Is Big Pharma distorting drug development costs?

May 1, 2011 § Leave a comment

Does R&D really cost $1.3 billion per drug?

Drug R&D costs rose considerably between 2000 and 2005

A study from the February 2011 issue of BioSocieties pegged the actual cost of the research and development of one drug at $78 million. That’s far below the $1.3 billion given by the Journal of Health Economics in 2003.

The study’s authors, an inter-disciplinary effort between Donald W. Light of the University of Medicine and Dentistry of New Jersey and Rebecca Warburton of the University of Victoria in Canada, systematically dismantled what they call “the wholly artificial ‘fact’ of average R&D costs per new drug” by removing inflated multipliers and calculating the tax breaks drug companies get for their R&D, among many other steps. The study says that industry’s estimates always have been based on raw data the drug companies keep confidential. That’s a major issue because the industry has an obvious incentive to maximize its R&D claims; this way, they can’t be double-checked.

These figures have been questioned for years, and continue to be questioned with these new findings. Do you think that these findings or true, or that the original numbers stand? Should the original numbers even be questioned or verified?


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