What Does It Really Cost to Bring a New Drug to Market? Study Attempts to Find Out

March 3, 2020

Both the capitalized research and development costs as well as the average cost of investments were higher than previous estimates from other researchers.

The issue of rising drug costs has been front and center in the United States, influencing political and policy debates, raising concerns about patient access, and stirring questions about the level of biopharmaceutical prices and profit required to recoup investment in new therapies.

In an effort to quantify how much drug companies spend to bring a new drug to market, a study published in JAMA Tuesday found that, inclusive of the cost of failed trials, research and development (R&D) costs were $985 million, and that the mean investment was $1.4 billion.

Between 2009 and 2018, the FDA approved 355 new drugs; this study analyzed 63 of those. Of the 63, 16, or 25%, were biologics.

Using publicly available data, researchers found $985.3 million (95% CI, $683.6 million-$1228.9 million) in R&D costs, and said the mean investment was estimated at $1335.9 million (95% CI, $1042.5 million-$1637.5 million) in the base case analysis.

Authors examined R&D estimates by therapeutic areas with 5 or more drugs (oncology, metabolism and endocrinology, cardiovascular, central nervous system, autoimmune and inflammation, opthamology, and infectious disease).

Median estimates ranged from $765.9 million (95% CI, $323.0 million-$1473.5 million) for nervous system agents to $2771.6 million (95% CI, $2051.8 million-$5366.2 million) for antineoplastic and immunomodulating agents.

Both the capitalized R&D costs as well as the average cost of investments were higher than previous estimates from other researchers. Other recent estimates had ranged from $314 million to $2.8 billion; the authors said the differences may stem from the types of data used (ie, public vs private) as well as the range of drug products analyzed.

Researchers stressed the importance for policy makers, regulators, and payers to know the exact scale of investments in development. “This knowledge can inform the design of pricing policies that give adequate rewards for innovative drugs that bring value to health care systems,” they wrote.


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