Research costs skyrocket
December 7, 2012
THE cost of developing a new
medicine has skyrocketed in the
last 40 years from $199 million in
the 1970’s to $1.9 billion in the
2000s, findings from the Office of
Health Economics in the United
Kingdom have shown.
According to The R&D Cost of a
New Medicine report, there are
four main reasons for the
increasing costs including higher
company out-of-pocket costs, up
nearly 600% over the period; and
lower success rates from clinical
development as researchers tackle
tougher therapeutic areas such as
dementia and arthritis.
The other factors include: an
increase in R&D time as science
becomes more complex, from six
years to 13.5 years; and increases in
the cost of capital from 8% to 11%.
Speaking in the wake of the study,
Medicines Australia chief executive
Dr Brendan Shaw said: “This study
confirms what we have known for
some time, namely that it is taking
longer and is becoming more
expensive to develop new medicines”.
“From time to time we hear
people question whether it really
costs this much money to develop
new medicines for the community,”
he said.
“There's a suggestion that
somehow the development of new
medicines can be done on the
cheap and should be priced as such.
“This new study categorically
shows that it costs companies a lot
of money to take a new medicine
from first discovery in a laboratory,
through clinical trials and ultimately
make it available for patients,” he
added.
Shaw used the report’s findings to
champion the importance of
investing in the medicines
development process, as well as
ensuring that the regulatory and
business environment for the
development of new medicines is
as efficient and effective as possible.
“The commercial business model
is undergoing change,” said Shaw
“Governments, payers and the
community need to be aware of
this and ultimately work with industry
to get a supportive environment
that encourages innovation in the
future medicine,” he added.
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