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R&D cost estimates - MSF response to Tufts CSDD study on cost to develop a new drug

18 November 2014
The Tufts Center for the Study of Drug Development has just released its latest study on the average cost of developing a new drug. The average figure, released by Tufts CSDD, is US$2.588 billion ($2.6 billion).

The previous Tufts CSDD study, from 2003, reported a figure of US$802 million per drug. The study and its use of an average cost is indicative of a much larger problem in the pharmaceutical industry as a whole, which operates behind firmly closed doors and refuses to make R&D costs public. The pharma industry must be much more transparent on how much it costs to develop a drug.

Médecins Sans Frontières (MSF) responds to the Tufts CSDD study with the below quote:

“The pharmaceutical industry-supported Tufts Center for the Study of Drug Development claims it costs US$2.6 billion to develop a new drug today; but if you believe that, you probably also believe the earth is flat.

“GlaxoSmithKline’s CEO Andrew Witty himself says the figure of a billion dollars to develop a drug is a myth; this is used by the industry to justify exorbitant prices. We need to ask ourselves, if the CEO of a top pharmaceutical company says it’s a myth that it costs a billion dollars to develop a drug, can we really take this new figure 2.56 billion seriously?

“We know from past studies and the experience of non-profit drug developers that a new drug can be developed for just a fraction of the cost the Tufts report suggests. The cost of developing products is variable, but experience* shows that new drugs can be developed for as little as $50 million, or up to $186 million if you take failure into account, which the pharmaceutical industry certainly does – these figures are nowhere near what the industry claims is the cost.

“Today nearly half of R&D spending is paid for by the taxpayer or by philanthropy, and that figure continues to rise as governments do more and more to make up for the pharmaceutical industry’s R&D shortcomings. Not only do taxpayers pay for a very large percentage of industry R&D, but are in fact paying twice because they then get hit with high prices for the drugs themselves.  

“Regardless of how much R&D costs, the system is failing people in developing countries, as the latest example of Ebola shows, with over 5,000 deaths so far because there is no treatment or vaccine on the market; meanwhile millions of people continue to die from diseases such as tuberculosis. The R&D system as we know it is broken and must be fixed.”

- Rohit Malpani, Director Policy and Analysis, Médecins Sans Frontières Access Campaign

*Drugs for Neglected Diseases initiative, figures in US$ converted from euros: http://www.dndi.org/media-centre/press-releases/1711-dndi-rd-model.html

 

Page updated: 18 November 2014
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