The cost of drug development: A systematic review

doi:10.1016/j.healthpol.2010.12.002

Health Policy

Volume 100, Issue 1, April 2011, Pages 4-17

https://doi.org/10.1016/j.healthpol.2010.12.002 Get rights and content

Abstract

Objectives

We aimed to systematically review and assess published estimates of the cost of developing new drugs.

Methods

We sought English language research articles containing original estimates of the cost of drug development that were published from 1980 to 2009, inclusive. We searched seven databases and used citation tracing and expert referral to identify studies. We abstracted qualifying studies for information about methods, data sources, study samples, and key results.

Results

Thirteen articles were found to meet our inclusion criteria. Estimates of the cost of drug development ranged more than 9-fold, from USD$92 million cash (USD$161 million capitalized) to USD$883.6 million cash (USD$1.8 billion capitalized). Differences in methods, data sources, and time periods explain some of the variation in estimates. Lack of transparency limits many studies. Confidential information provided by unnamed companies about unspecified products forms all or part of the data underlying 10 of the 13 studies.

Conclusions

Despite three decades of research in this area, no published estimate of the cost of developing a drug can be considered a gold standard. Studies on this topic should be subjected to reasonable audit and disclosure of – at the very least – the drugs which authors purport to provide development cost estimates for.

Introduction

The pharmaceutical industry is heavily reliant on private and public investment in research to bring new products to market. The development of a new marketable drug product requires the establishment of basic knowledge related to a disease, the discovery of possible treatments, the engineering of methods for drug production, and the performance of tests to establish safety and efficacy. Each stage may be costly because of the complexities of human health, compound manufacturing, and treatment response.

A variety of studies have attempted to measure the cost of developing new drugs, and several commentaries have been written on the topic. Yet, despite the importance of knowledge about drug development costs, we could not find any prior systematic review of evidence concerning the cost of drug development. To address this gap, we sought to answer the following questions: What are the methods used to generate available estimates of the cost of developing a new drug? What is the range of available estimates? What are the components of estimated development costs? Have development cost estimates increased over time? Do cost estimates vary by therapeutic category? In the sections that follow, we describe our literature search and screening process; summarize the studies included and the methods and data sources they employed; review the estimates of the cost of drug development by cost component and across studies, drug classes, and time periods; and discuss the overall quality of available evidence.

Section snippets

Search strategy

We sought English language research articles on the cost of drug development that were published from 1980 to 2009, inclusive. We used database searching, citation snowballing and expert referral to identify the relevant literature. From January 19 to 21, 2010, we searched seven literature databases: EconLit (Ebsco), International Pharmaceutical Abstracts (OvidSP), MEDLINE (1950 to Present with Daily Update; OvidSP), Public Affairs Information Service and PAIS Archive (CSA), ProQuest

Included studies

Our initial searches of literature databases resulted in a list of 1806 potentially relevant citations (1718 unique citations after de-duplication). Title and abstract screening eliminated all but 24 of these citations. Most other citations were excluded at this stage because they were not on topic (1651 citations), they were commentaries (19), or they did not provide original estimates of the cost of drug development (22). Two additional, potentially relevant published articles were found

Variation in costs by treatment category

Following publication of his 1991[5] and 2003[8] studies, DiMasi produced follow-on papers that reported the clinical research costs by therapeutic categories using sub-samples from his research data [6], [9]. The most recent results are reported in Table 3. These estimates vary by 43%, from USD$311.9 million for a sample of analgesic and anaesthetic drugs to USD$448.0 million for a sample of anti-infective drugs. When DiMasi includes an estimate of the opportunity cost of capital invested, his

Discussion

Differences in data, methods, and subjects of investigation likely drive the wide variation in published estimates of the cost of drug development. For example, Young provides estimates based on aggregated research spending reported by the pharmaceutical industry and aggregated new drug approvals reported by the US FDA [11]. In comparison to the firm- and project-level analyses, Young's estimates of the cost of drug development are very low. The Global Alliance for TB Drug Development

Conclusions

Despite three decades of research in this area, no published estimate of the cost of developing a new drug can be considered a gold standard. Existing studies vary in their methods, data sources, samples, and therefore estimates. While some methods are methodologically strong and some findings have been widely cited, the fact that the data and even the subjects of investigation are kept secret make it impossible to assess validity and reliability. Studies on this topic should be subject to

Competing interests

Steve Morgan has been retained by the Canadian Department of Justice and the British Columbia Ministry of Health Services to provide expert testimony on matters related to pharmaceutical policy. In 2007, Joel Lexchin was retained by a law firm representing Apotex to provide expert testimony about the effects of promotion on the sales of medications. From 2007 to 2008 he was retained as an expert witness by the Canadian federal government in its defense of a lawsuit challenging the ban on

Authors’ contributions

Steve Morgan contributed to the review protocol, screening and abstraction of citations, and analysis of results; he drafted the initial manuscript. Paul Grootendorst and Joel Lexchin contributed to the review protocol, abstraction of citations, analysis of results, and revision of the manuscript. Colleen Cunningham contributed to the review protocol, screening citations, analysis of results, and revision of the manuscript. Devon Greyson conducted the literature searches and contributed to the

Acknowledgements

This project was made possible through a research contract from Health Canada and through a CIHR/Health Canada Emerging Team Grant in equity in access to necessary medicines. Sponsors had no role in the study design, interpretation of results, or decision to publish. All opinions expressed are solely those of the authors.

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ReviewThe cost of drug development: A systematic review

Abstract

Objectives

Methods

Results

Conclusions

Introduction

Section snippets

Search strategy

Included studies

Variation in costs by treatment category

Discussion

Conclusions

Competing interests

Authors’ contributions

Acknowledgements

Journal of Health Economics

Journal of Health Economics

Journal of Health Economics

Journal of Health Economics

Journal of Health Economics

The pharmaceutical development process: estimates of development costs and times and the effect of proposed regulatory changes

Spending on new drug development

Health Economics

How to improve R&D productivity: the pharmaceutical industry's grand challenge

Nature Reviews Drug Discovery

The cost of developing a new drug

Research and development costs for new drugs by therapeutic category: a study of the U.S Pharmaceutical Industry

PharmacoEconomics

R&D costs innovative output and firm size in the pharmaceutical industry

International Journal of the Economics of Business

Review
The cost of drug development: A systematic review