Fact or Fantasy? Investigators estimate new drug R&D at $55M

How much does it cost to bring a new drug to market? Tufts set out a few years ago to answer that question, and came back with $802 million in 2000, or roughly a billion dollars in today's greenbacks. The industry has pushed its own estimate of $1.32 billion. But a pair of investigators who set out to question those figures wound up with the bargain-basement price of $55 million.

The researchers--Donald W. Light of the University of Medicine and Dentistry of New Jersey and economist Rebecca Warburton of the University of Victoria--discounted estimates of private investment in basic research, deducted the cost of capital and added the tax break received by the industry to come up with their figure.

To give that number some additional context, $55 million is often what you'd expect to see a promising biotech raise in venture funds ahead of Phase II. It's a lot less than the $18 billion-plus spent on R&D by Roche and Pfizer alone last year. It also doesn't begin to explain the industry's biggest challenge today: Squaring the billions of dollars spent on drug research with the low level of new drug approvals.

Tomorrow FierceBiotech will run a special report on R&D costs. We'll break down the top 10 R&D spenders in the world, each of which would love to say they could develop a new drug for anything remotely close to $55 million.

- here's the story from Slate