Despite the variety of health systems across hundreds of different countries, one feature is near-universal: We all depend on private industry to commercialize and market drug products. And because drugs are such an integral part of our health care system, that industry is generally heavily regulated. Yet despite this regulation, little is publicly known about drug development costs. But aggregate research and development (R&D) data are available, and the pharmaceutical industry spends billions per year.
A huge challenge facing consumers, insurers, and governments worldwide are the acquisition costs of drugs. On this point, the pharmaceutical industry makes a consistent argument: This is a risky business, and it costs a lot to bring a new drug to market. According to PhRMA, the U.S. pharmaceutical industry’s advocacy group, it cost $1.3 billion (in 2005 dollars) to bring a new drug to market. The industry argues that high acquisition costs are necessary to support the multi-year R&D investment, and considerable risks, in to meet the regulatory requirements demanded for new drugs.
But what goes into this $1.3 billion figure? Read more »
*This blog post was originally published at Science-Based Medicine*