1. New OHE Study on Pharmaceutical R&D Costs Released
London. 3 December 2012. The Office of Health Economics today released a comprehensive study
of the cost of R&D for new medicines. It confirms research published to date, which shows an
increase in costs from £125 million ($199 million) per new medicine in the 1970s to £1.2 billion
($1.9 billion) in the 2000s (both in 2011 prices).
Four factors are increasing R&D costs: (1) higher out-of-pocket costs, up nearly 600% from the
1970s to the 2000s; (2) lower success rates for clinical development as tougher therapeutic areas
are tackled—e.g. neurology (Alzheimer’s), autoimmune diseases (arthritis), and oncology—from 1
in 5 in the 1980s to 1 in 10 in the 2000s; (3) increases in R&D times as both regulation and science
have become more complex, from 6 years in the 1970s to 13.5 years in the 2000s; and (4) increases
in the cost of capital—i.e. providing returns to funders that reflect the high risks of investing in
medicines R&D, from 8% in the 1970s to 11% in the 2000s.
Companies continue to emphasise changes that are intended to improve the efficiency of R&D
decisions, addressing those factors within their control. This includes, for example, making
decisions far earlier in R&D about the market prospects of a drug candidate and more tightly
managing clinical trial costs, often by outsourcing some aspects and/or siting some trials in lower-
cost locations.
Rapidly evolving R&D technology requires a wide range of expertise and data. New collaborations
are arising that involve a range of public and private entities, sharing both risks and rewards. Dr
Mestre-Ferrandiz, lead author on the study, points out that ‘Just as new approaches to R&D are
crucial to the future, so are new approaches to facilitating market entry and use. These are
essential both to encouraging R&D and ensuring that patients have the earliest access possible to
life-changing therapies’.
Contact: Jorge Mestre-Ferrandiz
Email: jmestre-ferrandiz@ohe.org
Phone: +44.20.7747.8860
Materials: http://news.ohe.org/
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