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.
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