This is a new article entitled “Pharmaceutical research and development: what do we get for all that money?”, and it’s by Joel Lexchin (York University) and Donald Light of UMDNJ. And that last name should be enough to tell you where this is all coming from, because Prof. Light is the man who’s publicly attached his name to an estimate that developing a new drug costs about $43 million dollars.
[…] These posts go into some detail about how ludicrous that number is, but for now, I’ll just note that it’s hard to see how anyone who seriously advances that estimate can be taken seriously. But here we are again.
It’s weird how departed from reality Donald Light’s worldview is, on the boundary of quackdom. Just a cursory glance at the number of approved drugs a year (maybe around 20 per year in the past decade, to be generous?)1 divided by the spending per year on R&D (about $17 billion in 2003, according to the National Science Foundation and the Congressional Budget Office2) gives a figure of about \$850 million per drug to get it to market. Even if you were to take the most number of drugs in a year from Light and Lexchin’s paper, around 50 drugs approved in 1996, and you assume that the R&D spending to make those drugs was the same as the spending in 1980 (about \$5.5 billion domestically in the US, according to the NSF), that still gives $110 million per drug as the lowest possible figure for average R&D, which is more than double the number that Donald Light is giving. That’s with all of my assumptions being a bit more favorable to Donald Light than they should be.
There is a simple and straighforward way to estimate the price of developing a drug. Look at the retained earnings (accumulated losses) of biotechnology companies bringing their first drug to market.