Cost of New Drug Development Reaches $897M, Study Says

The average cost of developing a new prescription drug is $897 million, almost four times the cost in the early 1990s, according to a study by the Tufts Center for the Study of Drug Development, Bloomberg/Bergen Record reports. The study is based on a review of data involving 68 drugs from 10 multinational, foreign-owned and U.S.-owned pharmaceutical companies during the 1990s. According to the study, drug companies spend $802 million on pre-clinical and clinical costs and $95 million on additional testing expenses following FDA approval. Drug makers try to cut costs by determining whether drugs will be safe and effective during early development stages, the Bloomberg/Record reports. According to the study, the rate of companies terminating drug development in late stages fell in the 1990s compared with the 1980s. About 22% of drugs that start the first out of three stages of human trials win FDA approval, the study found. Kenneth Kaitin, director of the Tufts Center, said that "drug development remains a time-consuming, risky and expensive process" (Ryerson-Cruz, Bloomberg/Bergen Record, 5/14).