[Ip-health] WSJ Pharmalot: How Much Does it Cost to Develop a Drug? What do you Think?

Thiru Balasubramaniam thiru at keionline.org
Mon Nov 17 09:23:42 PST 2014


http://blogs.wsj.com/pharmalot/2014/11/17/how-much-does-it-cost-to-develop-a-drug-what-do-you-think/

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<SNIP>

So what might the latest number from Tufts look like? Already, the betting
has begun. A forum run by one consumer advocacy group is asking
participants to guess and, so far, their answers have ranged from about
$1.1 billion to $2.5 billion.

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11:03 am ET
Nov 17, 2014CLINICAL TRIALS
<http://blogs.wsj.com/pharmalot/category/clinical-trials/>How Much Does it
Cost to Develop a Drug? What do you Think?



   - By
   - ED SILVERMAN


For years, there has been intense debate over what it costs to develop a
new drug. And tomorrow, one think tank hopes to put the issue to rest. Of
course, this remains to be seen.

Drug makers maintain the true cost should reflect the investment in not
only the hits, but the misses. In other words, the pharmaceutical industry
says the expense needed to successfully concoct any one medicine should
incorporate the costs of the many failures that occur along the way.

Conversely, consumer advocates and some academics, among others, regularly
contest industry estimates, which have been rising over the years. As they
see it, the numbers proffered by drug makers mask a combination of
irrelevant and overstated expenses. And these estimates, they go on to
argue, are unfairly used to justify rising prices.

For these reasons, arguments are likely to continue. Nonetheless, the Tufts
Center for the Study of Drug Development on Tuesday will release a report
that will take yet another stab at determining the true cost. The last time
the think tank offered an estimate was in 2003, when it calculated the cost
to develop a drug at $802 million. The findings were published
<http://fds.duke.edu/db?attachment-25--1301-view-168> in the Journal of
Health Economics.

So what might the latest number from Tufts look like? Already, the betting
has begun. A forum run by one consumer advocacy group is asking
participants to guess and, so far, their answers have ranged from about
$1.1 billion to $2.5 billion.

Since 2003, various estimates have suggested the cost has increased
significantly. Two years ago, for instance, the cost was estimated at $1.5
billion by the Office of Health Economics, a consulting firm that received
an unrestricted grant from AstraZeneca to compile its report. The Tufts
analysis, however, remains widely cited as a benchmark.

How does the Tufts Center calculate the cost? The non-profit think tank
relies on data supplied, in part, by the pharmaceutical industry as well as
other sources. For those who are interested, the methodology will be
released along with the bottom-line calculations. We should note, by the
way, that the Tufts Center is funded, in part, by the pharmaceutical
industry.

So what do you think the number will be? No, there is no prize for the
person who guesses correctly, but this is as good a time as any to think it
over.



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