insight into cost of developing a drug

iVillage Member
Registered: 04-26-2004
insight into cost of developing a drug
1
Wed, 05-19-2004 - 9:31am
I know this is long, sorry, but I hope it gives you all some insight into the cost of developing a drug.

I agree, drug prices are too high, and they should be lower in the US, they are lower in other countries, and I think that Pharmaceutical companies, as many other kinds of manufacturers out there, are greedy. Think about the junk you see in a dollar store. How much do you think it cost the manufacturer to make that? Pennies… but we all get excited and buy it up, because it’s only a dollar! At least the meds are doing more for me than a knick-knack from the dollar store!

But having said that, what we pay for a drug is not just based on what it costs to manufacture the pill. The pharmaceutical companies have to add in the costs of research and development of the drug. It really is amazing what a company has to go through to get a drug to market (A lot having to do with the government). First the chemists have to find a new drug entity, totally different from anything anyone else has ever found. They then study it, find out what it can do. If it has promise, shows indication that it can help say, epilepsy, then another group has to figure out how to mass produce it. Once that’s done then there are a slew of research studies that have to be performed (involving animal research) to get approval from the FDA. People always complain about animal research, but it’s the government that requires these studies to be done, to prove it’s safe to give to people (and rats are the largest # used). Once the FDA agrees it’s safe, then it goes into humans. If you’ve ever heard a radio ad asking if you are interested in trying an experimental new drug, well, that’s what it’s all about. Meanwhile longer term rat studies go on, 2-year studies to show it’s not cancerous. Once that’s all done, a huge package is submitted to the FDA for drug approval. If it’s approved great, then the whole manufacturing side takes over and marketing. Lots of people are involved in making one drug a reality. Lots of people to pay. And that’s if the drug works! For every one drug that a company gets through the process, there are at least 10 that stop somewhere in the middle.

I did a little research on the web, and found this. Granted it’s from the PhRMA website, and they are going to be biased in favor of the Pharmaceutical companies, but it gives you an idea of what it does cost:

In 2002, PhRMA (Pharmaceutical Research & Manufacturers of America) member companies spent an estimated $32 billion on R&D, compared to the entire NIH (national institute of health) operating budget of $24 billion. However, this investment does not fully reflect the chancy endeavor that makes our life-enhancing research such a difficult venture. PhRMA companies also invested more in R&D not only to improve the current rate of finding innovative medicines, but to meet the rising cost of bringing a drug to market. Economists recently published a new study finding that the average cost of developing a new prescription medicine was $802 million.



In addition, only 3 out of every 10 drugs brought to market generate enough revenue to recover the average cost of its development. That means 7 out of every 10 drugs brought to market, never generate enough revenue to recover the average cost of development.

Again, I DO agree, drug prices are too high, and I doubt the Pharmaceutical companies are going to change that any time sooner, but I hope this relieves some of the anxiety over why drug cost so much…

Lee Anne

iVillage Member
Registered: 01-26-2004
Wed, 05-19-2004 - 12:04pm
Lee Anne, thank you.
AcornLeaves