Unbiased Analysis of Today's Healthcare Issues

Cost of drug development: $1 billion

Written By: Jason Shafrin - Feb• 16•10

A paper by DiMasi et al. (2003) found that the cost of drug development was $802 million.  This is a highly contentious number.  Drug companies have used this number to lobby regulators to loosen the FDA approval process.  The data used in the study, however, was confidential and could not be replicated by other authors.

A new paper by Adams and Branter (2010) replicates the methods of the older study with publicly available data and find that the previous number is an underestimate.  The paper claims that the cost of drug development is actually $1 billion.  This is not an absolute number, however, as there is a substantial variation drug development expenditure depending on the therapeutic category.

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  1. […] $1 billion burning a hole in your pocket? On average that should be enough to develop one new drug, says Healthcare Economist. (If you want to take an easier path, Health Business Blog suggests placebo may be the next blockbuster.) […]

  2. […] tip to Jason Shifrin of the Healthcare Economist blog for pointing out the new […]

  3. […] develop one drug is around $1,300,000,000, equal to the GDP of Guyana (a google search will show lower estimated average costs). Coincidentally, or not, over the last decade the number of new drugs to reach the market has been […]

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