Dave Ricks, CEO of Eli Lilly, speaking on the excellent Cheeky Pint Podcast (hosted by John Collison, sometimes joined by Patrick as in this episode) had the clearest discussion of why US clinical trial costs are so expensive that I have read.

One point is obvious once you hear it: Sponsors must provide high-end care to trial participants–thus because U.S. health care is expensive, US clinical trials are expensive. Clinical trial costs are lower in other countries because health care costs are lower in other countries but a surprising consequence is that it’s also easier to recruit patients in other countries because sponsors can offer them care that’s clearly better than what they normally receive. In the US, baseline care is already so good, at least at major hospital centers where you want to run clinical trials, that it’s more difficult to recruit patients. Add in IRB friction and other recruitment problems, and U.S. trial costs climb fast.

Patrick
I looked at the numbers. So, apparently the median clinical trial enrollee now costs $40,000. The median US wage is $60,000, so we’re talking two thirds. Why and why couldn’t it be a 10th or a hundredth of what it is?

David (00:10:50):
Yeah, brilliant question and one we’ve spent a lot of time working on…“Why does a trial cost so much?” Well, we’re taking the sickest slice of the healthcare system that are costing the most. And we’re ingesting them. We’re taking them out of the healthcare system and putting them in a clinical trial. Typically we pay for all care. So we are literally running the healthcare system for those individuals and that is in some ways for control, because you want to have the best standard of care so your experiment is properly conducted and it’s not just left to the whims of hundreds of individual doctors and people in Ireland versus the US getting different background therapies. So you standardize that, that costs money because sort of leveling up a lot of things, but then also in some ways you’re paying a premium to both get the treating physicians and have great care to get the patient. We don’t offer them remuneration, but they get great care and inducement to be in the study because you’re subjecting yourself quite often, not all the case, but to something other than the standard of care, either placebo or this. Or, in more specialized care, often it’s standard care plus X where X could actually be doing harm, not good. So people have to go into that in a blinded way and I guess the consideration is you’ll get the best care.

Patrick (00:12:51):
Of the $40,000. How much of that should I look at as inducement and encouragement for the patient and how much should I look at it as the cost of doing things given the regulatory apparatus that exists?

David (00:13:02):
The patient part is the level up part and I would say 20, 30% of the cost of studies typically would be this. So you’re buying the best standard of care, you’re not getting something less. That’s medicine costs, you’re getting more testing, you’re getting more visits, and then there is a premium that goes to institutions, not usually to the physician, the institution to pay for the time of everybody involved in it plus something. We read a lot about it in the NIH cuts, the 60% Harvard markup or whatever. There’s something like that in all clinical trials too. Overhead coverage, whatnot. But it’s paying for things that aren’t in the trial.

Patrick (00:13:40):
US healthcare is famously the most expensive in the world. Yes. Do you run trials outside the US?

David (00:13:44):
Yeah, actually most. I mean we want to actually do more in the US. This is a problem I think for our country. Take cancer care where you think, okay, what’s the one thing the US system’s really good at? If I had cancer, I’d come to the US, that’s definitely true. But only 4% of patients who have cancer in the US are in clinical trials. Whereas in Spain and Australia it’s over 25%.

And some of that is because they’ve optimized the system so it’s easier to run and then enroll, which I’d like to get to, people in the trials. But some of it is also that the background of care isn’t as good. So that level up inducement is better for the patient and the physician. Here, the standard’s pretty good, so people are like, “Do I want to do something where there’s extra visits and travel time?” There’s another problem in the US which is, we have really good standards of care but also quite different performing systems and we often want to place our trials in the best performing systems that are famous, like MD Anderson or the Brigham. And those are the most congested with trials and therefore they’re the slowest and most expensive. So there’s a bit of a competition for place that goes on as well.

But overall, I would say in our diabetes and cardiovascular trials, many, many more patients are in our trials outside the US than in and that really shouldn’t be other than cost of the system. And to some degree the tuning of the system, like I mentioned with Spain and Australia toward doing more clinical trials. For instance, here in the US, everywhere you get ethics clearance, we call it IRB. The US has a decentralized system, so you have to go to every system you’re doing a study in. Some countries like Australia have a single system, so you just have one stop and then the whole country is available to recruit those types of things.

Patrick (00:15:31):
You said you want to talk about enrollment?

David (00:15:32):
Yeah, yeah. It’s fascinating. So drug development time in the industry is about 10 years in the clinic, a little less right now. We’re running a little less than seven at Lilly, so that’s the optimization I spoke about. But actually, half of that seven is we have a protocol open, that means it’s an experiment we want to run. We have sites trained, they’re waiting for patients to walk in their door and to propose, “Would you like to be in the study?” But we don’t have enough people in the study. So you’re in the serial process, diffuse serial process, waiting for people to show up. You think, “Wow, that seems like we could do better than that. If Taylor Swift can sell at a concert in a few seconds, why can’t I fill an Alzheimer’s study? There seem to be lots of patients.” But that’s healthcare. It’s very tough. We’ve done some interesting things recently to work around that. One thing that’s an idea that partially works now is culling existing databases and contacting patients.

Patrick (00:16:27):
Proactive outreach.

See also Chertman and Teslo at IFP who have a lot of excellent material on clinical trial abundance.

Lots of other interesting material in this episode including how Eli Lilly Direct—driven largely by Zepbound—has quickly become a huge pharmacy. The direct-to-consumer model it represents could be highly productive as more drugs for preventing disease are developed. I am not as anti-PBM as Ricks and almost everyone in the industry are but I will leave that for another day.

Here is the Cheeky Pint Podcast main page.

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Megan McArdle celebrates the fact that, in modern America, innovation that was once pie-in-the-sky is routine. A slice:

The happy ending to this story is that technological change has made pie crust easier — not as easy as cake, maybe, but still something a competent beginner can master with a small amount of effort. Food processors simplify the laborious process of cutting fat into flour, and chef J. Kenji Lopez-Alt has developed not one but two foolproof pie crust recipes for novices who own such a machine. I’d encourage readers who think pies are too difficult to give one a try, roll them out (videos on the internet will show you how to do this), then put them in the freezer to await Thanksgiving morning.

But I’d also ask them to think about how technology might be used to recapture other things they miss. Childhood foods you’ve lost, for example. At the end of my father’s life, I managed to reproduce his beloved snow pudding, a now-forgotten lemon dessert that turns out to be delicious and easy to make with an electric stand mixer. Then think bigger: Could safer self-driving cars revive the once-common sight of children playing in the street? Could a productivity boom driven by artificial intelligence give us more time to invest in our communities? Could manufactured housing make it easier to form families, or might robots reverse our demographic decline by taking over the dreary housework that kids generate?

GMU Econ alum Abby Hall Blanco and her co-author Chrysanthi Skaliotis warn residents of New York City of the economic damage that their Mayor Mamdani is about to inflict on them. A slice:

Rent control offers an immediate political payoff. The new mayor can be viewed as helping renters. The long-term consequences — shrinking supply, deteriorating buildings and hindering construction — are delayed and spread out amongst the population of New York City. They are noticed years down the road, when we come back and it’s even harder to find an affordable apartment. Simply put, it allows Mamdani to claim victory and praise in the short run, while the worst effects will only be realized long after he’s out of office.

Elizabeth Nolan Brown updates us on Lina Khan’s efforts to impose her economically ignorant notions on New Yorkers. A slice:

With Khan’s influence, we can expect the future Mamdani mayoral administration to get creative and, perhaps, unconstitutional—in its application of existing laws and authorities to enact Mamdani’s agenda, which includes things like city-run grocery stores, free child care and bus rides, nearly doubling the minimum wage, and a freeze on raising rents.

Paul Moreno reviews G. Edward White’s new biography of Robert Jackson. A slice:

Jackson’s unhappy career on the Court resulted from his inability to fuse or completely separate the roles of advocate and judge. Though brought up in the world of progressive “Legal Realism,” which conflated law and politics, he retained some sense of the classical belief that law could be separated from politics—the “natural law” belief that law was discovered, not made, which White has called the “oracular” view of judging. White notes that before he was on the Court, Jackson was “not a committed ideological partisan in the same manner as many who served with him in the Roosevelt administration … but he was a team player.” He was as political as Roosevelt needed him to be, ardently denouncing New Deal opponents as plutocrats and fascists. But he knew that the Court was different, and many of his Roosevelt-appointed fellow Justices did not.

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