Rising Research and Development Costs for New Drugs in a Cost Containment Environment

Summary

The concurrence in recent years of mounting pressures to contain pharmaceutical expenditures in the United States and Europe, and rising research and development costs for new drugs, raises concerns about the future of new drug development. A recent study has shown that the research and development expenditures required to get new drugs to the marketplace are high and have been increasing rapidly. A random sample of 93 new chemical entities (NCEs) first tested in humans in 1970 to 1982 yielded an estimate for the cost per approved NCE of US$231 million in 1987 dollars. This estimate is more than double, in constant dollars, that of a previous study that used a similar methodology and covered a period roughly one decade earlier. The 2 studies were analysed to determine the components of the cost increase, and some of the more fruitful areas for future research on research and development costs are discussed.