The argument has been raging for many years: What is the actual cost to bring a novel drug to market? The oft-cited figure from the 2014 Tufts Center for the Study of Drug Development of $2.6 billion seemed bloated. Several others have countered that the figure is actually far lower, perhaps a mean of $1.3 billion (median, $985 million; range, $0.3–2.8 billion). Of note, these figures include the cost of failed drug development, not just of developing the one product that achieves FDA approval. If the latter calculation were ever done, the estimate would be considerably lower.

The high costs of drug development are directly related to the necessity for clinical trials. The Tufts Center claimed the average cost of a phase 3 study was $255 million. A 2020 estimate found a median cost of a pivotal clinical trial to be $48 million, with an interquartile range of up to $102 million. This also varied considerably by therapeutic area (hematologic drug trials cost a median of $311,000 per patient enrolled, compared with dermatology drug trials, which cost a median of $25,000 per patient).
According to McKinsey and Company, biosimilars cost between $100 million and $300 million to bring to market. I suspect that this number is ranging downward, as some recently approved biosimilars have not been required to do phase 3 trials. McKinsey’s analysis assumed up to 70% of these costs were associated with clinical trials. With biosimilar drug development, one does not have to generally consider the cost of failed clinical trial efforts: failure at this stage is very rare and should be, since the goal of the trial is equivalence (or at least noninferiority) to a biologic molecule that has already been proven to work.
The Basis for Lowering Biosimilar Development Costs
In comparison, the cost for small-molecule generic drug development may be less than $5 million, on average, partly because generic drug manufacturers simply have to prove molecular equivalence to the branded product. In other words, no clinical trials are needed.
Long-time biosimilar veteran Sarfaraz Niazi, PhD, stated in August that this testing is unnecessary, from a scientific basis. The clinical efficacy studies of biosimilars do not have sufficient sensitivity to detect significant differences in outcomes from those of the comparator reference products. The FDA has now approved several hematologic biosimilars without having clinical efficacy data. Even phase 1 pharmacokinetic and pharmacodynamics studies provide limited additional information above what in vitro investigations supply. In other words, the “sensitive analytical methods to characterize the molecular structure, correlate binding properties with structure, and establish a robust similarity of the critical quality attributes are of greatest significance in evaluating the safety and efficacy of biosimilars,” according to Dr. Niazi.
Late-stage clinical trials have not picked up important differences in these products, and have accounted for a large portion of their development costs. We’ve reported in the past that certain providers may feel uncomfortable prescribing biosimilars that have not been subjected to randomized, controlled clinical studies. Should we continue to cater to the confidence of these providers when there is ample evidence to decide whether a biosimilar will perform as intended based on the analytical data? This represents an opportunity to significantly lower the bar to entry for more prospective biosimilar manufacturers. Proving comparability and pharmacokinetic/pharmacodynamic equivalence, as in the generic drug industry, seems to render clinical trials unnecessary for biosimilars.