What Does It Cost to Create a Cancer Drug? Less Than You’d Think

Gina Kolata in The New York Times:

CancerWhat does it really cost to bring a drug to market? The question is central to the debate over rising health care costs and appropriate drug pricing. President Trump campaigned on promises to lower the costs of drugs. But numbers have been hard to come by. For years, the standard figure has been supplied by researchers at the Tufts Center for the Study of Drug Development: $2.7 billion each, in 2017 dollars. Yet a new study looking at 10 cancer medications, among the most expensive of new drugs, has arrived at a much lower figure: a median cost of $757 million per drug. (Half cost less, and half more.) Following approval, the 10 drugs together brought in $67 billion, the researchers also concluded — a more than sevenfold return on investment. Nine out of 10 companies made money, but revenues varied enormously. One drug had not yet earned back its development costs. The study, published Monday in JAMA Internal Medicine, relied on company filings with the Securities and Exchange Commission to determine research and development costs.

…One striking example was ibrutinib, made by Pharmacyclics. It was approved in 2013 for patients with certain blood cancers who did not respond to conventional therapy. Ibrutinib was the only drug out of four the company was developing to receive F.D.A. approval. The company’s research and development costs for their four drugs were $388 million, the company’s S.E.C. filings indicated. After it was approved, Janssen Biotech acquired the drug for $21 billion. “That is a 50-fold difference between revenue post-approval and cost to develop,” Dr. Prasad said.

More here.

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