Cancer drugs do not cost as much to produce as industry-sponsored research claims, according to a landmark analysis.
Pharmaceutical companies often say it costs $2.7billion to produce medication to fight cancer, though there is no public data to support that.
However, the new study published today in JAMA Internal Medicine concludes it costs around $650million – less than a quarter of the commonly-cited figure.
The researchers at Oregon Health and Science University and Memorial Sloan Kettering say the findings suggest the industry’s prices may be wildly extortionate.
Pharmaceutical companies often say it costs $2.7billion to produce medication to fight cancer, but a new study says it costs around $650million
‘I think these results would suggest that pharmaceutical drug development is extremely lucrative and the current drug prices are not necessarily justified by the R & D [research and development] spending on these drugs,’ Sham Mailankody of Memorial Sloan said.
The highly-critiqued figure, between $2billion and $2.5billion, comes from a 2014 report by the Tufts Center for the Study of Drug Development.
The report was compiled using private datasets.
After Donald Trump cited the figure in January, it triggered a new conversation about drug pricing and manufacturing.
‘Fifteen years, $2.5 billion to come up with a product where there’s not even a safety problem. So it’s crazy,’ he said.
So researchers Mailankody, a medical oncologist and hematologist at Memorial Sloan Kettering, and Dr Vinay Prasad, a hematologist-oncologist at the Oregon Health and Science University, investigated.
They identified 10 firms that had a cancer drug on the market.
They looked up the companies’ research and development costs, according to their federal stock reporting paperwork, to come up with the average figure of $650 million.
Merrill Goozner, editor emeritus of the magazine Modern Healthcare, said: ‘[T]he industry consistently generates the highest profit margins among all US industries, which suggests the pricing power afforded by patent exclusivity far outweighs the inherent riskiness of pharmaceutical research and development.’