Abstract
In this paper we present a decision analytic approach to determining sample size in a set of Phase III drug efficacy trials sponsored by a pharmaceutical company. In this approach we built a model to predict the expected net present value of the drug at varying sample sizes. We then chose the sample size that maximizes that value. We took into consideration effects that sample size had on the probability of approval, the cost of the studies, the time it takes the drug to reach the market, and a variety of other factors. We found that increasing the sample size increases the chance that the drug will be approved. On the other hand increasing the sample size increases the cost of the studies and the time it will take for the drug to reach the market. The model weighs these factors to produce the expected net present value.