A seismic shift in the world’s most important drug regulator landed last week: the US Food and Drug Administration (FDA) will now, by default, accept just one high-quality pivotal clinical trial plus supporting evidence to underpin new drug approvals. The move marks a formal end to the longstanding “two-trial” standard that had guided regulatory submissions for decades.
The change was announced in a commentary published on Thursday in the New England Journal of Medicine by FDA Commissioner Dr Marty Makary and his top deputy Dr Vinay Prasad, both of whom argued that the traditional requirement for two independent “adequate and well-controlled” studies no longer reflected the science or the realities of modern drug development.
What exactly is changing — and why now?
For more than half a century, US regulators operated under a default expectation that two independent pivotal trials — typically large Phase III studies — were needed to demonstrate that a drug was safe and effective enough for market approval. The logic was classic risk management: two statistically significant trials reduced the likelihood that a positive result was a fluke.
Legally, however, that two-trial rule was never a hard statutory requirement. Since a 1997 amendment to the Food, Drug, and Cosmetic Act, the FDA has had explicit authority to approve drugs on the basis of a single well-controlled trial supplemented by confirmatory evidence — such as mechanistic data, results in a related indication or real-world evidence. But in practice, the de-facto standard remained two trials outside tightly regulated accelerated pathways.
Makary and Prasad argue that the science has evolved — with more sophisticated trial designs, better biomarkers, modern statistical methods and richer external evidence sources — and that regulators and sponsors alike should concentrate resources on making one excellent study instead of two adequate ones. They contend this will reduce cost, shorten development time and make the FDA’s standards clearer to innovators without diluting the strength of evidence.
What this means for drug developers
For US-facing Australian biotech and pharma companies, the implications are immediate and material:
Lower development risk and cost: Conducting a single large pivotal trial rather than two can shave tens of millions off clinical costs and compress timelines. Industry estimates suggest a single Phase III can cost $30 million–$150 million, with a second study adding comparable costs.
Greater flexibility in evidence strategy: Sponsors can bolster a single trial with richer mechanistic data, biomarkers, or real-world evidence to meet the “substantial evidence” threshold. This may benefit programmes for which multiple large trials would be infeasible — for example, niche indications or precision medicines.
No change to FDA stringency: The policy doesn’t automatically mean sloppier science — regulators still stress that trials must be “adequate and well-controlled”, robustly designed, and complemented by confirmatory evidence. The agency retains discretion to ask for more if the data aren’t convincing.
Critics — including some academic clinicians and regulatory experts — caution that loosening the default bar could, over time, erode confidence in approvals and lead to greater variability in post-market performance, particularly for drugs addressing broad, common conditions.
What it means for Australian biotech
Although this shift is a US regulatory policy, its ripples will be felt globally — including in Australia:
- Strategic prioritisation for US submissions: Many ASX-listed or Australian biotech firms see the US FDA as the gold standard. Getting faster, cheaper proof-of-concept in the US could improve valuations and de-risk capital raises, particularly for companies with novel mechanisms or biomarkers that translate into compelling single trials.
- Australian regulators may take notice: The Therapeutic Goods Administration (TGA) and other regulators frequently watch FDA precedent when shaping their guidance. While the TGA has its own evidentiary norms, informal influence and converging global standards could nudge Australian approvals towards similar flexibility — especially for first-in-class or unmet-need therapies.
- Competitive implications for local investors: A lower barrier to US approval could accelerate the path to global partnerships and licensing deals for Australian biotech assets. International pharma partners may be more inclined to engage earlier if regulatory risk — and cost — are reduced.
Bottom line
This isn’t just a tweak to an arcane regulatory footnote — it’s a fundamental shift in how the world’s biggest drug regulator thinks about proof of benefit. Whether it dramatically accelerates innovation or subtly shifts investment calculus remains to be seen. What’s clear is that it alters the strategic landscape for biotech developers, investors and international regulators alike.