The Tufts Center for the Study of Drug Development estimated that the average drug costs around $2.6 billion for its development and approval.
The researchers clarified that the computation was based on the average out-of-pocket costs amounting to $1.4 billion and time costs of $1.16 billion.
The quoted costs do not include post-approval R&D (research and development) which costs an additional $312 million. R&D includes the expenses for the studies and testing used as evidence to win the approval of the U.S. Food and Drug Administration.
The team reviewed the data provided by 10 pharmaceutical companies including 106 drugs developed and approved between 1995 and 2007 to get the figures.
"Drug development remains a costly undertaking despite ongoing efforts across the full spectrum of pharmaceutical and biotech companies to rein in growing R&D costs," Joseph A. DiMasi, director of economic analysis at Tufts CSDD and principal investigator for the study, said in a press release.
The latest computation of Tufts is triple the amount compared to 10 years ago - $802 million. DiMasi explained that the increase was due to a surge in out-of-pocket costs and failed tests on human subjects.
The results of the study seem to support the rising price of drugs such as Gilead's new hepatitis C drug that costs $1,050 per day.
Critics questioned the reliability of Tufts' study as the pharmaceutical companies did not disclose the details of their research costs.
"If you believe (the estimate), you probably also believe the earth is flat," Doctors without Borders, a medical humanitarian non-governmental organization, said in an email to Reuters.
Another critic also said that the study lacked some vital information.
"The new Tufts study was part of a public relations campaign, designed to get people to accept high drug prices," Jamie Love of Knowledge Ecology International, a non-profit group that tracks intellectual property and access to medicines issues, told the Wall Street Journal. "The study is long on propaganda and short of details... Did all of these drugs really have zero NIH funding for pre-clinical work?"
