Two studies look at trends in the cost and length of time spent developing new pharmaceuticals
Explore this issue:July 2006
Since 1994, US spending on prescription drugs grew three times faster than healthcare spending as a whole. That affects payers, plans, patients, and physicians. Pharmaceutical companies claim that the cost of developing a new molecular entity (NME), often exceeding $1 billion, justifies high prescription drug prices. Two recent articles scrutinize that claim, examining the true costs of pharmaceutical innovation.
Development Costs: Is There One Answer?
Quantifying the cost of developing a new drug is a crucial question in the drug development debate. A recent analysis by Christopher P. Adams and Van V. Brantner entitled “Estimating the Cost of New Drug Development: Is It Really $802 Million?” notes that there is great variation in actual development costs for new drugs (Health Affairs 2006; 25 (2):429–436).