The price of innovation: new estimates of drug development costs.

Published

Journal Article

The research and development costs of 68 randomly selected new drugs were obtained from a survey of 10 pharmaceutical firms. These data were used to estimate the average pre-tax cost of new drug development. The costs of compounds abandoned during testing were linked to the costs of compounds that obtained marketing approval. The estimated average out-of-pocket cost per new drug is 403 million US dollars (2000 dollars). Capitalizing out-of-pocket costs to the point of marketing approval at a real discount rate of 11% yields a total pre-approval cost estimate of 802 million US dollars (2000 dollars). When compared to the results of an earlier study with a similar methodology, total capitalized costs were shown to have increased at an annual rate of 7.4% above general price inflation.

Full Text

Duke Authors

Cited Authors

  • DiMasi, JA; Hansen, RW; Grabowski, HG

Published Date

  • March 2003

Published In

Volume / Issue

  • 22 / 2

Start / End Page

  • 151 - 185

PubMed ID

  • 12606142

Pubmed Central ID

  • 12606142

Electronic International Standard Serial Number (EISSN)

  • 1879-1646

International Standard Serial Number (ISSN)

  • 0167-6296

Digital Object Identifier (DOI)

  • 10.1016/s0167-6296(02)00126-1

Language

  • eng