The Rising Cost of New Drugs and Why

If we adopt the definition of the number of new drugs, defined by new molecular entities (NMEs), approved per year, then it appears that the industry is in deep decline and in a major crisis.

Affordable Care Act, The Health Reform Law, law, healthIndustry estimates peg the cost of bringing a chemical entity to market at about $900 million, including post-launch studies. Based on recent performance data, however, the true cost is nearly twice as high—closer to $1.7 billion per successful launch, when you also include average launch costs of $250 million. The former estimate derives from data from the period 1983 to 2000. Analysis of more recent data from 1997 to 2001, taking into account both direct and indirect costs, indicates that performance has declined substantially. This makes the probability of investment and the cost to market of a new drug even more when the ROI is close to 5%
http://www.fredreichheld.com/bainweb/PDFs/cms/Public/rebuilding_big_pharma.pdf

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