The Tufts Center for the Study of Drug Development (“Tufts
Center”) has recently published a study estimating the cost of new
pharmaceutical development approaching US $3 billion. The
Tufts Center at Tufts University "provides strategic information to help
drug developers, regulators, and policy makers improve the quality and
efficiency of pharmaceutical development, review, and utilization." The
Tufts Center notes that:
The $2.558 billion
figure per approved compound is based on estimated average out-of-pocket costs
of $1.395 billion and time costs (expected returns that investors forego while
a drug is in development) of $1.163 billion.
When post-approval
R&D costs of $312 million are included, the full, product lifecycle cost
per approved drug, on average, rises to $2.870 billion, according to Tufts
CSDD. Post-approval studies, required by the U.S. Food and Drug Administration
as a condition of approval, assess new indications, new formulations, and new
dosage strengths and regimens, and monitor safety and long-term side effects in
patients. All figures are expressed in 2013 dollars.
The Tufts CSDD
estimate also accounts for expenses incurred for product development efforts
that did not reach fruition, which Joseph A. DiMasi, director of economic
analysis at Tufts CSDD and principal investigator for the study, said reflects
the full cost of winning marketing approval for a new drug.
The press release concerning the study attributes the rising costs of drug
development, in part, on the “higher failure rates for drugs tested in human
subjects.”