Has the price of developing drugs really doubled in the last 11 years?
- According to data from the Tufts Center for the Study of Drug Development, the cost of drug development has doubled to $2.56 billion, from $802 million (or $1.04 billion in 2013 dollars) in 2003.
- Two of the major causes contributing to increased development costs are larger, more complex clinical trials and high failure rates, according to Tufts.
- The pharmaceutical industry cites the high costs of drug development as a major driver of higher drug prices. However, others, including the health insurance lobby and some doctors' groups, suggest that drug prices are arbitrary and no longer linked to development costs.
On one side are drug developers who cite not only the staggeringly high cost of development as contributing to the cost of drugs, but also the post-approval costs associated with post-marketing studies—a cost that averages $312 million.
On the other side are detractors, who claim that drug prices are untethered from reality. Rohit Malpani of Doctors Without Borders suggests that believing the numbers projected by Tufts amounts to "[believing] the Earth is flat." He cites more realistic figures as falling between $50 million and $186 million. Moreover, he says that almost half of drug-development costs are paid for by taxpayers or philanthropy.
Thus far, Tufts has not responded to Malpani's assertions. But this is an absolutely critical consideration when it comes to crafting policy and reimbursement rates for medicines. And the sunlight between some manufacturers and doctors (and even certain pharma companies) on the true costs of development will be a major sticking point going forward.