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Typical drug development costs $2.6 billion

By Tim Sandle     Dec 6, 2014 in Health
How much does it cost to produce a pharmaceutical product these days? According to a new study, the typical cost has rocketed to $2.6 billion. The $ figure is up from an estimated price tag of $1 billion from an analysis published in 2003.
The extortionate figure is as according to a new estimate from the Tufts Center for the Study of Drug Development. This is based on the cost of developing a pharmaceutical and getting it approved for human use. The main reason is soaring R&D costs. In all drug development is a blanket term used to define the process of bringing a new pharmaceutical drug to the market once a lead compound has been identified through the process of drug discovery.
Outlining this further, Joseph DiMasi, the study’s lead investigator, said in a research brief: "Because the R&D process is marked by substantial technical risks, with expenditures incurred for many development projects that fail to result in a marketed product, our estimate links the costs of unsuccessful projects to those that are successful in obtaining marketing approval from regulatory authorities."
The full cost of bringing a new drug (that is a drug that is a new chemical entity) to market – from discovery through clinical trials to approval – is complex and controversial and thus the figure is not accepted by all. For example, the New York Times’s The Upshot blog states: “the bottom line is that the report contains a lot of assumptions that tend to favor the pharmaceutical industry. While the Tufts Center reports that $2.6 billion is the cost to develop ‘a new prescription medicine that gains marketing approval,’ it might be more accurate to say that it’s the cost to develop certain new molecular entities for which pharmaceutical companies did all of the research. That’s very few drugs, in the scheme of things.”
However, The Life Sci VC blog found the assumptions in the Tufts study to be reasonable. “No analysis is perfect. If Tufts estimate is off the mark for the entire industry, it doesn’t appear off by a huge amount, and certainly not the order of magnitude implied by the critics.”
More about Drugs, Pharmaceuticals, drug development, Research, R&d
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