OD07 Disaggregation Of The Costs Of Pharmaceutical Research And Development

Abstract

Introduction

Costs for pharmaceutical products are increasing. Pharmaceutical companies claim that high research and development (R&D) costs are the reason for the steep price increase of new products. However, there exists little data to support such claims; there is a lack of transparency in R&D cost reporting. This research intends to analyze and to disaggregate the costs of pharmaceutical R&D.

Methods

Studies on the costs of introducing new medications to the market can differ substantially in their methodology, their origin of data, and their results. A scoping review was conducted on costs of R&D for pharmaceutical products using Embase, PubMed, and EconLit, using a combination of the terms “drug research and development” and “costs” or “drug research and development” and “expenditure.” Additionally, semi structured interviews with 16 experts from non-governmental organizations (NGOs), pharmaceutical companies, academic researchers, and not-for-profit pharmaceutical companies were conducted to identify the main driving factors for rising costs of new drugs.

Results

Out of 24 studies that analyzed mixed therapeutic fields, the five highest cost estimates had affiliations with industry or received funding from pharmaceutical companies. Non-affiliated researchers are unable to reproduce studies that use confidential data and therefore cannot check the validity of the results. Additionally, different definitions for R&D make analyzing costs challenging. The interviewees emphasized that driving factors influencing costs for pharmaceutical R&D are therapeutic indication, drug complexity, number of patients in clinical trials, length of the development process, and attrition rates.

Conclusions

Due to the diverse nature of drug development and the confidential information held by pharmaceutical companies, it is a challenge to provide an exact assessment of the average costs of pharmaceutical R&D. Transparency policies with well-defined definitions for R&D are necessary to level the information asymmetries between the private and the public at price negotiations.