Pharmaceutical research and development: what do we get for all that money?
Open accessAbstract
Data indicate that the widely touted “innovation crisis” in pharmaceuticals is a myth. The real innovation crisis, say Donald Light and Joel Lexchin, stems from current incentives that reward companies for developing large numbers of new drugs with few clinical advantages over existing ones
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About half of the $1 billion to $2 billion research and development figure derives from assuming profit from an index fund increasing in value 11% annually, compounded over 15 years.
“Third, about half of this figure derives from assuming how much profit could have been made if companies had instead invested in an index fund increasing in value 11% annually, compounded over 15 years [32].”
From Estimated minimum prices and lowest available national prices for antiobesity medications: Improving affordability and access to treatment (2023) · cites this paper as [32]
The estimate that it costs $1 billion to $2 billion to bring a drug to market has been heavily criticized because the data were not made publicly available and were from a small handpicked selection of industry respondents, and because it does not include federal tax breaks for research and development.
“Although some industry associated and funded studies have claimed it costs $1 billion to $2 billion to bring a drug to market [33], this estimate has been heavily criticized, first because the data were not made publicly available and were from a small handpicked selection of industry respondents chosen for interview and second because they do not include the huge federal tax breaks companies get”
From Estimated minimum prices and lowest available national prices for antiobesity medications: Improving affordability and access to treatment (2023) · cites this paper as [32]
It is extremely difficult and controversial to estimate the average costs of research and development, which can span from 3 months to more than 30 years.
“It is extremely difficult and controversial to estimate the average costs of R&D, which can span from 3 months to more than 30 years [32].”
From Estimated minimum prices and lowest available national prices for antiobesity medications: Improving affordability and access to treatment (2023) · cites this paper as [32]
Most pharmaceutical companies spend between double and 19-fold more on advertising and marketing than they spend on research and development.
“most pharmaceutical companies spend between double and 19-fold more on advertising and marketing than they spend on R&D [32].”
From Estimated minimum prices and lowest available national prices for antiobesity medications: Improving affordability and access to treatment (2023) · cites this paper as [32]
The absolute amount spent on research and development globally increased between 1995 and 2010.
“Although the absolute amount spent on R&D globally has increased between 1995 and 2010”
From Estimated minimum prices and lowest available national prices for antiobesity medications: Improving affordability and access to treatment (2023) · cites this paper as [32]
The revenues of pharmaceutical companies increased six-fold more than research and development spending between 1995 and 2010.
“the revenues of pharmaceutical companies actually increased six-fold more [32]”
From Estimated minimum prices and lowest available national prices for antiobesity medications: Improving affordability and access to treatment (2023) · cites this paper as [32]
Almost half of the remaining research and development figure is paid for by public funds, bringing the estimate down to $90 million to $300 million.
“Furthermore, almost half of the remaining figure for R&D is actually paid for by public funds (such as universities, the WHO, the Gates Foundation, and NIH), bringing the estimate down to $90 to $300 million [32,34].”
From Estimated minimum prices and lowest available national prices for antiobesity medications: Improving affordability and access to treatment (2023) · cites this paper as [32]
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The High Cost of Prescription Drugs in the United States: Origins and Prospects for Reform
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“Third, about half of this figure derives from assuming how much profit could have been made if companies had instead invested in an index fund increasing in value 11% annually, compounded over 15 years [32].”
BackgroundNaci, H., Dias, S., & Ades, A. E. (2014) · BMJ · doi:10.1136/bmj.g5741 · Cited by 61 · see citing works
- Authors
- Light, D. W., & Lexchin, J. R.
- Affiliations
- University of Medicine and Dentistry of New Jersey (US)
- York University (CA)
- Corresponding author
- Light, D. W.
- Venue
- BMJ
- Publisher
- BMJ
- Published
- 2012-08-07
- Volume
- 345
- Issue
- aug07 1
- Pages
- e4348-e4348
- ISSN
- 1756-1833 (ISSN-L)
- OpenAlex
- W2077420003
- Cited by
- 258
- References
- 22
- Citations by year
- 2026: 6 · 2025: 6 · 2024: 7 · 2023: 10 · 2022: 15 · 2021: 10 · 2020: 19 · 2019: 11 · 2018: 24 · 2017: 10 · 2016: 21 · 2015: 26 · 2014: 30 · 2013: 52 · 2012: 9
- FWCI
- 88.68
- Type
- journal article
- Language
- en
- Open access
- green
- doi.org
- Locations
- BMJ (publishedVersion)
- SSRN Electronic Journal (publishedVersion)
- PubMed (publishedVersion)
- HighWire Press Open Archive (submittedVersion)
- Topics
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Pharmaceutical Economics and Policy
- Life Sciences › Pharmacology, Toxicology and Pharmaceutics › Pharmacology › Pharmaceutical industry and healthcare
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Health Systems, Economic Evaluations, Quality of Life
- Keywords
- pharmaceutical innovation, pharmaceutical R&D, innovation crisis, drug development incentives, new drug approvals, pharmaceutical industry
- MeSH terms
- Cost-Benefit Analysis, Diffusion of Innovation, Pharmacology, Models, Economic, Biomedical Research, Drug Discovery, Drug-Related Side Effects and Adverse Reactions
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