• clinical trial design;
  • cost-effectiveness

In this note, we highlight the fact that the choice of type I and type II error rates should not simply be set at traditional levels in the phase II clinical trial setting when considering the relative success rate of previous trials in a given disease setting. For diseases in which it is rare that a new compound is active, we argue that more stringent type I error rates in the phase II setting may be more important relative to relaxing the type II error rates. The paper itself is more of a ‘thought’ experiment on this topic such that specific clinical trial settings will require specific applications of this approach. This is due in part to the fact that the real-world setting is more complex relative to overall decision process in terms of moving from phase II to phase III trials than our basic illustrative model. Copyright © 2012 John Wiley & Sons, Ltd.