In December 2025, FDA Commissioner Dr. Marty Makary announced a policy shift that biopharma consultants have termed a “regulatory acceleration warhead.” By moving the agency’s default requirement from two adequate and well-controlled Phase 3 clinical trials to a single pivotal trial, the FDA is effectively rewriting the rules of engagement for approximately one-third of the drug development pipeline.
While the agency has long exercised flexibility for rare diseases and oncology, this new directive targets the mass-market indications—Psychiatry, Cardiology, and Dermatology—that have historically been burdened by the expensive “Rule of Two.”
The “34% Opportunity”: Who Benefits?
To understand the impact, we must look at the approval data. In 2024, 66% of New Molecular Entities (NMEs) were already approved based on a single pivotal trial, primarily in orphan diseases and oncology. The Makary Doctrine specifically unlocks the remaining 34% of drugs that were previously held to the two-trial standard.
This subset includes large-population chronic diseases where the FDA traditionally demanded replication to rule out chance and bias. Examples are:
- Psychiatry: Drugs for schizophrenia and depression (e.g., Cobenfy for schizophrenia required two trials, EMERGENT-2 and -3) could now potentially reach the market with one robust study.
- Dermatology: Psoriasis and atopic dermatitis treatments, which often run identical twin Phase 3 studies (e.g., Vtama), are prime candidates for consolidation.
- Cardiology & Metabolic: While cardiovascular outcome trials remain massive, symptom-driven treatments (like those for hypertension or lipids) could see requirements halved.
Financial Impact: The “Capital Efficiency” Revolution
The shift to a single-trial default fundamentally alters the unit economics of drug development, particularly for pre-revenue biotech companies.
1. Direct Cost Savings: $50M to $150M+ Per Asset
A typical Phase 3 trial for a chronic condition involves 500 to 3,000 patients. The average cost for such trials ranges from $20 million to over $100 million per study, depending on complexity and therapeutic area.
- Old Model: A sponsor needs ~$150M–$200M to fund two parallel Phase 3s to get to an NDA (New Drug Application).
- New Model: The sponsor needs ~$75M–$100M for one robust Phase 3.
- Result: A massive reduction in the “cost to launch,” directly improving the Return on Invested Capital (ROIC) for R&D.
2. Time is Money: 12–24 Months Saved
Running two trials sequentially adds years. Running them concurrently (the industry standard for speed) creates a massive “cash flow trough” where burn rates spike to unsustainable levels. Eliminating the second trial can shave 12 to 18 months off the timeline to commercialization, extending the patent exclusivity period on the back end where revenues are highest.
3. Organizational & Operational Shift
The operational burden of managing 100+ clinical sites across multiple countries for two trials is immense. A single-trial default allows sponsors to:
- Concentrate Quality: Focus resources on high-performing sites to ensure data integrity.
- Enhance Statistical Power: Instead of two trials at p < 0.05, the FDA will likely demand one trial with overwhelming statistical significance (e.g., p < 0.001). This requires larger sample sizes than a single typical Phase 3, but significantly fewer patients than two combined trials.
Consequences for Valuations and Capital Markets
This policy shift creates a seismic change in how biotech companies are valued, particularly at the “Phase 2 to Phase 3” transition.
- The “One-and-Done” Premium: Previously, a successful Phase 2 asset faced a “valley of death”—the need to raise hundreds of millions for two Phase 3s. Now, a company with strong Phase 2 data faces a cheaper, faster path to approval. This likely increases the valuation of mid-stage biotechs because the “cost to complete” has been halved.
- M&A Acceleration: Big Pharma often waits for the “second pivotal” to de-risk an acquisition. If the FDA accepts one trial, a single positive Phase 3 readout becomes a trigger for acquisition. We can expect M&A activity to occur earlier in the lifecycle.
- Reduced Dilution: Small-cap biotechs will need to raise less equity to fund their pivotal programs. This reduces dilution for founders and early investors, potentially making the sector more attractive to venture capital.
Conclusion: A New Risk-Reward Calculus
The “Makary Doctrine” is arguably the most pro-industry regulatory shift in decades. By treating the 34% of mass-market drugs like orphan drugs, the FDA is signalling that statistical rigor can replace repetition.
For investors and developers, the message is clear: The financial barrier to entry for blockbuster indications has just been lowered. However, the scientific bar has been raised—that single trial must be impeccable. A failure in a “one-shot” strategy is fatal, but a win is now twice as valuable.
