The cost and time involved in drug development is highly dependent on therapeutic class, according to a new report from the Tufts Center for the Study of Drug Development.

Drugs targeting the central nervous system (CNS) are the most expensive to develop. Compared with an overall average of US $466 million, total out-of-pocket and time costs for the clinical and approval phases were $527 million (year 2000$). Anti-infectives were also above average with a cost of $492 million. Cardiovascular and analgesic/anaesthetics were below average, with costs of $460 million and $375 million, respectively (see Fig. 1; data from Tufts Center for the Study of Drug Development).

Figure 1
figure 1

Drug development costs in relation to therapeutic areas. Data from Tufts Center for the Study of Drug Development. CNS, central nervous system, CV, cardiovascular.

Full size image

“The costs differ at component levels, and analyses across these areas highlight how to contain development costs and bring new drugs to market more quickly,” says Joseph DiMasi, Director of Economic Analysis at the Tufts Center for the Study of Drug Development, and lead author of the study.

The Tufts study, released in summary form in the Center's Impact Report and due to be published in full in the August issue of Drug Information Journal, further analyses the data on which the widely quoted $802 million average cost of drug development is based. With preclinical data difficult to assign precisely to therapeutic area, the new study focused on the clinical and approval costs and times of 69 investigational drugs that first entered clinical testing worldwide between 1983 and 1994.

Clinical development times were highest for CNS and cardiovascular treatments, but clinical costs were lowest (see figure). The reverse was true for anti-infectives and analgesics/anaesthetics.

Comparison with a similar Tufts analysis of drugs that entered clinical trials between 1970 and 1982 (DiMasi, J. A. et al. Pharmacoeconomics 7, 152–169 (1995)) reveals how development costs evolved over a decade. The most striking change was in the cost of anti-infectives, which has risen from 25% below average to 6% above average. “This increase in costs has been driven largely, but not exclusively, by HIV treatments, which weren't being developed in the previous analysis,” says DiMasi.

Cardiovascular drug costs remained around the average value, and CNS drugs remained stable, rising slightly from 10% to 13% above average. Analgesics/anaesthetics cannot be compared as the first study looked at NSAIDs only.

The difference in returns from each therapeutic area hints at how companies are forming strategy decisions. The ratio of life-cycle worldwide sales for new drugs approved during 1990–1994 to the development costs calculated in the study was greatest for CNS and cardiovascular drugs (see figure), which included big-sellers such as SSRIs and ACE inhibitors. Anti-infectives and analgesics/ anaesthetics fared less well. This difference in profitability could explain companies' decisions on allocation of R&D resources, says Ken Kaitin, Director of the Tufts Center. “Our findings are consistent with a model that suggests R&D efforts have generally shifted towards high net return, and away from low-return therapeutic areas.”