Innovation in the pharmaceutical industry: New estimates of R&D costs.
The research and development costs of 106 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 and biologics 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 approved new compound is $1395 million (2013 dollars). Capitalizing out-of-pocket costs to the point of marketing approval at a real discount rate of 10.5% yields a total pre-approval cost estimate of $2558 million (2013 dollars). When compared to the results of the previous study in this series, total capitalized costs were shown to have increased at an annual rate of 8.5% above general price inflation. Adding an estimate of post-approval R&D costs increases the cost estimate to $2870 million (2013 dollars).
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- United States
- Health Policy & Services
- Drug Industry
- Costs and Cost Analysis
- Capital Financing
- Biomedical Research
- 4407 Policy and administration
- 3801 Applied economics
- 1403 Econometrics
- 1402 Applied Economics
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Published In
DOI
EISSN
ISSN
Publication Date
Volume
Start / End Page
Related Subject Headings
- United States
- Health Policy & Services
- Drug Industry
- Costs and Cost Analysis
- Capital Financing
- Biomedical Research
- 4407 Policy and administration
- 3801 Applied economics
- 1403 Econometrics
- 1402 Applied Economics