Wednesday, May 28, 2008

Pharmaceutical Facts

Time to develop and market a new drug: 10-15 years

Average Cost to develop a new drug (2006): $1.318 billion

Total R&D spending on drugs in 2007: $58.8 billion

Generic share of market in 2007: 67%

Percent of marketed drugs that cover R&D costs: Only 20%

Total number of drugs approved in 2007: 23

R&D as a percent of U.S. sales: 18.7%

Average effective patent life for major drugs: 11 years

Medicines currently in development: 2,700 compounds

For every 5,000-10,000 compounds tested, the number that make it to clinical trials: 5

For every 5 compounds that make it to clinical trials, the number that get FDA approval: 1

Probability that a compound tested eventually gets FDA approval: .01% (1/100th of 1%) to .02% (1/50th of 1%)

Source: Pharmaceutical Industry Profile 2008

6 Comments:

At 5/28/2008 3:40 PM, Anonymous Anonymous said...

It is my understanding that the majority of the $1.3B to develop a new drug is in fact marketing and promotional expenses. Do you have numbers on this?

 
At 5/28/2008 4:04 PM, Blogger randian said...

Assume that were true. Let's say only $500 million is drug research. How do you propose to recoup that massive expense without boatloads of marketing and promotion?

 
At 5/28/2008 4:04 PM, Blogger Jack McHugh said...

"Total number of drugs approved in 2007: 23"

That's obscenely low, and is all the evidence anyone needs that the current system is FUBAR. Obviously there is no reasonable cost-benefit analysis in this process; it's purely bureaucratic, with an eye only toward the risk - the seen - vs the benefit - the unseen. In allowing the process to be governed by bureacratic imperatives and culture Congress is responsible for many thousands of deaths and untold suffering. Shame! Shame!

One more statistic I just heard last week: One half of America's (aging) population takes some drug every day. We don't do it for fun, but to improve and/or save our lives. You want to beat up on "big, bad pharma?" Go ahead - and then drop dead (when your drugs no longer exist).

I think it was Uncle Milton who said, "I'd rather know that the person who's going to invent the drug that someday saves my life reasonably expects that the incalculable dedication and expense that's required will make him rich, versus having to trust in someone's altruism to save my life."

 
At 5/28/2008 4:42 PM, Anonymous Anonymous said...

It costs money to be altruistic yet, there are some men who manage to improve medicine without the assistance of grants. See recent article on the late Dr. Buncke.

http://online.wsj.com/article/SB121158539356718985.html

If there is little or no return to creating new drugs, researchers like any other professionals will consider other lines of work that offer a reasonable return for effort. Milton is right. Incentives matter.

 
At 5/28/2008 7:25 PM, Blogger Ken Braun said...

Um... Did all the product liability lawyers die while I was watching the hockey playoffs?

Where's their "contribution" to this cost structure? I bet it's not small.

 
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