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The Price Tag

The cost of developing a new drug has been recently pegged at $2.6 billion by the Tufts Center for the Study of Drug Development — nearly twice what it was estimated a decade ago — notes a trio of Australian researchers at The Conversation.

Though Narcyz Ghinea, Ian Kerridge, and Wendy Lipwort from the University of Sydney say how the Tufts group came up with that amount is largely being kept secret, they pieced together some clues from their website, press releases, and background information. Just more than half of the $2.6 billion estimate, they say, is directly related to research and development costs. Much of the rest are time costs, or returns that investors could've been making had their money not been otherwise unavailable. 

Critics, they add, argue that the amount is both an over- and underestimate.

Knowing just how much it costs to develop a new drug is important, Ghinea, Kerridge, and Lipwort say, as these estimates are used to justify the high price of drugs.

"Rewarding innovation is necessary, but allowing drugs to be priced according to whatever the market will bear, rather than according to their benefits and cost-effectiveness, leads to inefficiencies, inequities, and dramatic global inconsistencies," the trio argues.