Propaganda or cost of innovation? The high price of new drugs

Abstract

Ever wonder how much it costs to develop a new drug? The independent, non-profit research group, The Tufts Center for the Study of Drug Development, estimates US$2.6 billion, almost double the centre’s previous estimate a decade ago. But how accurate is this figure? While the details of the study remain a secret, a press release, slideshow and background document on the Tufts website provide some insight into how this figure was calculated. Interestingly, only slightly more than half of this cost is directly related to research and development (R&D). US$1.2 billion are “time costs” – returns that investors might have made if their money wasn’t tied up in developing a particular drug. As expected, these costings have attracted the attention of policymakers, consumer advocates and critics of big pharma. In the New England Journal of Medicine, Harvard University Professor of Medicine Jerry Avorn questions several assumptions underpinning the Tufts costing – particularly the unverifiable claim that up to 80% of compounds are abandoned at some point during development.