Innovation in the pharmaceutical industry: New estimates of R&D costs

Abstract

a b s t r a c tThe research and development costs of 106 randomly selected new drugs were obtained from a survey of 10 pharmaceutical firms. These data were used to estimate the average pre-tax cost of new drug and biologics development. The costs of compounds abandoned during testing were linked to the costs of compounds that obtained marketing approval. The estimated average out-of-pocket cost per approved new compound is $1395 million (2013 dollars). Capitalizing out-of-pocket costs to the point of marketing approval at a real discount rate of 10.5% yields a total pre-approval cost estimate of $2588 million (2013 dollars). When compared to the results of the previous study in this series, total capitalized costs were shown to have increased at an annual rate of 8.5% above general price inflation. Adding an estimate of post-approval R&D costs increases the cost estimate to $2870 million (2013 dollars).

Can Pension Funds Partially Manage Longevity Risk by Investing in a Longevity Megafund?

“…For example, the average research and development cost per pharmaceutical development has been reported to be $2558 M by DiMasi et al (2016) but less than $59 M by Light and Warburton (2011). Appendix B navigates through such inconsistent historical reports, but also consistent open data and recent investigations, and concludes that the pharmaceutical development returns have been relatively stable.…”

“…However, for now a crisis is declared on the pharmaceutical side, with reported strong increases in research and development investments in the last decades, high cost of risk for investors, but strong decreases in success rates of drug development (see Scannell et al 2012). Reported estimates of average research and developments cost are $802 M (see DiMasi et al 2003) per successful drug, including the cost of failures, or more recently $2558 M (see DiMasi et al 2016). Such numbers are debated to be less than $59 M and it is suggested that most publicly available data in the field are biased (see Light and Warburton 2011;and Lazonick et al 2017).…”

America's drug problem

“…Although the cost of conceiving and making Strimvelis is on the far edge of the bell curve, a paper from the Tufts Center for the Study of Drug Development (Boston) suggests that even the average cost for developing and winning approval for a new drug is an astonishing ~$2.6 billion-about $1.4 billion in cash outlay, and another $1.2 billion in time costs to investors 9 . The industry loves to toss these nebulous figures around, but there is no doubt building a true breakthrough drug is a difficult, time consuming and expensive process.…”

A retrospective pilot study comparing data from monitoring reports to identify staffing influence on protocol deviation rates

“…The progression from new discovery to marketing approval can take more than 10 years and cost more than $2 billion dollars. 1 Only those protocols supported by confirmatory, applicable research results generated from animal studies, assays, molecular pathways, and genetic links move into the early Phase 0 and Phase 1 clinical trials in humans.…”