FROM THE ANALYST'S COUCH

Breaking Eroom’s Law

  1. Michael S. Ringel

    1. Boston Consulting Group, Boston, MA 02210, USA.

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  2. Jack W. Scannell

    1. University of Edinburgh, Edinburgh, UK.

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  3. Mathias Baedeker

    1. Boston Consulting Group, Munich, Germany.

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  4. Ulrik Schulze

    1. Boston Consulting Group, Zürich, Switzerland.

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Early in the last decade, researchers at Sanford Bernstein published ‘Eroom’s Law’— Moore’s Law in reverse — that the all-in cost of R&D on new drugs approved by the US FDA had risen exponentially for 60 years (Nat. Rev. Drug Discov. 11, 191–200; 2012). Among the potential contributing factors underlying the trend, the authors highlighted a progressively higher bar for improvements over existing therapies (the ‘better than the Beatles’ problem) and a progressive lowering of risk tolerance by regulatory agencies (the ‘cautious regulator’ problem). However, as the researchers posited might happen, about the same time Eroom’s Law was published, it was already being broken. Here, we analyse the changes and discuss the underlying factors. Details of the data and analysis are provided in Supplementary Box 1.

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Nature Reviews Drug Discovery 19, 833-834 (2020)

doi: https://doi.org/10.1038/d41573-020-00059-3

Acknowledgements

The authors thank Q. N. Vuong for analytical support and P. Kirkpatrick for valuable commentary on an earlier draft.

Updates & Corrections

  • Correction 27 April 2020: The date range on the x axis of Figure 1b erroneously began in 1940 rather than 1990 and has been corrected.

Supplementary Information

  1. Supplementary Box 1

Competing Financial Interests

M.S.R, M.B and U.S. are employees of The Boston Consulting Group (BCG), a management consultancy that works with the world's leading biopharmaceutical companies. The research for this specific article was funded by BCG's Health Care practice.

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