Developing A Drug And Getting It On The Market Is Extremely Expensive

When a pharmaceutical company creates a new drug, it has to go through the FDA and is required to submit a New Drug Application (NDA) to the FDA. The FDA reviews the application to assure that there is an objective proof that the proposed drug is safe and effective. If the

There are several phases and applications to complete for drug development in the United States. The three basic stages in the testing process are preclinical, clinical, and approval. The first step of preclinical usually lasts anywhere from one to six years. During the preclinical phase, toxicology studies on the ingredients are collected and drug testing

Technical risk, a large portion of all development costs are spent on drugs that never reach the market.

1. Cost: The drug development is a lengthy and an expensive process. It will aid in the predevelopment process to identify future demand and to identify if it is a worthwhile venture. The future of a company could depend on the success or failure of a new drug in the market.

Recently, there has been a debate about the high prescription drug prices in the United States. Accounting for 9.7% of the national health expenditure, $329.2 billion was spent on prescription medications ($931 per person) in 2011 (Linton, 2014). So what exactly is the average American getting with their $931? Well, because there is an extraordinary amount of time, effort, and energy that goes into creating, manufacturing, and distributing a new drug, it’s no wonder the prices are so high. But what other costs are folded into the prices of your prescribed medications? This review looks beyond just the research and development costs needed to take a new drug from idea to shelf by examining several journals and other credible, secondary sources, to shed some light on how much pharmaceutical companies are spending to develop, advertise, and sell their drugs.

A drug development time may take on average over 15 years and expenditure R & D total costs of about $880 million. The length for and FDA application is at least 100,000 pages, which details the potential drug’s usage, production, formula and labeling.

After all research has been conducted including the testing of all animal and human studies associated, the New Drug application is completed by the drug developer. The results provided are used by the FDA to determine whether the drug is approved or the recommendation of further testing. Finally phase four is based on the monitoring of the drug’s risks and benefits monitored by various sponsors hired by the FDA.

On average, savings up to approximately $8 to $10 billion a year are noted at retail pharmacies. Generic drugs typically cost 80-85% less than their counterparts.These savings are increased when generics are used in hospitals as well. Often, when a new drug is first developed, it is protected by a patent of 20 years. When the patent expires, drug companies begin to market generic drugs which is more cost efficient as they do not have to develop a drug from scratch. The manufacturers spend most of their cost into testing to ensure that the generic drug has the same medical performance of the brand-name drug and is as safe and effective. They do not have to spend resources in performing clinical trials required for new drugs, and also spend less on marketing and

Start Pharmaceutical development companies are an example of a service characterized by high fixed costs and low marginalized costs. The fixed costs are very high because of the extremely high costs of developing a new drug. To bring a new drug to market costs hundreds of millions of dollars and is very risky. For a drug to be brought to market the Food and Drug Administration must approve of the drug. Then after the drug is approved it can be sold. The research and development costs are spent before any units of the drug are produced, so the companies are left with very high fixed costs. The highly automated drug production facilities also contribute to the high fixed costs because building the high-tech factories is very expensive. However, after the factory is built the marginal costs are very low in this industry because producing 1 more tablet or dose of the drug is very cheap because of the small amount of materials cost.

The term “drug” is defined means “articles intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease in man” by “affecting the structure or any function of the body of man.” In order to be marketed, “new drug” needs to have an approved application. “New Drug” can be defined as “any drug…the composition of which is such that such drug is not “generally recognized as safe and effective” for their labelled use. Prescription drug are prescribed by a physician, usually bought at pharmacy, prescribed for and intended to be used by one person and regulated by FDA through the New Drug Application (NDA) process. A typical NDA approval process includes three clinical phases which are distinct in terms of number of patients, length of study and purpose. The new drug application approval process helps in maintaining certain safeguards such as drug safety, dosing, manufacturing quality control standards, review of ongoing clinical safety and efficacy data,

Once a company has successfully developed an orphan drug and gained FDA approval, the process to build and operate a manufacturing facility can be extremely costly. This is driven by the fact that the bargaining power of the supplies is medium/high. This classification is because of the extreme regulations that exist for not only the equipment, but also the raw materials used within the drug manufacturing process. The environment causes companies to create stringent supplier

Phase III is the first large-scale trial of human testing. This phase can only begin if the new drug shows to be effective in the phase II. Phase III seeks to further determine the effectiveness of the drug. This is done by testing the drug on different populations, meaning that testing will be done on more people, testing will be done on different drug doses, and the drug will be tested on patients who are also taking other drugs. If Phases I through III show the investigational new drug to be safe and effective, then the pharmaceutical company will file a New Drug Application (NDA). The NDA includes both the results of the first three trial phases and data on how the drug is manufactured (Frank & Hargreaves, 2003; Lipsky & Sharp, 2001;

Phase III is the first large-scale trial of human testing. This phase can only begin if the new drug shows to be effective in Phase II. Phase III seeks to further determine the effectiveness of the drug. This is done by testing the drug on different populations, meaning that testing will be done on more people, testing will be done with different drug doses, and the drug will be tested on patients who are also taking other drugs. If Phases I through III show the investigational new drug to be safe and effective, then the pharmaceutical company will file a New Drug Application (NDA). The NDA includes both the results of the first three trial phases and data on how the drug is manufactured (Frank & Hargreaves, 2003; Lipsky & Sharp, 2001; Krishna,

After conducting extensive animal studies in the laboratory and assessing the safety and biological activity of the drug compound, the

First, it takes an extremely long time to develop a new drug, and only a very small portion of all projects is successful. Projects that the company starts today will determine its financial performance 10-15 years later. Therefore, careful planning of R&D projects is very important for the long-term stability of the company.