The cost of developing a new cancer drug is “significantly” less than previously thought, new research published Monday in the U.S. journal JAMA Internal Medicine said.
The new analysis said the actual amount is about 648 million U.S. dollars, not the often-cited 2.7 billon dollars.
Cost is an important question, according to study co-author Vinay Prasad of the Oregon Health and Science University (OHSU), because those figures often are referenced in debates about the high price of cancer drugs.
“One of the frequently cited justifications for the high drug prices is the sizable R&D (research and development) outlay needed to bring the drug to market,” said Prasad, an assistant professor of medicine in the OHSU School of Medicine
Previous studies have shown widely disparate estimates for the cost of bringing a cancer drug to the U.S. market, from 320 million dollars to 2.7 billion dollars.
In order to better estimate the cost of developing a cancer drug, the new study took a new research approach by focusing on the R&D spending of 10 pharmaceutical companies that have only one cancer drug in the U.S. market.
“We were surprised to see our analysis show this cost to be about 648 million dollars, substantially lower than the often-cited 2.7 billion dollars,” said Sham Mailankody, study co-author and hematologist and medical oncologist at the Memorial Sloan Kettering Cancer Center.
And the companies only had a median time of 7.3 years to develop a drug, they found.
The researchers also analyzed long-term gains by the pharmaceutical companies and found that after just four years, the 10 drugs analyzed in the study had made more than 67 billion dollars.
“That is extremely lucrative,” Prasad said. “Is there room to lower the price of drugs without stifling innovation? The answer has to be yes, in my opinion.”
In an accompanying commentary, Merrill Goozner, editor emeritus of the magazine Modern Healthcare, noted that “the industry consistently generates the highest profit margins among all U.S. industries, which suggests the pricing power afforded by patent exclusivity far outweighs the inherent riskiness of pharmaceutical research and development.”
“The implications of the present study seem clear,” Goozner wrote. “Current pharmaceutical industry pricing policies are unrelated to the cost of research and development. Policymakers can safely take steps to rein in drug prices without fear of jeopardizing innovation.”