Drug R&D Costs Take Big Leap

Abstract

A New Report published by the Tufts Center for the Study of Drug Development (CSDD) pegs the cost of developing a prescription drug that gains market approval at $2.6 billion, a 145% increase, correcting for inflation, over the estimate the center made in 2003. CSDD’s finding, a bellwether figure in the drug industry, is based on an average out-of-pocket cost of $1.4 billion and an estimate of $1.2 billion in returns that investors forgo on that money during the 10-plus years a drug candidate spends in development. The center’s analysis drew from information provided by 10 pharmaceutical companies on 106 randomly selected drugs first tested in humans between 1995 and 2007. The study concludes that another $312 million is spent on postapproval development—studies to test new indications, formulations, and dosage strengths—for a life-cycle cost of $2.9 billion. The steep rise in costs comes despite an intense effort in recent years ...