3 ms·

It already costs 2.5 billion to bring a medication to market.. https://www.scientificamerican.com/article/cost-to-develop-new-pharmaceutical-drug-now-exceeds-2

by aantix 9y ago

It already costs 2.5 billion to bring a medication to market.. https://www.scientificamerican.com/article/cost-to-develop-new-pharmaceutical-drug-now-exceeds-2-5b/ https://www.scientificamerican.com/article/cost-to-develop-n... Adding additional quality measures only stands to increase that number.

Retric 9y ago
That number includes : "and an estimate of $1.2 billion in returns that investors forego on that money during the 10-plus years a drug candidate spends in development." The math on that seems wacky as 1.4 billion assuming it's close to valid is spent over 10+ years and is not a 100% up front investment for 10 years. So, they are saying if you invest ~140 million / year after 10 years you will have ~2.5 billion from your expected 13% annual ROI which is crazy talk. Even 70m/year over 20 years is only 2.5b if you assume 6% ROI which is hardly 'safe'. Given that, I suspect the other numbers are also inflated such as including 'failed' drugs which is classic Hollywood accounting. PS: One of the classic ways Drug companies mislead is what they bundle under the Research part of R&D vs the Development part of R&D.
mikeyouse 9y ago
That's a very industry-friendly number with a very industry-friendly calculation; > CSDD’s finding, a bellwether figure in the drug industry, is based on an average out-of-pocket cost of $1.4 billion and an estimate of $1.2 billion in returns that investors forego on that money during the 10-plus years a drug candidate spends in development. Backing some figures out then, the actual cash cost is $1.4 billion to develop a drug. They rely on a 11.8% clinical success rate for that figure, so if you back out the drugs that were abandoned along the way (since they won't need late-stage human safety studies), it's more like $165M to develop a self-originated drug if you believe the self-supplied pharma figures. It's even more suspect when their $2.6 billion headline figure for increased from $800M in 2003 when the cost of capital has decreased since then and average approval times have been halved: http://www.raps.org/uploadedImages/Site_Setup/Regulatory_Focus/News/2016/03/subs.png http://www.raps.org/uploadedImages/Site_Setup/Regulatory_Foc...
- jcranmer 9y ago
  > Backing some figures out then, the actual cash cost is $1.4 billion to develop a drug. They rely on a 11.8% clinical success rate for that figure, so if you back out the drugs that were abandoned along the way (since they won't need late-stage human safety studies), it's more like $165M to develop a self-originated drug if you believe the self-supplied pharma figures. The actual cost to develop a single successful drug, if you pass all the clinical trials, is in the ballpark of $500M or so. Dividing the total cost by success rate isn't an accurate number since the cost varies based on where you fail: the expensive bits are the clinical trials at the end, so finding out that the drug is a failure sooner cuts your costs considerably. The Phase III clinical trial by itself is well over $100M, much more if you're doing a large, long-term clinical study for a difficult problem (say, Alzheimer's or cancer). Something like 50% of all drugs fail in phase III.
  - mikeyouse 9y ago
    > The actual cost to develop a single successful drug, if you pass all the clinical trials, is in the ballpark of $500M or so. I'd love to see a source for that.. Not even Pharma claims figures that high. Take Sofosbuvir for example; It was discovered in 2007, was developed through 2011 and then the company was acquired by Gilead while they had multiple Phase III trials running. In that time period, they spent a total of $230 million on R&D -- for all of their candidates. They also had two other compounds that were undergoing Phase II trials. > The Phase III clinical trial by itself is well over $100M, much more if you're doing a large, long-term clinical study for a difficult problem (say, Alzheimer's or cancer). Nah. Not even close. HHS's most recent look placed Phase III at $19.9M, with very few classes of drugs costing more than $50M total for all phases (Ignoring IV since those are often more marketing than R&D)[1]: https://aspe.hhs.gov/system/files/images-reports/examination-clinical-trial-costs-and-barriers-drug-development/Figure%203.png https://aspe.hhs.gov/system/files/images-reports/examination... > Something like 50% of all drugs fail in phase III. The average is closer to 60% success rate, with some areas up to 75% success.[2] And it's not like if you fail the Phase III, the compound is scrapped and all of that work is wasted. There's an entire industry behind drug "repurposing, repositioning and rescue" to purchase and retarget promising compounds. [1] Full study: https://aspe.hhs.gov/report/examination-clinical-trial-costs-and-barriers-drug-development https://aspe.hhs.gov/report/examination-clinical-trial-costs... [2] https://www.bio.org/sites/default/files/Clinical%20Development%20Success%20Rates%202006-2015%20-%20BIO,%20Biomedtracker,%20Amplion%202016.pdf https://www.bio.org/sites/default/files/Clinical%20Developme...

by aantix 9y ago

Retric 9y ago

That number includes : "and an estimate of $1.2 billion in returns that investors forego on that money during the 10-plus years a drug candidate spends in development." The math on that seems wacky as 1.4 billion assuming it's close to valid is spent over 10+ years and is not a 100% up front investment for 10 years. So, they are saying if you invest ~140 million / year after 10 years you will have ~2.5 billion from your expected 13% annual ROI which is crazy talk. Even 70m/year over 20 years is only 2.5b if you assume 6% ROI which is hardly 'safe'. Given that, I suspect the other numbers are also inflated such as including 'failed' drugs which is classic Hollywood accounting. PS: One of the classic ways Drug companies mislead is what they bundle under the Research part of R&D vs the Development part of R&D.

mikeyouse 9y ago

That's a very industry-friendly number with a very industry-friendly calculation; > CSDD’s finding, a bellwether figure in the drug industry, is based on an average out-of-pocket cost of $1.4 billion and an estimate of $1.2 billion in returns that investors forego on that money during the 10-plus years a drug candidate spends in development. Backing some figures out then, the actual cash cost is $1.4 billion to develop a drug. They rely on a 11.8% clinical success rate for that figure, so if you back out the drugs that were abandoned along the way (since they won't need late-stage human safety studies), it's more like $165M to develop a self-originated drug if you believe the self-supplied pharma figures. It's even more suspect when their $2.6 billion headline figure for increased from $800M in 2003 when the cost of capital has decreased since then and average approval times have been halved: http://www.raps.org/uploadedImages/Site_Setup/Regulatory_Focus/News/2016/03/subs.png http://www.raps.org/uploadedImages/Site_Setup/Regulatory_Foc...

jcranmer 9y ago
> Backing some figures out then, the actual cash cost is $1.4 billion to develop a drug. They rely on a 11.8% clinical success rate for that figure, so if you back out the drugs that were abandoned along the way (since they won't need late-stage human safety studies), it's more like $165M to develop a self-originated drug if you believe the self-supplied pharma figures. The actual cost to develop a single successful drug, if you pass all the clinical trials, is in the ballpark of $500M or so. Dividing the total cost by success rate isn't an accurate number since the cost varies based on where you fail: the expensive bits are the clinical trials at the end, so finding out that the drug is a failure sooner cuts your costs considerably. The Phase III clinical trial by itself is well over $100M, much more if you're doing a large, long-term clinical study for a difficult problem (say, Alzheimer's or cancer). Something like 50% of all drugs fail in phase III.
- mikeyouse 9y ago
  > The actual cost to develop a single successful drug, if you pass all the clinical trials, is in the ballpark of $500M or so. I'd love to see a source for that.. Not even Pharma claims figures that high. Take Sofosbuvir for example; It was discovered in 2007, was developed through 2011 and then the company was acquired by Gilead while they had multiple Phase III trials running. In that time period, they spent a total of $230 million on R&D -- for all of their candidates. They also had two other compounds that were undergoing Phase II trials. > The Phase III clinical trial by itself is well over $100M, much more if you're doing a large, long-term clinical study for a difficult problem (say, Alzheimer's or cancer). Nah. Not even close. HHS's most recent look placed Phase III at $19.9M, with very few classes of drugs costing more than $50M total for all phases (Ignoring IV since those are often more marketing than R&D)[1]: https://aspe.hhs.gov/system/files/images-reports/examination-clinical-trial-costs-and-barriers-drug-development/Figure%203.png https://aspe.hhs.gov/system/files/images-reports/examination... > Something like 50% of all drugs fail in phase III. The average is closer to 60% success rate, with some areas up to 75% success.[2] And it's not like if you fail the Phase III, the compound is scrapped and all of that work is wasted. There's an entire industry behind drug "repurposing, repositioning and rescue" to purchase and retarget promising compounds. [1] Full study: https://aspe.hhs.gov/report/examination-clinical-trial-costs-and-barriers-drug-development https://aspe.hhs.gov/report/examination-clinical-trial-costs... [2] https://www.bio.org/sites/default/files/Clinical%20Development%20Success%20Rates%202006-2015%20-%20BIO,%20Biomedtracker,%20Amplion%202016.pdf https://www.bio.org/sites/default/files/Clinical%20Developme...