Biotech Development Costs Higher Than Pharmaceuticals

A recent study by the Tufts Center for the Study of Drug Development (CSDD, csdd.tufts.edu) shows that development costs are higher for biotechnology products than previously estimated development costs for traditional pharmaceuticals. The study estimates the average cost of developing a new biotechnology product at $1.2 billion.

Tufts CSDD said the $1.2-billion estimate reflects the costs of drugs that fail in testing and the time costs associated with bringing a new biopharmaceutical to market. Of this amount, capitalized out-of-pocket preclinical costs totaled $615 million, while the cost of clinical studies totaled $626 million. Capitalized costs include both out-of-pocket and time costs. A new biotech product took 97.7 months on average to wend its way through clinical development and regulatory review, about 8% longer than for pharmaceuticals, according to the analysis.

To develop the estimates, Tufts CSDD relied on compound-specific costs for a sample of 17 investigational biopharmaceuticals from four firms that first entered clinical testing from 1990 to 2003. Average development times and phase-transition probabilities were estimated based on data from more than 500 therapeutic recombinant proteins and monoclonal antibodies. According to the study, biopharmaceuticals had an overall clinical approval success rate of 30.2%, compared to 21.5% for traditional pharmaceutical firm pipelines.

The Tufts CSDD findings were reported in the November–December Tufts CSDD Impact Report. The full study will be published in the journal Managerial and DecisionEconomics.