Drugs, costs, economics

The $800 million figure has been tossed around as the cost of making the first pill of a new drug. Derek Lowe, and some commentors, “discuss the topic”:http://www.corante.com/pipeline/archives/2005/04/26/knocking_opportunity_costs.php. (Definitely read the comments, also.)

The figure itself hides a lot of issues. As Ben Robinson points out, it is the oft-cited _economic_ cost of drug development, rather than the sum total of receipts entered into the ledger book. Given the time scale of drug development, the effect of inflation isn’t trivial. For example, the price of milk is quite a bit higher than 10 years ago, and that’s the way our growth-oriented economy works. So, which number is the correct one to use? Well, that depends on what you want to examine.

What I can say is that the sum total of receipts goes to hundreds or thousands of people that make a clinical trial work – clinical workers, doctors, patients, statisticians, project managers, medical writers, data entry specialists, medical coding specialists, programmers/information technology specialists, regulatory specialists, and so on. I can also say that this money has to flow even if the drug fails, and few drugs that go through the development process succeed. For example, 4 out of 5 that make it to late stage trials fail.

That leaves us to consider the returns — economic and social — we get on having another pharmaceutical on the market, and that’s a debate I’d love PhRMA to address.

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