[Ip-health] New paper on cost of R&D of cancer medicines

Mohga Kamal-Yanni mkamalyanni at Oxfam.org.uk
Wed Oct 18 17:08:53 PDT 2017

JAMA Intern Med. 2017 Sep 11. doi: 10.1001/jamainternmed.2017.3601. [Epub 
ahead of print]
Research and Development Spending to Bring a Single Cancer Drug to Market 
and Revenues After Approval.
Prasad V1,2,3, Mailankody S4,5.

A common justification for high cancer drug prices is the sizable research 
and development (R&D) outlay necessary to bring a drug to the US market. A 
recent estimate of R&D spending is $2.7 billion (2017 US dollars). 
However, this analysis lacks transparency and independent replication.

To provide a contemporary estimate of R&D spending to develop cancer 

Analysis of US Securities and Exchange Commission filings for drug 
companies with no drugs on the US market that received approval by the US 
Food and Drug Administration for a cancer drug from January 1, 2006, 
through December 31, 2015. Cumulative R&D spending was estimated from 
initiation of drug development activity to date of approval. Earnings were 
also identified from the time of approval to the present. The study was 
conducted from December 10, 2016, to March 2, 2017.

Median R&D spending on cancer drug development.

Ten companies and drugs were included in this analysis. The 10 companies 
had a median time to develop a drug of 7.3 years (range, 5.8-15.2 years). 
Five drugs (50%) received accelerated approval from the US Food and Drug 
Administration, and 5 (50%) received regular approval. The median cost of 
drug development was $648.0 million (range, $157.3 million to $1950.8 
million). The median cost was $757.4 million (range, $203.6 million to 
$2601.7 million) for a 7% per annum cost of capital (or opportunity costs) 
and $793.6 million (range, $219.1 million to $2827.1 million) for a 9% 
opportunity costs. With a median of 4.0 years (range, 0.8-8.8 years) since 
approval, the total revenue from sales of these 10 drugs since approval 
was $67.0 billion compared with total R&D spending of $7.2 billion ($9.1 
billion, including 7% opportunity costs).

The cost to develop a cancer drug is $648.0 million, a figure 
significantly lower than prior estimates. The revenue since approval is 
substantial (median, $1658.4 million; range, $204.1 million to $22 275.0 
million). This analysis provides a transparent estimate of R&D spending on 
cancer drugs and has implications for the current debate on drug pricing.

Best wishes مع أطيب التمنيات 
Mohga -Dictating to the computer so please forgive silly mistakes
Dr. Mohga Kamal-Yanni
Senior health & HIV policy advisor, Oxfam GB
Editor of www.globalhealthcheck.org
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