TY - JOUR
KW - Biomedical Research
KW - Capital Financing
KW - Costs and Cost Analysis
KW - Discount rate
KW - Drug Industry
KW - Innovation
KW - Pharmaceutical industry
KW - R&D cost
KW - Technical success rates
KW - United States
AU - Joseph A. DiMasi
AU - Henry G. Grabowski
AU - Ronald W. Hansen
AB - 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).
BT - Journal of Health Economics
DA - 2016-05
DO - 10.1016/j.jhealeco.2016.01.012
LA - eng
N2 - 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).
PY - 2016
SP - 20
EP - 33
ST - Innovation in the pharmaceutical industry
T2 - Journal of Health Economics
TI - Innovation in the pharmaceutical industry: New estimates of R&D costs
UR - https://www.sciencedirect.com/science/article/abs/pii/S0167629616000291?via%3Dihub
VL - 47
SN - 1879-1646
ER -