Friday, November 21, 2014

R&D Cost for Generics is Zero. Nothing. Nada. Nilch. So Why are Their Prices Surging?

According to the latest estimate from Tufts economists, it now costs upwards of $2.6 billion to bring a new prescription drug to market (read "Cost to Bring a New Drug to Market Is $2.6 Billion According to Tufts - 3X More Than in 2003!"). Other estimates range from $59 million to $1.5 billion.

But the gap in price between generic drugs and brand-name drugs in narrowing. Why?

Wednesday, November 19, 2014

Cost to Bring a New Drug to Market Is $2.6 Billion According to Tufts - 3X More Than in 2003!

According to a new study by the Tufts Center for the Study of Drug Development (CSDD), which receives funding from the pharmaceutical industry, the estimated cost to develop a new Rx drug for marketing in the U.S. is $2,558 million or $2.6 billion (see press release). That 3.25 times the $800 previously estimated and frequently cited by the pharmaceutical industry, pharma trade publications, and the general media.

I have tackled the estimated $800 million drug develop cost gorilla before and garnered a lot of comments from readers, including Dr. Joseph DiMasi, whose team at Tufts came up with that number way back in 2003 (for more on that, read "Tufts Hangs Tough on Opportunity Cost Analysis").

It's about time CSDD threw out the old number and came up with a new, much larger number! But Tufts is not the only academics who have tackled the problem. As I reported in 2011, the London School of Economics and Political Science (LSEPS) cam sup with quite a different - much lower! - estimate of $59 million (see "A New Estimate of Drug Development Cost") and the Office of Health Economics (OHE) at the University College London estimated the cost to be $1.5 billion in 2013 (see here).

These various historic estimates are summarized in the following chart:

Click on chart for an enlarged view.
No doubt the new Tufts estimate will reign supreme in coming PR campaigns launched by the pharmaceutical industry and repeated ad naseum in the press.

You'll never guess who said the oft-cited 2003 Tufts estimate was  "one of the great myths of the industry".

Wednesday, November 12, 2014

FDA Plans DTC TV Ad Torture Test!

The FDA plans to to study the "Impact of Ad Exposure Frequency on Perception and Mental Processing of Risk and Benefit Information in DTC Prescription Drug Ads" (see Federal register Notice).

"Generally," says FDA, "it has been argued that first exposure to an ad results in attention, second exposure affects learning of the advertised message, and third and subsequent exposures reinforce the learning effects of the second exposure. To our knowledge, the literature concerning ad exposure frequency has not been extended to include specific attention to prescription drug ads."

To fill that void, FDA's Office of Prescription Drug Promotion OPDP) plans to examine the effects of variation in ad exposure frequency on perception and mental processing of risk and benefit information in DTC prescription drug ads.

The experimental design calls for volunteers to be randomly assigned to view a prescription drug ad one, three, or six times as part of "clutter reels" embedded in a 42 minute TV program.

My concept of a volunteer participating in this study is shown on the image above.

Guess how many "volunteers" FDA plans to torture in this experiment.

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