, Volume 6, Issue 1, pp 34–50 | Cite as

Demythologizing the high costs of pharmaceutical research

  • Donald W LightEmail author
  • Rebecca Warburton
Original Article


It is widely claimed that research to discover and develop new pharmaceuticals entails high costs and high risks. High research and development (R&D) costs influence many decisions and policy discussions about how to reduce global health disparities, how much companies can afford to discount prices for lower- and middle-income countries, and how to design innovative incentives to advance research on diseases of the poor. High estimated costs also affect strategies for getting new medicines to the world's poor, such as the advanced market commitment, which built high estimates into its inflated size and prices. This article takes apart the most detailed and authoritative study of R&D costs in order to show how high estimates have been constructed by industry-supported economists, and to show how much lower actual costs may be. Besides serving as an object lesson in the construction of ‘facts’, this analysis provides reason to believe that R&D costs need not be such an insuperable obstacle to the development of better medicines. The deeper problem is that current incentives reward companies to develop mainly new medicines of little advantage and compete for market share at high prices, rather than to develop clinically superior medicines with public funding so that prices could be much lower and risks to companies lower as well.


pharmaceutical research costs myths neglected diseases AMC (Advance Market Commitment) 


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Copyright information

© The London School of Economics and Political Science 2011

Authors and Affiliations

  1. 1.Program in Human BiologyStanford UniversityStanfordCAUSA
  2. 2.University of Medicine and Dentistry of New JerseyNJUSA
  3. 3.School of Public Administration, University of VictoriaVictoriaCanada

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