Drug development costs have increased from £125m to £1.2bn in 30 years, study reveals
Four main factors are driving costs up
Research and development costs have increased from £125m in the 1970s to £1.2bn in the 2000s, a new study has revealed.
Four main factors are increasing R&D costs, says the UK’s Office for Health Economics’ study, The R&D Cost of a New Medicine, by Jorge Mestre-Ferrandiz, Jon Sussex and Adrian Towse. These are higher out-of-pocket costs, which have risen by nearly 600% in the past 30 years, and lower success rates as tougher therapeutic areas are tackled, such as neurology (Alzheimer’s), autoimmune diseases (arthritis), and oncology – from 1 in 5 in the 1980s to 1 in 10 in the 2000s.
The time taken for R&D has also risen as both regulation and science become more complex – from 6 years in the 1970s to thirteen-and-a-half years in the 2000s. In addition, the cost of capital has also increased from 8% to 11% in three decades.
Companies are doing all they can to mitigate against rising R&D costs by making decisions far earlier about the market prospects of a drug candidate and more tightly managing clinical trial costs, often by outsourcing some aspects and/or siting some trials in lower-cost locations, the study reveals.
These findings paint a very clear picture - researching and developing medicines is hugely expensive
Stephen Whitehead, CEO of the ABPI, said: ‘These findings paint a very clear picture – researching and developing medicines is hugely expensive and the costs are rising year on year. The reasons for this are varied – added regulation, increasingly complex science and the rising cost of capital. But as the cost of R&D continues to rise, the price of medicines in the UK remains among the lowest in Europe and companies struggle to get their medicines bought by the NHS and then used to treat patients. Combined, these factors are squeezing revenues and making it more difficult for companies to reinvest profits back in to the discovery of new medicines to combat disease.’
But the Government must play its part too, Whitehead adds. ‘We need to ensure that companies get a fair reward for the treatments companies create, and once the huge investment has been made bringing a medicine to market, patients must be able to access it.
‘We must get this right and ensure new treatments are created in the UK. Medicines are the life and soul of healthcare not only in the NHS but across the world – without their use, we would have no way to combat disease.’