What Are Phase 3 Trials?

Phase 3 is the final phase of clinical trials for an experimental new drug, embarked upon if Phase 2 trials show evidence of effectiveness. Phase 3 collects randomized control data on a larger sample size than in phase 2 and focuses on both efficacy and safety. As a randomized control trial, some Phase 3 participants will receive a placebo and not the study drug.

The Center for Drug Evaluation and Research, or CDER, a division of the U.S. Food and Drug Administration (FDA), oversees these clinical trials.

Key Takeaways

  • Phase 3 trials complete the three-stage process of clinical drug trials as required by regulators before a new drug or medical device can be approved for public use.
  • These are double-blind, randomized control trials and involve large-scale participation of up to several thousand patients across multiple locations, focusing on safety and efficacy.
  • Phase 3 trials are expensive and have been blamed for high drug prices.

Understanding Phase 3 Trials

Phase 3 trials are used to obtain additional information about the new drug’s effectiveness and safety to assess the benefit versus risk of the therapy and to use this information in the drug’s labeling, if it is approved by the FDA. These trials are large-scale studies that involve the participation of several hundred to several thousand patients across multiple study locations. The average duration of Phase 3 trials ranges from one year to four years, and only between 25–30 percent of tested medications make it through this final stage of testing.

Phase 3 trials are randomized control trials (RCTs), which means that trial participants are assigned at random to receive the experimental drug, or a placebo, or another therapy that is the current standard. The trials are also double-blinded, which means that neither the investigator nor the participant knows what the latter has received.

As is the case with Phase 1 and Phase 2 trials, the CDER can impose a clinical hold on Phase 3 trials if a study is unsafe or if the trial design is deficient in meeting its objectives. Phase 3 trials involve thousands of participants to uncover potential side effects that may only affect a small number of people, and thus may have been missed in the smaller Phase 2 trials.

Phase 3 Trial Costs

Phase 3 trials are very expensive and may account for as much as 40 percent of a company’s R&D expenditures. A 2016 study conducted by Eastern Research Group, Inc., for the U.S. Department of Health and Human Services, found that the average cost of a Phase 3 study ranged from $11.5 million to $52.9 million. A 2018 study estimated a median cost of $19 million for Phase 3 trials. The study, conducted by researchers at the John Hopkins Institute for Medicine, found that clinical trials cost a median of $41,117 per patient and $3,562 per patient visit. The researchers also wrote that the costs for such trials vary widely depending on the drug. "These data suggest that high-cost trials occur but usually when drug effects are small or a known drug already provides clinical benefit. On the other hand, pivotal trials for novel drugs with substantial clinical benefits can be conducted at a lower cost," they concluded.

Companies engaged in drug development view the steep costs associated with Phase 3 trials as a necessary expense since the odds of obtaining marketing approval from the FDA for a new drug rise significantly upon successful completion of Phase 3 trials.

High Drug Prices

A 2012 study by the Manhattan Institute for Policy Research points out that the surging expense of Phase 3 trials is the major driver behind the spiraling cost of developing new drugs. The study notes that Phase 3 trials account for 40 percent of a company’s total R&D expenditures, which includes expenses for numerous drug candidates that do not make it past Phase 1 or Phase 2 studies.

A 2014 report by Eastern Research Group, Inc., for the U.S. Department of Health and Human Services, cited a growing trend among drug manufacturers to take their trial and research operations to countries outside of the U.S., since trial costs in countries such as China and India can be significantly lower.

Drug Approval Process

Statistical analysis is a key component of evaluating the results of a clinical trial to determine whether the treatment was effective or whether the results were as likely as a chance outcome. Despite extensive testing, it can be difficult to determine drug effectiveness. While clinical trials may demonstrate that a drug does or does not work, they don’t necessarily indicate the reasons. Another shortcoming of clinical trials is that the test subjects may be healthier than the patients who would actually use the treatment being tested.

A New Drug Application (NDA) is the formal final step taken by a drug sponsor, which involves applying to the FDA to get approval required to market a new drug in the U.S. An NDA is a comprehensive document with 15 sections that includes data and analyses on animal and human studies, the drug’s pharmacology, toxicology and dosage, and the process to manufacture it. Once a drug reaches the NDA stage, the probability of it receiving FDA approval and being marketed in the U.S. exceeds 80 percent. Filing of an NDA typically does not result in a substantial increase in the share price of a publicly-held sponsor company, as most of the stock appreciation is likely to have occurred as the investigational drug progressed through successive phases of earlier clinical trials.