Increasing Percentages of New Drugs are Failing Phase II and III Trials

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In the drug discovery pipeline, Phase I trials are first used to evaluate if a new drug is safe, then Phase II trials are done to assess the drug’s efficacy, and finally Phase III trials are performed to monitor side effects and compare the drug to similar compounds already on the market. Each consecutive phase includes more people to refine the results obtained in the previous phase. A recent analysis by the Centre for Medicines Research in the UK has concluded that since 2008, the failure rate for drugs in Phase II and III clinical trials has been rising [1-2]. Phase II success rates are currently at 18%, lower than at any other phase of drug development.

Drug development pipeline

The first analysis evaluated 108 reported Phase II failures from 2008 to 2010 for new drugs and major new indications of existing drugs [1]. Sixty-eight percent of the failures fell into only five therapeutic areas:

  1. alimentary/metabolism (including diabetes) (23%)
  2. cancer (20%)
  3. neurological disorders (16%)
  4. cardiovascular diseases (11%)
  5. other (32%)

Diabetes is a fairly well-served market; since there are a number of effective drugs currently in use, it is tougher for new drugs to demonstrate their superiority to extant treatments. This demonstration is a requirement for gaining approval. Treating cancer and neurological disorders entail a high degree of risk, explaining the high failure rate. But drugs treating cardiovascular diseases have traditionally enjoyed a relatively high success rate in clinical trials. It is possible that, like diabetes, its market has been saturated with effective drugs.

Eighty percent of the new drugs reported their reasons for failure. Fifty-one percent of these were due to insufficient efficacy, twenty-nine percent were due to strategic reasons, and nineteen percent were due to safety concerns. “Strategic reasons” include exploiting already established drug targets, indicating that perhaps these new drugs failed because they were not sufficiently different from similar drugs already on the market. This in turn indicates that there may be substantial overlap in the research and development occurring at competing pharmaceuticals companies. Of the twenty-one failing drugs for which no reason was reported, seventeen also involved validated targets.

At Phase III, the failure rate is now at about fifty percent; like Phase II trials, the failure rate in Phase III trials has risen since 2007. Most of these failures fell into the same four therapeutic areas mentioned above. By the time new drugs made it to Phase III, sixty-six percent failed due to lack of efficacy and twenty-one percent failed because of safety concerns.

Phase II reasons for failure:

  • 51% insufficient efficacy
  • 29% strategic reasons
  • 19% safety concerns
Phase III reasons for failure:

  • 66% lack of efficacy
  • 21% safety concerns

Efficacy failures mean that the drugs could not show a statistically significant improvement in efficacy compared to a placebo or an active control or as an add-on therapy. As is the case in Phase II, this could be because these new drugs have novel mechanisms of action because they are trying to serve underserved patients: those with cancer and neurodegenerative disorders. Or, it could be because of the immense pressure on pharmaceuticals companies to gain approval for their drugs to compensate for revenues lost as the patents on their old drugs expire. This might be causing them to forsake developing risky drugs that work through unproven mechanisms in favor of drugs with proven targets, and then pushing them into Phase III trials when they perhaps displayed only marginally statistically significant efficacy in their Phase II proof-of-concept trials. There also seems to be a tendency on the part of drugmakers to presume that efficacy in one therapeutic area ensures efficacy in another, different disease, but these high failure rates indicate that that is not the case. For example, sunitinib (brand name: Sutent) is marketed to treat gastrointestinal stromal tumors — a type of tumor that grows in the stomach, intestine (bowel), or esophagus – but just failed a Phase III trial for treating hepatic cancer, and the angiogenesis inhibitor bevacizumab (brand name Avastin) has been used to treat various cancers, including colorectal, lung, and kidney cancer, as well as eye disease, but it just failed a Phase III trial for use in gastric cancer.

In fact, failure rates for both Phase II and Phase III clinical trials have risen since 2001, primarily because of poor showing against placebos [3]. But perhaps the high failure rates in Phase II trials suggest that we are more stringently interpreting efficacy data at the proof-of-concept stage, and that the drugs that survive until Phase III actually belong there and have a greater chance of success.


  1. John Arrowsmith. Trial watch: Phase II failures: 2008–2010. Nature Reviews Drug Discovery 10, 328-329. 2011 May.
    View abstract
  2. John Arrowsmith. Trial watch: Phase III and submission failures: 2007–2010. Nature Reviews Drug Discovery 10, 87. 2011 Feb.
    View abstract
  3. Placebos Are Getting More Effective. Drugmakers Are Desperate to Know Why. Wired Magazine. 2009 Aug 24.
About the Author

Diana Gitig, Ph.D., is a freelance science write based in White Plains, New York. She earned her Ph.D. in Cell Biology and Genetics from Cornell University's Graduate School of Medical Sciences.