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Health Aff (Millwood). 2006 Mar-Apr;25(2):420-8.

Estimating the cost of new drug development: is it really 802 million dollars?

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  • 1Bureau of Economics, Federal Trade Commission, in Washington, DC, USA.


This paper replicates the drug development cost estimates of Joseph DiMasi and colleagues ("The Price of Innovation"), using their published cost estimates along with information on success rates and durations from a publicly available data set. For drugs entering human clinical trials for the first time between 1989 and 2002, the paper estimated the cost per new drug to be 868 million dollars. However, our estimates vary from around 500 million dollars to more than 2,000 million dollars, depending on the therapy or the developing firm.

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