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Is the FDA Too Conservative or Too Aggressive?: A Bayesian Decision Analysis of Clinical Trial Design

54 Pages Posted: 11 Aug 2015 Last revised: 29 Nov 2017

Leah Isakov

Pfizer, Inc.

Andrew W. Lo

Massachusetts Institute of Technology (MIT) - Sloan School of Management; National Bureau of Economic Research (NBER); Massachusetts Institute of Technology (MIT) - Computer Science and Artificial Intelligence Laboratory (CSAIL)

Vahid Montazerhodjat

Massachusetts Institute of Technology (MIT) - Sloan School of Management; Massachusetts Institute of Technology (MIT) - Electrical Engineering and Computer Science

Multiple version iconThere are 2 versions of this paper

Date Written: November 28, 2017

Abstract

Implicit in the drug-approval process is a host of decisions---target patient population, control group, primary endpoint, sample size, follow-up period, etc.---all of which determine the trade-off between Type I and Type II error. We explore the application of Bayesian decision analysis (BDA) to minimize the expected cost of drug approval, where the relative costs of the two types of errors are calibrated using U.S. Burden of Disease Study 2010 data. The results for conventional fixed-sample randomized clinical-trial designs suggest that for terminal illnesses with no existing therapies such as pancreatic cancer, the standard threshold of 2.5% is substantially more conservative than the BDA-optimal threshold of 23.9% to 27.8%. For relatively less deadly conditions such as prostate cancer, 2.5% is more risk-tolerant or aggressive than the BDA-optimal threshold of 1.2% to 1.5%. We compute BDA-optimal sizes for 25 of the most lethal diseases and show how a BDA-informed approval process can incorporate all stakeholders' views in a systematic, transparent, internally consistent, and repeatable manner.

Keywords: Clinical Trial Design; Drug-Approval Process; FDA; Bayesian Decision Analysis; Adaptive Design

JEL Classification: I18, C12, C44, C11

Suggested Citation

Isakov, Leah and Lo, Andrew W. and Montazerhodjat, Vahid, Is the FDA Too Conservative or Too Aggressive?: A Bayesian Decision Analysis of Clinical Trial Design (November 28, 2017). Available at SSRN: https://ssrn.com/abstract=2641547 or http://dx.doi.org/10.2139/ssrn.2641547

Leah Isakov

Pfizer, Inc. ( email )

MA 01776
United States

Andrew Lo (Contact Author)

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

100 Main Street
E62-618
Cambridge, MA 02142
United States
617-253-0920 (Phone)
781 891-9783 (Fax)

HOME PAGE: http://web.mit.edu/alo/www

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Massachusetts Institute of Technology (MIT) - Computer Science and Artificial Intelligence Laboratory (CSAIL)

Stata Center
Cambridge, MA 02142
United States

Vahid Montazerhodjat

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

77 Massachusetts Ave.
Cambridge, MA 02142
United States

Massachusetts Institute of Technology (MIT) - Electrical Engineering and Computer Science ( email )

77 Massachusetts Avenue
Cambridge, MA 02139-4307
United States

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