NCPA - National Center for Policy Analysis

THE TRUTH ABOUT DRUG COMPANIES

August 31, 2004

Drug companies have a huge investment in research and development, says Henry I. Miller of the Hoover Institution.

  • The research-based pharmaceutical industry (that is, excluding companies that make generic drugs) currently spends more than $33 billion annually on research and development, investing a far greater percentage of sales (17.7 percent) in R&D than any other industrial sector.
  • Only one in 5,000 products screened is ultimately approved as a new medicine; the others drop out because of concerns about safety, efficacy, or profitability.
  • Only three in ten of the drugs that are approved and marketed ultimately produce revenue that recoup their R&D costs.
  • On average, it now costs more than $800 million to bring a drug to market.

One reason for the increasing cost of R&D is that the Food & Drug Administration keeps raising the bar for approval, especially for innovative, high-tech products and technologies.

Source: Henry I. Miller, "Fighting Disease Is Only Half the Battle." Wall Street Journal, August 25, 2004.

For WSJ text (subscription required) http://online.wsj.com/article/0,,SB109338374006000093-search,00.htmlhttp://online.wsj.com/article/0,,SB109338374006000093-search,00.html

 

Browse more articles on Health Issues