Rising costs for r&d, tighter regulations and price pressures make the task of translating the ‘eureka’ moments of medical science into safe, effective and cheaper medicines an increasingly difficult task. Susan Birks reports.
A report published recently by the UK research and consulting organisation Office of Health Economics (OHE) highlighted the escalating costs of R&D for new medicines. The costs have risen from £125m (US$199m) per new medicine in the 1970s to £1.2bn ($1.9bn) in the 2000s (2011 prices). While such estimates are controversial and vary around the world, four factors have been identified in raising R&D costs:
- Higher ‘out-of-pocket’ costs, up nearly 600% from the 1970s
- Lower success rates as tougher therapeutic areas are tackled, e.g. neurology (Alzheimer’s), autoimmune diseases (arthritis) and oncology
- Increased R&D timescales – from six years in the 1970s to 13.5 years in the 2000s – as both regulation and science have become more complex
- Increased cost of capital, i.e. providing returns to funders that reflect the high risks of R&D – from 8% in the 1970s to 11% in the 2000s
But as the costs of R&D rise, the price of medicines is being pushed down. To mitigate the rising costs, pharmaceutical companies have been forced to adopt new R&D models, make decisions earlier in the development process about whether a treatment is viable or not, foster more open innovation and partner more to share the risk while bringing down the cost.
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