The price of innovation: new estimates of drug development costs.

By J. DiMasi, R. Hansen, Henry G. Grabowski. 2003

4,275 citations recorded by the source corpus.

The research and development costs of 68 randomly selected new drugs were obtained from a survey of 10 pharmaceutical firms. These data were used to estimate the average pre-tax cost of new drug development. The costs of compounds abandoned during testing were linked to the costs of compounds that obtained marketing approval. The estimated average out-of-pocket cost per new drug is 403 million US dollars (2000 dollars). Capitalizing out-of-pocket costs to the point of marketing approval at a real discount rate of 11% yields a total pre-approval cost estimate of 802 million US dollars (2000 dollars). When compared to the results of an earlier study with a similar methodology, total capitalized costs were shown to have increased at an annual rate of 7.4% above general price inflation.

Subfields: Economics and Econometrics, Immunology

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Citations in the corpus

SWEETLEAD: an In Silico Database of Approved Drugs, Regulated Chemicals, and Herbal Isolates for Computer-Aided Drug Discovery (2013, background): “approved new chemical entity (NCE) continue to soar[1-3],”
Strategic Entrepreneurship at Universities: Academic Entrepreneurs’ Assessment of Policy Programs (2009, background): “dollars (DiMasi et al., 2003), and the costs of new product development are also high in other industries such as chemicals, consumer goods, and industrial equipment (Kessler, 2000).”
The Contribution of Skilled Immigration and International Graduate Students to U.S. Innovation (2005, background): “For 13 pharmaceuticals it could take as long as fifteen years for patent applications, due to the lengthy period for clinical trials, and a further two years for the patent award (DiMasi et al., 2003).”
Can the pharmaceutical industry reduce attrition rates? (2004, background): “In 2001, the costs of discovering and developing a drug were of the order of US d804 millio”
3D bioactive composite scaffolds for bone tissue engineering (2017, background): “ical and human clinical trials is substantial, and can extend to hundreds of millions of dollars [446,447].”
The influence of lipophilicity in drug discovery and design (2012, background): “On average, every new drug molecule requires 12 -- 15 years to reach the patient and costs a staggering amount of US$ > 800 million [1].”
Ready to Be Open? Explaining the Firm-Level Barriers to Benefiting from Openness to External Knowledge (2017, neutral): “Financial resources for R&D are increasingly important as R&D costs have been increasing considerably in the last decade (DiMasi et al., 2003, DiMasi, 2014).”
What Is a Patent Worth? Evidence from the U.S. Patent “Lottery” (2019, background): “33 coming from the probability of technical success and the regulatory process (DiMasi, Hansen, and Grabowski 2003).”
Shareholder returns and the exploration–exploitation dilemma: R&D announcements by biotechnology firms (2007, background): “…has characterized the early stages of this process (namely, patenting and preclinical trials) as akin to exploration and the final stages (namely, human clinical trials andNDA) as akin to exploitation (DiMasi, 1995; DiMasi et al., 2003; Flieger, 1995; Rothaermel and Deeds, 2004: 209–210).”
The productivity crisis in pharmaceutical R&D (2011, background): “The cost of developing a new drug has increased, as have total R&D expenditure”