The $800 million dollar pill?

by on February 10, 2005 at 7:16 am in Economics, Medicine | Permalink

The research by DiMasi et al. showing that the cost of the average new drug (new chemical entity) is about $802 million dollars is controversial with many people suggesting the results were doctored.  A new paper, Estimating the Costs of New Drug Development: Is it really $802m?, by two economists at the Federal Trade Commission, replicates that research using somewhat different data and they indeed find that DiMasi et al. are wrong.  The average new drug does not cost $802…it costs between $839 and $868 million.

An interesting aspect of the new study is that the authors break down development costs by drug category finding that AIDS drugs, for example, cost considerably less than average.  Why?  The authors suggest that AIDS drugs have been regulated less severely than other drugs resulting in lower costs as well as quicker times to market.

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