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The Cost of Innovation

Robert Zirkelbach   |     November 19, 2014   |   SHARE THIS

Patients are living longer, healthier lives thanks to biopharmaceutical innovation. But, as evidenced by a new study released yesterday by the Tufts Center for the Study of Drug Development, the road to bringing a new FDA-approved medicine to patients is long and the costs are formidable.

The Tufts Center released findings showing that the average cost to research and develop (R&D) a new medicine has doubled over the past decade to $2.6 billion. This includes the cost of failures - which tend to be more common than successes, but build on previous advances. When the costs of post-approval R&D were factored in, the estimate increased to $2.8 billion.

Researchers attribute this growth in R&D to several factors, including an increase in the complexity of clinical trials and a significant decline in clinical approval successes. According to the study, only 12 percent of drug candidates that enter clinical testing are eventually approved for use by patients.

A recent report on the so-called “failure” rates for three difficult-to-treat cancers – melanoma, lung cancer, and brain cancer – illustrates just how difficult the clinical trial process can be. In the past 16 years, there have been 96 unsuccessful attempts to develop drugs to treat melanoma, 167 for lung cancer, and 75 for brain cancer. In this same period, there were some medicines that beat the odds and advanced care: 7 to treat melanoma, 10 for lung cancer, and 3 for brain cancer were approved by the Food and Drug Administration.

These findings underscore the ongoing challenges the biopharmaceutical industry faces as R&D efforts focus on some of the most costly and challenging diseases, where the science is more complex and the failure risks are compounded. 

Although R&D for cancer and other debilitating diseases such as HIV/AIDS and hepatitis C remains a challenge, America’s biopharmaceutical companies are committed to the pursuit of innovative medicines. Through these investments, we are discovering innovative treatments that improve lives and give patients greater hope for their future. This is an investment worth making.

Robert Zirkelbach

Robert Zirkelbach Robert Zirkelbach is Executive Vice President of Public Affairs at PhRMA. He joined PhRMA in 2014 after working for seven years representing the health insurance industry. He likes Saturday afternoon BBQs on his deck, traveling, trying new restaurants, and attempting to play golf. He’s an avid, somewhat obsessive, Iowa Hawkeye fan and is lucky to have a wife that loves watching college football on Saturday afternoons.

Topics: Research and Development, drug cost

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