What is Phase 3

Phase 3 is the final phase of clinical trials for an experimental new drug, embarked upon if Phase 2 trials show evidence of effectiveness. The Center for Drug Evaluation and Research, or CDER, a division of the U.S. Food and Drug Administration oversees these clinical 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 use this information in the drug’s labeling if 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. As a result, 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. However, 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.

Phase 3 trials are often randomized, 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 know 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 costs

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.