Tufts center study: It costs $2.6B to get drug to market
The never-ending debate about what drugs should cost is in part driven by the fact that no one seems to know how much money it actually takes to develop one.
Now there’s an analysis from an influential think tank for what it believes to be the cost of getting a drug approved: $2.6 billion.
That’s the latest projection from the Tufts Center for the Study of Drug Development, a research group partially funded by drugmakers. The new figure is more than three times higher than the group’s 2001 estimate of $802 million.
The group estimates the average drug discovery and development process costs $1.4 billion. Its estimate includes another $1.2 billion in foregone returns investors otherwise would have seen while the drug was under development. The group estimates that drugmakers on average face another $312 million in research and development costs after a drug gets approved, which could bring the total average cost of development to $2.9 billion.
The prices of many popular prescription drugs have risen sharply over the last decade, leaving consumers wondering why the cost of medicine is so high — and whether pharmaceutical companies need to charge so much to cover the cost of developing drugs, or if they are padding their profits.
With patents on blockbuster drugs expiring over the past few years, the pharmaceutical industry is under pressure to make up for those losses.
The Tufts center researchers say the cost of developing a drug, when adjusted for inflation, has increased 145 percent over the past decade. Their findings — which are drawing scrutiny from consumer advocates and academics — attribute the rising costs to higher failure rates for drugs and higher R&D costs.
Drugmakers have also been tackling more complex diseases over the past decade, and they must fund research proving the cost effectiveness of new drugs, according to the report.
An overwhelming number of drugs that enter clinical trials don’t actually get approved by the Food and Drug Administration, so drugmakers try to recover those costs when they have a successful product. Joseph DiMasi, the lead author of the CSDD study, said the group’s estimate takes that into account.
“Drug development remains a costly undertaking despite ongoing efforts across the full spectrum of pharmaceutical and biotech companies to rein in growing R&D costs,” DiMasi said in a statement.
The study won’t be released until 2015, the researchers said. So far, the Tufts center has released only a slide presentation, a press release and a backgrounder on the study methodology.
Consumer advocates say that estimates from the Tufts research center are often inflated to justify higher drug prices — and the lack of detail released on this latest study makes it hard to assess the claims.
James Love, director of the nonprofit Knowledge Ecology International, said critical information is missing from the analysis, such as how many patients were in the drug trials, or how much money was claimed to have been spent on each patient.