Trials24 May 2019 17:50
Trials
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Drug development and pre-clinical trials focus on non-human subjects and work on animals such as rats. This is the most inexpensive phase of testing.[citation needed]
The Food and Drug Administration mandates a 3 phase clinical trial testing that tests for side effects and the effectiveness of the drug with a single phase clinical trial costing upwards of $100 million.[9]
After a drug has passed through all three phases, the pharmaceutical company can move forward with a New Drug Application from the FDA. In 2014, the FDA charged between $1 million to $2 million for an NDA.[10]
Failed drugs
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The processes of "discovery" and clinical trials amounts to approximately 12 years from research lab to the patient, in which about 10% of all drugs that start pre-clinical trials ever make it to actual human testing.Citation needed Each pharmaceutical company (who have hundreds of drugs moving in and out of these phases) will never recuperate the costs of "failed drugs". Thus, profits made from one drug need to cover the costs of previous "failed drugs".
Relationship
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Overall, research and development expenses relating to a pharmaceutical drug amount to the billions. For example, it was reported that AstraZeneca spent upwards on average of $11 billion per drug for research and developmental purposes.[9] The average of $11 billion only comprises the "discovery" costs, pre-clinical and clinical trial costs, and other expenses.[citation needed] With the addition of "failed drug" costs, the $11 billion easily amounts to over $20 billion in expenses.[citation needed] Therefore, an appropriate figure like $60 billion would be approximate sales figure that a pharmaceutical company like AstraZeneca would aim to generate to cover these costs and make a profit at the same time.[citation needed]
Total research and development costs provide pharmaceutical companies a ballpark estimation of total expenses. This is important in setting projected profit goals for a particular drug and thus, is one of the most necessary steps pharmaceutical companies take in pricing a particular drug.[citation needed]
Research on costs
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Tufts Center for the Study of Drug Development has published numerous studies estimating the cost of developing new pharmaceutical drugs. In 2001, researchers from the Center estimated that the cost of doing so was $802 million,[11] and in 2014, they released a study estimating that this amount had risen to nearly $2.6 billion.[12] The 2014 study was criticized by Medecins Sans Frontieres, which said it was unreliable because the industry's research and development spending is not made public.[13] Aaron Carroll of the New York Times also criticized the study, saying it "contains a lot of assumptions that tend to favor the pharmaceutical industry."[14] The Center's 2016 estimate, published in the Journal of Health Economics, found the cost to have averaged $2.87 billion (in 2013 dollars).[15]
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