Mean Cost of Bringing New Drug to U.S. Market Is $879.3 Million

A study published in JAMA Network Open on June 28, 2024, estimates the mean cost of developing a new drug for the U.S. market to be approximately $879.3 million. This figure includes both the costs of failed drug development and capital costs, with the cost of developing a new drug ranging from $378.7 million for anti-infectives to $1.756 billion for pain and anesthesia.

The study, conducted by Aylin Sertkaya, Ph.D., from Eastern Research Group Inc., in Lexington, Massachusetts, and colleagues, used data from 2000 to 2018 to assess the mean cost of drug development and how research and development (R&D) intensity changed over time. They found that the estimated mean cost of developing a new drug was approximately $172.7 million, which included postmarketing studies. However, when the cost of failures was included, the cost increased to $515.8 million.

Between 2008 and 2019, the pharmaceutical industry experienced a decline of 15.6 percent in sales but increased R&D intensity from 11.9 to 17.7 percent. Large pharmaceutical companies saw an increase in R&D intensity from 16.6 to 19.3 percent and a 10.0 percent increase in sales over the same period, despite the relatively stable or potentially decreasing cost of drug development.

The authors of the study conclude that understanding the costs associated with drug development is crucial for informing drug-related policies and their potential impacts on innovation and competition in the pharmaceutical industry.

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