DRUG COSTS

The Price of Pills

orators. The researchers analysis placing the cost for developing a new drug at $802 million appears in the March Journal of Health Economics (they extended the gure to $897 million in May). DiMasi bridles at the suggestion that the data were tainted or not representative of all new drugs under development. The methodology was sound, he maintains. I was satised that the people [from the drug companies who provided the data] were being honest with me. The clinical trials collectively involved 5,303 patients, with a price of roughly $23,000 per patient. The problem with these studies is they just dont jibe with publicly available data on the cost of clinical trials, argues Love, who says that a more realistic number is $10,000 to $12,000 per patient. That would cover pretty much everything youd want to do to a given patient in any type of trial, he suggests. He also points out that DiMasis cost-per-patient gure isnt the whole story, because it adds up to only $122 million. DiMasi counters that the other $680 million reects preclinical research and the cost of failures. In an editorial accompanying the Tufts article, Richard G. Frank of Harvard Medical School contends that the analysis considered only those drugs that were new chemical entities with little known about them, whereas many drugs in clinical testing are chemical relatives of existing drugs whose actions and side effects can be anticipated to a degree. Frank asserts that a signicant proportion of drug development costs typically reects business decisions to drop other drugs because of competition or market size. Still, he warns against tampering with the drug development process too much: Regardless of the exact cost gure estimated, he writes, if we are not cognizant of the complex, risky and costly process of drug development, public policy can damage an industry that has over the past generation bestowed enormous benets on society by improving the effectiveness of health care.

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DOES IT REALLY TAKE $897 MILLION FOR A NEW THERAPY? BY CAROL EZZELL

orty F16 jet fighters, or $802 million. Thats how much it takes to develop a new drug, according to the rst academic analysis of the process published in 12 years. That number reaches $897 million if postmarketing studies additional clinical research that the U.S. Food and Drug Administration sometimes requires as a condition for approving a new drug are taken into account, the reports authors announced in May. These sky-high prices (in 2000 dollars) have prompted disbelief and consternation among some critics, who allege that the pharmaceutical industry is inating the true cost of drug development to justify the escalating price tags of many therapies. The naysayers also accuse big pharma of seeking to justify its tax credits for research and development and to dissuade Congress from rolling back those benets. Drug companies often counter that clinical research testing new therapies in patients has gotten more difcult and therefore more expensive in recent years. Clinical trials for treatments for chronic diseases, such as arthritis, often require thousands of patients who must be followed for years, they say. Moreover, the companies cite statistics that only 21.5 percent of drugs that enter human tests ever make it to market, so they must recoup their costs on the therapies that do. Who is right? Its hard to tell. The new analysis was led by economist Joseph A. DiMasi of Tufts Universitys Center for the Study of Drug Development, which receives roughly 65 percent of its funding from the pharmaceutical industry. (The funds are unrestricted Tufts says companies cannot direct how they are spent.) But that connection worries some skeptics. James Love of the Washington, D.C.based Consumer Project on Technology, one of the pharmaceutical industrys staunchest fault nders, comments that he considers the Tufts center a think tank on behalf of industry. Love and others note that the study relied on data condentially provided by the companies. Ten pharmaceutical rms turned over cost information on a total of 68 randomly selected new drugs to DiMasi and his collabwww.sciam.com

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Analyzing the cost of drug research and development is tough because the industry protects such information for competitive reasons. In 1987 economist Joseph A. DiMasi of Tufts University led a research group that put the price at $231 million, or $318 million in 2000 dollars. But by the mid-1990s pharmaceutical firms were routinely citing a $500million-per-new-drug figure, which apparently stemmed from an attempt by the Boston Consulting Group to extrapolate upward for the increasing size of clinical trials. That number was bandied about until last year, when a drug company executive announced the new $802-million number at a conference, months before the full analysis appeared in the scientific literature. SCIENTIFIC AMERICAN

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