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The Ballooning Price Tag

The Ballooning Price TagA closely watched study by Tufts experts shows the cost to develop a new drug has nearly tripled over the last decade, intensifying the national debate over prescription drug coverage.

Boston [12.04.01] For over 25 years, the Tufts Center for the Study of Drug Development has been tracking drug development costs -- providing some of the most closely watched and influential findings in the country on the pharmaceutical industry. Last week, the Tufts experts released their newest research on development costs -- a meteoric $802 million per drug -- and re-ignited the national debate over the high costs of prescription medicine.

The new figure -- almost triple the $231 million estimate Tufts released in 1987 -- stunned many experts on the industry. But the Tufts researchers said rising costs throughout the process -- from initial research to clinical trials -- have pushed development costs ever higher.

"Drug development is a very lengthy, technologically risky process," Dr. Joseph DiMasi -- the study's lead author -- said in the Washington Post. "A lot of money gets spent over a long period."

According to Tufts experts from the Center, the average drug takes 12 years to develop -- and must overcome a very selective process.

"The Tufts study says that of every 5,000 potential new drugs tested in animals, only five are promising enough to be tested in humans," reported the New York Times. "Only one of those five is eventually approved for marketing."

More strenuous regulatory requirements have helped make the research and development process much more costly, says Tufts' Center Director Dr. Kenneth Kaitin. The expense of clinical testing has also ballooned.

"Kaitin attributes the staggering increase... to the soaring costs of human clinical testing," reported the Boston Globe. "The size of clinical trials has steadily increased in the past two decades at the same time that volunteers have become more scarce. As researchers learn more about the potential hazards posed by drugs, companies are also required to run a growing battery of safety tests."

The Tufts findings are expected to play an important role in the ongoing debate over the high cost of prescription drugs already raging on Capitol Hill.

"The cost study has two major impacts," Kaitin told the Globe. "One is the public policy impact. It's important for policy-makers to understand what goes into bringing a drug to market. The second is the business impact. To recoup this kind of investment, companies need to fill their pipelines and increase output while reducing these research and development costs."

Already, legislators are citing the findings as more proof that the nation's healthcare system needs to be revamped. Every year, Americans spend $117 billion to have three billion prescriptions filled.

"The Tufts study drives home the need for Medicare coverage of prescription drugs," Democratic Senator Ron Wyden told the New York Times. "The cost of drugs for seniors at the pharmacy counter is growing even more rapidly than the cost of drug development for the manufacturers. That's why seniors go to Canada and Mexico to get medicines that should be available and affordable here."

But Tufts' DiMasi said the study wasn't designed to stir up the political debate.

"The pharmaceutical industry has been under fire for years," he told the Associated Press. "Politics didn't play a role in releasing the study."

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