Publications [#318159] of Henry G. Grabowski

Journal Articles

1. DiMasi, JA; Grabowski, HG; Hansen, RW, Innovation in the pharmaceutical industry: New estimates of R&D costs., Journal of health economics, vol. 47 (May, 2016), pp. 20-33 [doi]
   (last updated on 2026/01/18)

   Abstract:
   The research and development costs of 106 randomly selected new drugs were obtained from a survey of 10 pharmaceutical firms. These data were used to estimate the average pre-tax cost of new drug and biologics development. The costs of compounds abandoned during testing were linked to the costs of compounds that obtained marketing approval. The estimated average out-of-pocket cost per approved new compound is $1395 million (2013 dollars). Capitalizing out-of-pocket costs to the point of marketing approval at a real discount rate of 10.5% yields a total pre-approval cost estimate of $2558 million (2013 dollars). When compared to the results of the previous study in this series, total capitalized costs were shown to have increased at an annual rate of 8.5% above general price inflation. Adding an estimate of post-approval R&D costs increases the cost estimate to $2870 million (2013 dollars).