By Clinical Informatics News Staff
November 18, 2014 | The Tufts Center for the Study of Drug Development released
new estimates today of how much it costs to develop and win marketing approval
for a drug. The total? $2.6 billion. About the same as the gross domestic
product of Burundi.
Tufts says the number comes from an estimated average
out-of-pocket cost of $1,395 million and time costs—expected returns that
investors forego while a drug is in development—of $1,163 million.
Post-approval R&D—including studies to test new
indications, new formulations, new dosage strengths and regimens, and to
monitor safety and long-term side effects in patients required by the U.S. Food
and Drug Administration as a condition of approval—adds another $312 million,
bringing the full product lifecycle cost per approved drug to $2,870 million.
Tufts last published similar research in 2003. Then the Tufts
CSDD estimated the cost per approved new drug to be $802 million (in 2000
dollars), or $1,044 million today. It’s a 145% increase.
Joseph A. DiMasi, director of economic analysis at Tufts
CSDD and principal investigator for the study, identified reasons he believes
the number is climbing and also identified factors not at play.
According to DiMasi, costs are going up thanks to out-of-pocket
costs for individual drugs and higher failure rates for drugs tested in human
subjects. Factors that likely have boosted out-of-pocket clinical costs include
increased clinical trial complexity, larger clinical trial sizes, higher cost
of inputs from the medical sector used for development, greater focus on
targeting chronic and degenerative diseases, changes in protocol design to
include efforts to gather health technology assessment information, and testing
on comparator drugs to accommodate payer demands for comparative effectiveness
data.
Not to blame were lengthening development and approval
times, he said.
$2.6 billion is a staggering amount of money. And, according
to some groups, a complete myth.
As soon as the report was released, Rohit Malpani, Director of
Policy and Analysis with Doctors Without Borders (Médecins Sans Frontières) released
a statement
that quoted GlaxoSmithKline’s CEO Andrew Witty who called the $1 billion drug
price tag “one of the greatest myths in the industry.” (Witty’s comment was made
at a conference and quoted in a 2013
Reuters article.)
“Experience shows that new drugs can be developed for as
little as $50 million, or up to $186 million if you take failure into account,”
Malpani said in the statement. “These figures are nowhere near what the
industry claims is the cost.”
Other groups accused the Center of dealing more in propaganda than facts,
calling for more details about the study, its findings and analyses.
This morning, in anticipation of the report, the Pharmalot blog ran an online poll. Half of voters guessed the cost would come in less than $2 billion per drug. Only about 15% guessed more than $2.5 billion.