Drug Development Costs See Steep Increase, But Not Enough to Justify Exorbitant Launch Prices

March 1, 2023

The cost of developing a new drug has risen by 15% to $2.3 billion, according to a report from the consulting firm Deloitte. This steep figure was paired with data showing that return on investments faced an 82% decline in the past year. However, a study published in the British Medical Journal, shows that operating costs contribute more to the increased development cost than research. Moreover, the paper argues that rising drug prices far outstrip any cost increases for biopharma companies.

According to Alex Philippidis, “In their study, “High drug prices are not justified by industry’s spending on research and development,” the researchers cited a June 2022 study published in the Journal of the American Medical Association or JAMA, which showed the net price of newly launched prescription drugs rocketing from a median price of about $1,400 a year in 2008 to more than $150,000 a year in 2021. However, in January, Reuters found an even higher median annual price of $193,900 for 17 novel drugs the FDA has approved since July 2022, paced by the $3.5 million list price of CSL’s Hemgenix®, the first and only FDA-approved gene therapy for hemophilia B and the most expensive drug ever sold (to date).”

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