Nature Medicine | Spoonful of Medicine

The price of failure: New estimate puts drug R&D in the billions per agent

The analytical fisticuff over how expensive research and development is for pharmaceutical companies flared up again today with a new estimate that pegs the cost of inventing a new medicine at well over the $1 billion price tag often tossed around in the industry. After factoring in money spent on drug failures, Bernard Munos of the InnoThink Center for Research In Biomedical Innovation says that the average cost to bring a drug to market closer to a staggering $4 billion.

Small firms that don’t go bust tend to be the most cost-effective. But among big pharma, some drugmakers manage to stretch their dollars further than others. Amgen, of Thousand Oaks, California, gets the most bang for its buck at just over $3.7 billion per approved drug—calculated by dividing the company’s total R&D spending by the number of approved agents—while UK-based AstraZeneca is the least efficient, spending closer to $12 billion per agent thanks to several recent late-stage clinical trial failures involving treatments for diabetes, depression, and ovarian cancer.

Experts remain divided about the accuracy of these new estimates, though. “A grand average doesn’t have much to do with the real world of cost,” Donald Light, a health policy researcher at the University of Medicine and Dentistry of New Jersey in Stratford, told Nature Medicine. Last year, Light used estimates of clinical trial costs submitted by pharmaceutical companies to the Internal Revenue Service to come to the conclusion that the overall cost to develop a new drug was closer to $60 million (see ‘Drugs development is cheaper than widely claimed, experts say’). He says that numbers as high as $12 billion are not useful measures of R&D costs because they do not take into account the cost that society bears on behalf of the drug company in the form of subsidies and tax credits.

Regardless of who’s right, “the high cost of developing drugs shouldn’t be a badge of honor for drug firms,” writes reporter Matthew Herper, who broke the story in Forbes. “There’s no reason it has to be this expensive.” Now, there’s one point all the experts can agree upon.


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