This matter is not just a commercial problem but also an ethical one.

This major concern is why there is an absolute and immediate need to implement real-world evidence (RWE) into the drug development continuum. RWE refers to the insights and knowledge generated from the analysis of real-world data (RWD), which is collected from various sources outside of traditional randomized controlled trials (RCTs), such as electronic health records, claims data, and patient-generated data. RWE emerged in the early 2000s in clinical R&D and has slowly gained traction. The industry is recognizing the value of supplementing RCTs and providing a more comprehensive understanding of a drug’s benefits, risks, and real-world effectiveness. It supplies valuable insights that inform and improve the overall efficiency throughout the drug development life cycle, including:

• Drug development: Using RWE to inform the design of clinical trials can help pharmaceutical companies to reduce the number of patients needed to show efficacy, increase the efficiency of trial design, and reduce the costs of running the trial.
• Regulatory approval: Using RWE to support regulatory approval can reduce the need for additional clinical trials, saving significant money.
• Pricing and reimbursement: Using RWE to prove the value of a drug to payers can help pharmaceutical companies to secure favorable pricing and reimbursement for their products.
• Post-approval studies: Using RWE to study a drug’s long-term safety and effectiveness can help pharmaceutical companies identify new indications for their products, which can lead to increased revenue.
• Comparative effectiveness: Using RWE to compare the efficacy of different drugs in real-world settings can help pharmaceutical companies to identify the most cost-effective treatments for specific conditions.

Cost savings from using RWE can vary significantly based on the specific use case and the stage of the drug development process. It has been estimated that top-10 pharma companies could save $500 million – $1 billion per year using RWE. More recently, McKinsey projected that an average top-20 pharma company could recoup more than $300 million annually by adopting advanced RWE analytics alone. With the surging amounts of RWD in combination with artificial intelligence (AI), machine learning (ML), and other digital health tech available today, the cost savings RWE can bring to innovative drug developers will continue to grow upwards.

It is important to note that while RWE provides valuable insights into the real-world use of a drug, it cannot completely replace traditional—and costly—RCTs or other standard requirements within the drug development process. RCTs are still considered the gold standard for demonstrating the efficacy and safety of treatments. The FDA evaluates RWE in the context of the overall body of evidence and will only make regulatory decisions based on high-quality data that support the approval and safe use of treatments. Nevertheless, the need for superior RWD to generate RWE is significantly less expensive than data from traditional clinical trials as it is usually collected as part of routine care. Therefore, pharma must work closely with the FDA and other regulatory agencies to navigate the RWD and RWE guidelines, expectations, methodology, and documentation to unlock the cost benefits of RWE effectively.

So, let’s get back to the problem: The excessive costs and extensive time required to bring a new drug to market today make prescription drugs increasingly expensive. The drug industry can keep talking about “being innovative” and “the importance of RWE,” but talking alone doesn’t help this unsustainable state. It is critical for talk to become actions—and this needs to happen now. As the pharma industry continues to evolve and hopefully prioritize data and technology, RWE must become mainstream in drug development to fully realize its potential time and cost-reducing benefits. Using RWE can solve pharma’s commercial problem while achieving the ultimate goal in healthcare: bringing more effective and affordable treatments to patients as quickly as possible.

About the Author

Jennifer Stacey is a seasoned executive with over 20 years in the clinical research and life science industries. As the SVP of Clinical Sciences & Operations at TriNetX, she is responsible for overseeing the team responsible for clinical feasibility and research, data solutioning, driving successful execution of clinical studies, and contributing to the company’s strategic growth and direction. With demonstrated expertise in data mining, platform querying, cohort identification, clinical trial development/design, and strategic analysis, she has a deep understanding of the importance of data-driven decision making and has successfully led cross-functional teams in the development and implementation of innovative study solutions.

Committed to advancing the field of clinical research with data and technology, Jennifer has delivered strategic and results-driven approaches to over 100 pharmaceutical and contract research organizations as well as FDA officials. She is a respected thought leader in the industry, regularly presenting at conferences and contributing to numerous publications. Prior to joining TriNetX, Jennifer held scientific positions at Cell Signaling Technology, Citeline, and inVentiv Health and remains dedicated to advancing the use of RWD and RWE to improve healthcare and achieve better outcomes for patients.