New cancer drugs have become extremely expensive. It is not unusual for immunotherapy treatments to cost between $100,000 and $200,000 per year. Often, the pharmaceutical industry justifies such a price tag because of the high cost to develop these medications.
What Does It Cost to Develop a New Cancer Drug?
One frequently cited analysis lists the cost to develop a new drug and bring it to market at $2.7 billion. Now a new analysis published in JAMA Internal Medicine challenges that estimate.
The researchers calculated the total R&D spending from the first year of a cancer drug’s development through FDA approval. Instead of nearly $3 billion per drug, the authors suggested that the median cost would be closer to $648 million.
That median cost rises to $757 million if you take into account an opportunity cost of 7 percent. (That means, the cost of having your money tied up in research instead of investing it in the stock market.) The analysts used data from ten companies’ filings with the Securities and Exchange Commission.
They conclude that:
“In a short period, development cost is more than recouped, and some companies boast more than a 10-fold higher revenue than R&D spending–a sum not seen in other sectors of the economy.”
Prasad & Mailankody, JAMA Internal Medicine, online, Sept. 11, 2017
High Cost of Prescription Drugs:
This is not the first time that academic analysts have noted that prices may be outstripping purported R&D expenses. In 2015, researchers pointed to a 400 percent hike in the consumer prices of dermatological drugs between 2009 and 2015. And Martin Shkreli, former head of Turing Pharmaceuticals, made headlines when he boosted the price of an old drug for toxoplasmosis by more than 5,000 percent.
