Tufts Study Says Drug Development Costs $2.6 Billion

Pharmaceutical companies today spend an average of $2.6 billion to get their products to market, according to a new report that finds R&D costs have increased 145 percent over the past decade.

Additional costs of postmarket R&D raise the overall costs of the drug’s entire lifecycle to roughly $2.9 billion, said Joseph DiMasi, director of economic analysis at the Tufts Center for the Study of Drug Development, which released the study.

By contrast, the cost of developing a drug in 2003 was $802 million, according to the study that looked at data from 106 drugs and biologics developed by 10 companies between 1997 and 2013.

The trend toward increasing R&D costs illustrates how difficult it is to develop new medicines for diseases today, PhRMA spokeswoman Holly Campbell said.

Rising costs are compounded by the fact that many investigational drugs fail early in development. Of the 1,442 compounds tested between 1997 and 2005, only 11.3 percent made it from Phase I to an FDA submission, and only 7.1 percent of those were ultimately approved. Meanwhile, a full 80.3 percent of the compounds were abandoned completely.

High failure rates can be attributed to the growing challenges of tackling highly complex diseases, Campbell said. A recent PhRMA report, for example, found that many more therapies for melanoma, brain and lung cancers have failed than succeeded in recent years. — Lena Freund

Originally appeared in Drug Industry Daily, the pharmaceutical industry’s number one source for regulatory news and information. Click here for more information.