Pharma For a Fee

Have you visited your local pharmacy lately?

I hope you haven’t because that might mean you are dealing with a medical issue. But the next time you do need to visit, stop for a few seconds and look around.

We are blessed to be living at a time of amazing medical breakthroughs that help us deal with everything from the common cold to back pains and muscle aches to more serious medical issues.

However all of that medicine comes at a cost—and it is a big cost.

There are many ways to calculate how much it costs to create a new medicine, but I’m going to cite a 2014 report by the Tufts Center for the Study of Drug Development. It pegs the cost of developing a prescription drug that gains federal approval and is sold on the market at $2.6 billion. That’s based on an out-of-pocket cost to the company of $1.4 billion and an estimate of $1.2 billion in returns that investors write off on that money during the 10+ years a drug candidate spends in research.

You could say the cost is even higher because the figure doesn’t include what the Tufts’ report lists as $312 million in postapproval development, which includes studies to test new formulations, dosage strengths and new indications. 

All told, the Tuft’s report says the figure is a 145% increase from the last report on drug costs that was published in 2003.

The folks at Biogen I talked with for my story Pharma Quest say part of the reason for the increased cost is the growing complexity in clinical trials and a greater focus on chronic and degenerative diseases. Those illnesses are much more complex and difficult to treat.

But here’s one additional factor to think about. Drug development is the process of bringing a new pharmaceutical drug to market once a lead compound has been identified. It includes pre-clinical research (on microorganisms and animals) and clinical trials (on people) as well as obtaining the approval of regulators to bring the drug to market.

But what isn’t included in the definition (and the cost) is the time and money it takes to identify the lead compound. That’s one of the reasons why pharmaceutical companies are looking to universities such as North Carolina Central University to help with the development of new drugs. The universities are taking on the cost of identifying the lead compound to be used in the drug, and chances are the researchers have already performed some initial tests. That means there’s a better chance the drug will be successful, before the pharmaceutical company even starts spending money to test it.

— Frank Graff

Frank Graff is a producer/reporter with UNC-TV, focusing on North Carolina Science Now, a weekly science series that airs Wednesdays, beginning in August 2013, as part of North Carolina Now on UNC-TV. In addition to producing these special segments, Frank will provide additional information related to his stories through this North Carolina Science Now Reporter's Blog!

Related Resources:

  • Video: Pharma Quest
  • Lesson Plan
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