Innovation in the pharmaceutical industry: new estimates of R&D costs

JA DiMasi, HG Grabowski, RW Hansen - Journal of health economics, 2016 - Elsevier
The research and development costs of 106 randomly selected new drugs were obtained
from a survey of 10 pharmaceutical firms. These data were used to estimate the average pre-
tax cost of new drug and biologics development. The costs of compounds abandoned during
testing were linked to the costs of compounds that obtained marketing approval. The
estimated average out-of-pocket cost per approved new compound is $1395 million (2013
dollars). Capitalizing out-of-pocket costs to the point of marketing approval at a real discount …