|Selected research from leading health care experts whose findings have a direct bearing on public policies effecting medical progress. Research is chosen based on its quality and relevance by the Medical Progress Today editorial staff.||
Estimating the Cost of New Drug Development: Is it Really $802 Million?
This study essentially verifies a widely quoted estimate for the cost of developing a new drug for FDA approval ($802 million) that was compiled several years ago by the Tufts Center for the Study of Drug Development.
This paper replicates the drug development cost estimates of Joseph DiMasi and colleagues ("The Price of Innovation"), using their published cost estimates along with information on success rates and durations from a publicly available data set. For drugs entering human clinical trials for the first time between 1989 and 2002, the paper estimated the cost per new drug to be $868 million. However, our estimates vary from around $500 million to more than $2,000 million, depending on the therapy or the developing firm.
The researchers theorize that drug development costs may vary widely because of strategic behavior on the part of drug companies, and that lower development costs for some therapies (for instance, AIDS drugs) suggest that “regulatory policy can also have a substantive effect on the cost of drug development.”
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