Healthy Skepticism Library item: 20344
Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.
 
Publication type: Journal Article
DiMasi JA, Hansen RW, Grabowski HG.
The price of innovation: new estimates of drug development costs.
J Health Econ 2003; 22:(2):151-85
http://www.sciencedirect.com/science/article/pii/S0167629602001261
Abstract:
The research and development costs of 68 randomly selected new drugs were obtained from a survey of 10 pharmaceutical firms. These data were used to estimate the average pre-tax cost of new drug development. The costs of compounds abandoned during testing were linked to the costs of compounds that obtained marketing approval. The estimated average out-of-pocket cost per new drug is 403 million US dollars (2000 dollars). Capitalizing out-of-pocket costs to the point of marketing approval at a real discount rate of 11% yields a total pre-approval cost estimate of 802 million US dollars (2000 dollars). When compared to the results of an earlier study with a similar methodology, total capitalized costs were shown to have increased at an annual rate of 7.4% above general price inflation.
Keywords:
Capital Expenditures/statistics & numerical data*
Costs and Cost Analysis
Data Collection
Drug Approval/economics
Drug Evaluation/economics*
Drug Evaluation, Preclinical/economics
Drug Industry/economics*
Drugs, Investigational/economics
Humans
Inflation, Economic
Organizational Innovation
Research Support as Topic/economics*
United States