Skip to main page content
U.S. flag

An official website of the United States government

Dot gov

The .gov means it’s official.
Federal government websites often end in .gov or .mil. Before sharing sensitive information, make sure you’re on a federal government site.

Https

The site is secure.
The https:// ensures that you are connecting to the official website and that any information you provide is encrypted and transmitted securely.

Access keys NCBI Homepage MyNCBI Homepage Main Content Main Navigation
. 2020 Mar 3;323(9):844-853.
doi: 10.1001/jama.2020.1166.

Estimated Research and Development Investment Needed to Bring a New Medicine to Market, 2009-2018

Olivier J Wouters  1 , Martin McKee  2 , Jeroen Luyten  3
Affiliations

Estimated Research and Development Investment Needed to Bring a New Medicine to Market, 2009-2018

Olivier J Wouters et al. JAMA. .

Erratum in

Abstract

Importance: The mean cost of developing a new drug has been the subject of debate, with recent estimates ranging from $314 million to $2.8 billion.

Objective: To estimate the research and development investment required to bring a new therapeutic agent to market, using publicly available data.

Design and setting: Data were analyzed on new therapeutic agents approved by the US Food and Drug Administration (FDA) between 2009 and 2018 to estimate the research and development expenditure required to bring a new medicine to market. Data were accessed from the US Securities and Exchange Commission, Drugs@FDA database, and ClinicalTrials.gov, alongside published data on clinical trial success rates.

Exposures: Conduct of preclinical and clinical studies of new therapeutic agents.

Main outcomes and measures: Median and mean research and development spending on new therapeutic agents approved by the FDA, capitalized at a real cost of capital rate (the required rate of return for an investor) of 10.5% per year, with bootstrapped CIs. All amounts were reported in 2018 US dollars.

Results: The FDA approved 355 new drugs and biologics over the study period. Research and development expenditures were available for 63 (18%) products, developed by 47 different companies. After accounting for the costs of failed trials, the median capitalized research and development investment to bring a new drug to market was estimated at $985.3 million (95% CI, $683.6 million-$1228.9 million), and the mean investment was estimated at $1335.9 million (95% CI, $1042.5 million-$1637.5 million) in the base case analysis. Median estimates by therapeutic area (for areas with ≥5 drugs) ranged from $765.9 million (95% CI, $323.0 million-$1473.5 million) for nervous system agents to $2771.6 million (95% CI, $2051.8 million-$5366.2 million) for antineoplastic and immunomodulating agents. Data were mainly accessible for smaller firms, orphan drugs, products in certain therapeutic areas, first-in-class drugs, therapeutic agents that received accelerated approval, and products approved between 2014 and 2018. Results varied in sensitivity analyses using different estimates of clinical trial success rates, preclinical expenditures, and cost of capital.

Conclusions and relevance: This study provides an estimate of research and development costs for new therapeutic agents based on publicly available data. Differences from previous studies may reflect the spectrum of products analyzed, the restricted availability of data in the public domain, and differences in underlying assumptions in the cost calculations.

PubMed Disclaimer

Conflict of interest statement

Conflict of Interest Disclosures: Dr McKee reported receipt of grants from the Wellcome Trust, European Commission, and United Kingdom Research and Innovation outside the submitted work. No other disclosures were reported.

Figures

Figure 1.
Figure 1.. Selection Process for Therapeutic Agents
FDA indicates the US Food and Drug Administration; R&D, research and development. aIncludes firms that went public while developing the therapeutic agent in question but for which US Securities and Exchange Commission (SEC) filings were missing for more than 3 years of the drug development period.
Figure 2.
Figure 2.. Estimated Expenditures for Therapeutic Agents by Quality of the Estimates
Indicates the estimated research and development investment needed for an average company to bring one of these products to market based on aggregate clinical trial success rates. Individual companies may have spent more or less on their respective development pipelines, based on their individual success rates.
See this image and copyright information in PMC

Comment in

References

    1. Kesselheim AS, Avorn J, Sarpatwari A. The high cost of prescription drugs in the United States: origins and prospects for reform. JAMA. 2016;316(8):858-871. doi:10.1001/jama.2016.11237 - DOI - PubMed
    1. Morgan S, Grootendorst P, Lexchin J, Cunningham C, Greyson D. The cost of drug development: a systematic review. Health Policy. 2011;100(1):4-17. doi:10.1016/j.healthpol.2010.12.002 - DOI - PubMed
    1. DiMasi JA, Hansen RW, Grabowski HG. The price of innovation: new estimates of drug development costs. J Health Econ. 2003;22(2):151-185. doi:10.1016/S0167-6296(02)00126-1 - DOI - PubMed
    1. DiMasi JA, Grabowski HG, Hansen RW. Innovation in the pharmaceutical industry: new estimates of R&D costs. J Health Econ. 2016;47:20-33. doi:10.1016/j.jhealeco.2016.01.012 - DOI - PubMed
    1. Jayasundara K, Hollis A, Krahn M, Mamdani M, Hoch JS, Grootendorst P. Estimating the clinical cost of drug development for orphan versus non-orphan drugs. Orphanet J Rare Dis. 2019;14(1):12. doi:10.1186/s13023-018-0990-4 - DOI - PMC - PubMed

MeSH terms