Key factors in the rising cost of new drug discovery and development

Key Points The development of a new drug requires a major investment of capital, human resources and technological expertise. It also requires strict compliance with regulations on testing and manufacturing standards before a new compound can be used in the general population. All these requirements contribute to the cost increases for new chemical entity (NCE) R&D. The central question raised by this trend is: who in the future will pay for new pharmaceutical R&D? With this question in mind, this article first describes how the environment for pharmaceutical R&D has changed over time, and the effect of these changes on R&D cost, risk and the time invested; second, reviews the literature on the cost of drug discovery and development for NCEs; and third, considers the societal value of new drugs. The public desire for new therapies, their increasing cost and the increased role of government as a payer for innovative new drugs all converge on the issue of the rapidly rising cost of new drug development — now thought to be greater than US $800 million — and highlight the necessity for an efficient use of resources. With this in mind, here we review studies on the cost of developing new drugs and consider how this cost has, and could be, affected by the changing environment for pharmaceutical research and development.