The cost of developing medicines – a big black box

Few issues in the pharmaceutical sector are more controversial and debated more intensely than the cost of developing a new drug.

The pharmaceutical industry tends to refer to a study conducted by the Tufts Centre for the Study of Drug Development. The Di Masi study reckons the average cost for drugs developed between 1995 and 2007 was $2.6 billion. Besides being the result of an industry-funded research, it does not take into account the significant amounts of public funds that pay for different stages of research & development or any other forms of public incentives.

Even the CEO of GlaxoSmithKline (GSK), one of the world’s biggest pharmaceutical companies, admitted that the $1 billion price tag to develop a new drug was “one of the great myths of the industry”. Other experiences, like the non-profit Drugs for Neglected Diseases Initiative (DNDi), tell us a completely different story. New drugs can be actually developed for as little as $50 million, or up to $186 million if the attrition (failure) rate is taken into account. These figures are nowhere near the industry’s claims.

It is high time citizens knew the real cost of research and development of new medicines. The diachronic shroud of secrecy around the cost of medical R&D leads us to believe that the ever-increasing prices of drugs have very little to do with the cost of R&D.
Pharmaceutical companies must disclose the real cost of medical R&D.