Newspaper article THE JOURNAL RECORD

Commentary: Going Up

Newspaper article THE JOURNAL RECORD

Commentary: Going Up

Article excerpt

You may not have caught the latest from the Tufts Center for Drug Development earlier this month. So for those of you who were following other November headlines - the elections, Iraq, OU's improbable run to the Big 12 title game - let me give it to you in a nutshell.

To get a single new treatment to the market, biotech companies spent an average of $1.2 billion.

Yes, that's with a B, not an M.

That figure roughly is in line with an earlier Tufts study, which in 2001 pegged pharmaceutical companies' costs for development at an average of $802 million per drug.

Certainly, these are staggering numbers by any measure. Their size can be attributed, in part, to capital costs, which account for more than half of these figures. But even setting aside capital costs, the newest study found that each new drug cost biotech companies $559 million in out-of-pocket expenses.

The obvious question: Why so much?

Preclinical development and clinical testing are expensive processes, running more than $100 million for many new drugs. But the bulk of that $559 million does not go to drugs that ultimately reach the market; those are dollars that biotechs spent on drugs that failed.

The Tufts study adds the cost of failure into the price tag for every successful product. And, of course, so do the drug companies when it comes time for you (and your insurance company) to pay for your prescriptions.

None of this should come as a surprise. But the real head- scratcher here is the fundamental driver behind these rising prices: the failure rates of experimental drugs.

The Tufts study found that the failure rate for biotech drugs is 70 percent, meaning that fewer than one in three drugs that began human clinical trials ever reached the market. Still, this dismal number compared favorably with pharmaceutical companies, which had a failure rate of almost 80 percent. …

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