Tufts CSDD: Cost to Develop New Drug is $2.6B

The last time the Tufts Center for the Study of Drug Development studied costs of developing a new prescription medicine that gains marketing approval was in 2003. At the time, the costs was $802 million for drugs first tested in human subjects for the time period 1983 to 1994. In 2013, that cost would be $1,044 million. With the analysis released today of the time period between 1995 to 2007, in 2013 dollars, the cost was $2,558 million.

Joseph A. DiMasi, director of economic analysis at Tufts CSDD and principal investigator for the study, said that rising drug development costs have been driven mainly by increases in out-of-pocket costs for individual drugs and higher failure rates for drugs tested in human subjects. He noted in the release that factors that likely have boosted out-of-pocket clinical costs include increased clinical trial complexity, larger clinical trial sizes, higher cost of inputs from the medical sector used for development, greater focus on targeting chronic and degenerative diseases, changes in protocol design to include efforts to gather health technology assessment information, and testing on comparator drugs to accommodate payer demands for comparative effectiveness data.

Lengthening development and approval times were not responsible for driving up development costs, according to DiMasi.