There are many costs and implementation challenges associated with bringing a new drug to market. The main reasons for high costs are the need for multiple clinical trials in order to provide quality data in humans at large scale, and the cost of manufacturing the product in large batches for clinical use (Phase III and post-marketing).
A great deal of money is invested to evaluate promising compounds that ultimately do not make it to market. In Phase I clinical trials, approximately 70% of drugs move to the next phase. But in Phase II, only about 33% of drugs move to the next phase, and only about 25-30% of Phase III drugs move on to the approval process, where they still can be rejected. Thus, the likelihood of a drug making it all the way to Phase III clinical trials is just 12%.1
Cost control is a significant concern, because if the compound does not successfully make it through the development process and approval stages, the process must begin again on another compound, and the time, money and resources invested may be lost. However, many drug developers learn a great deal through failures, and in many cases, the lessons they learn drive subsequent breakthroughs and innovations.