Tufts Pegs Drug Development Cost at $2.6 billion – MSF Cries Foul

A cool $2.6 billion is the going rate to develop and gain market approval for a drug, according to the recent study by the Tufts Center for the Study of Drug Development (CSDD).

The estimate by the CSDD breaks down the number with $1.4 billion as the average out-of-pocket cost and $1.2 billion in time costs, which are expected returns that investors forego while a drug is in development.

Tufts CSDD arrived at $2.6 billion taking information provided by 10 pharmaceutical companies on 106 randomly selected drugs that were first tested in human subjects anywhere in the world from 1995 to 2007, according to the release.

In 2003, Tufts estimated the new drug approval cost at $802 million (in 2000 dollars equivalent to $1.044 billion in 2013 dollars) for drugs first tested in human subjects from 1983 to 1994, a 145% spike between the two study periods, or at a compound annual growth rate of 8.5%.

The figure from Tufts is commonly cited by the industry, though it is not uncontested.

Médecins Sans Frontières (MSF) responded immediately to the CSDD’s figure.

“The pharmaceutical industry-supported Tufts Center for the Study of Drug Development claims it costs $2.56 billion to develop a new drug today; but if you believe that, you probably also believe the earth is flat,” said MSF.

Drug development costs are varibable, but can be significantly lower and nowhere near industry claims, adds MSF.