New study calculates median drug development costs at circa $1 billion

pharmafile | March 5, 2020 | News story | Manufacturing and Production, Research and Development, Sales and Marketing drug development, drug prices, pharma 

New research has pinned a concrete figure on the perennial industry question: how much does it cost to bring a new drug product through development to market?

The study, named ‘Changes in list prices, net Prices, and discounts for branded drugs in the US, 2007-2018’, analysed 63 therapies approved by the FDA between 2009 and 2018, of a total of 355 approvals throughout this period. These drugs were designed by 47 different companies, most of which were smaller in size.

Previous estimates on the cost of drug development have ranged from $314 million to $2.8 billion, the study notes. However, the findings showed an estimated median capitalised research and development cost for a therapeutic product was $985 million.

“After accounting for the costs of failed trials, the median capitalised research and development investment to bring a new drug to market was estimated at $985 million (95% CI, $638.6 million – $1228.9 million), and the mean investment was estimated at $1335.9 million (95% CI, $1042.5 million – $1637 million) in the base case analysis,” the study reads.

Back in May 2019, research published by the Tufts Center for the Study of Drug Development placed the estimated cost at $2.6 billion, breaking down to $1.4 billion in average out-of-pocket costs and $1.2 billion in time costs. That study investigated 106 drugs and approved between 1995 and 2007 from 10 pharma companies, chosen at random. These drugs were assessed for their pre-tax development cost, while the costs of abandoned trials or development programmes were also calculated.

The final judgement of the study varied hugely from the findings of the latest trial, and the authors of the new study argue that this is primarily down to their use of publicly available data.

Matt Fellows

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