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Study: Cost to develop cancer drugs far less than previous estimates, revenues in billions

A new study tracking the cost to develop ten cancer drugs found the median cost was below previous estimates while profits were in the tens of billions. PHOTO: MGN

A new study tracking the cost to develop ten cancer drugs found the median cost was below previous estimates while profits were in the tens of billions.

Researchers from Oregon health and Science University and the Memorial Sloan Kettering Cancer Center in New York analyzed the U.S. Securities and Exchange Commission filings for 10 cancer drugs developed by companies which had no other drugs in the market.

All the companies had received approval from the Food and Drug Administration and their SEC filings, estimated costs of development, and spending were tracked by the researchers.

Based on the data available, researchers say the median cost of a single drug to go through research & development from inception to date of approval by the FDA was $757.4 million, taking into account 'opportunity costs' (the amount of money that would have been earned had the same sum been invested in the hands of money managers rather than used for drug development).

This median cost of a drug according to researchers was well below a previous estimate by Tufts Center for the Study of Drug Development which estimated it cost $2.7 billion to bring a single drug to market.

Researchers say of the ten drugs they tracked, they totaled $67 billion in revenue. However, the profits were largely carried by four cancer drugs (ponatinib, ibrutinib, enzalutamide, and eculizumab) developed by companies. Those four drugs showed revenue from sales ten times the cost of R&D spending.

Ponatib showed $5 billion in revenue according to research estimates while Eculizumab reflected $12 billion in revenue.

Nine of the ten drugs showed a profit on the market, while one company was still waiting to recover R&D costs. Researchers says the total cost to develop the drugs is estimated at $9 billion while revenue totaled $67 billion.

Researchers did add their analysis is limited since other companies could over or under-emphasize R&D costs in SEC filings through unintentional errors. Also, since firms could obtain tax breaks, costs up to 15% could be subsidized.

Although researchers feel confident their R&D spending estimates are accurate, they admit the lack of total transparency did not allow for exact measurements. Their hope is their findings push stakeholders to "produce a precise, transparent estimate to inform policy."

Researchers believe by tracking companies bringing their first cancer drug to market it reflects an accurate estimate of costs/revenues.

View the compete study: HERE

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