@article{2896,
  keywords = {Biomedical Research, Capital Financing, Costs and Cost Analysis, Discount rate, Drug Industry, Innovation, Pharmaceutical industry, R&D cost, Technical success rates, United States},
  author = {Joseph A. DiMasi and Henry G. Grabowski and Ronald W. Hansen},
  title = {Innovation in the pharmaceutical industry: New estimates of R&D costs},
  abstract = {The research and development costs of 106 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 and biologics 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 approved new compound is $1395 million (2013 dollars). Capitalizing out-of-pocket costs to the point of marketing approval at a real discount rate of 10.5% yields a total pre-approval cost estimate of $2558 million (2013 dollars). When compared to the results of the previous study in this series, total capitalized costs were shown to have increased at an annual rate of 8.5% above general price inflation. Adding an estimate of post-approval R&D costs increases the cost estimate to $2870 million (2013 dollars).},
  year = {2016},
  journal = {Journal of Health Economics},
  volume = {47},
  pages = {20-33},
  month = {2016-05},
  issn = {1879-1646},
  url = {https://www.sciencedirect.com/science/article/abs/pii/S0167629616000291?via%3Dihub},
  doi = {10.1016/j.jhealeco.2016.01.012},
  language = {eng},
}