Transparent Estimates of Cancer Drug Research & Development: Are Patients Overspending?

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This analysis provides a transparent estimate of research and development spending on cancer drugs and has implications for the current drug pricing debate.
This analysis provides a transparent estimate of research and development spending on cancer drugs and has implications for the current drug pricing debate.

MONDAY, Sept. 11, 2017 (HealthDay News) -- The median cost of cancer drug development is $648 million, and revenue after approval is substantial, according to a study published online in JAMA Internal Medicine.

Vinay Prasad, MD, MPH, from the Oregon Health and Science University in Portland, and Sham Mailankody, MBBS, from the Memorial Sloan Kettering Cancer Center in New York City, estimated cumulative research and development (R&D) spending from initiation of drug development activity to date of approval for cancer drugs. The analysis included 10 companies and drugs.

The researchers found that the median time to develop a drug was 7.3 years for the 10 companies. Five of the drugs received accelerated approval from the US Food and Drug Administration, and 5 received regular approval. Drug development cost a median of $648 million.

The median cost was $757.4 million and $793.6 million for a 7% per annum cost of capital and for a 9% opportunity costs, respectively. The total revenue from sales of these 10 drugs was $67 billion with a median of 4 years since approval, compared with $7.2 billion in total R&D spending.

"The cost to develop a cancer drug is $648 million, a figure significantly lower than prior estimates," the authors write. "This analysis provides a transparent estimate of R&D spending on cancer drugs and has implications for the current debate on drug pricing."

One author disclosed financial ties to the biopharmaceutical industry; the second received fees for speaking at conferences in the health care industry.

Reference

  1. Prasad V, Mailankody S. Research and development spending to bring a single cancer drug to market and revenues after approval [published online September 11, 2017]. JAMA Intern Med. doi: 10.1001/jamainternmed.2017.3601

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