When consumers look at the cost of drug research, they don’t often consider the complexities that go on behind the scenes. Fees involved with testing, maintenance and licensing compound the costs of a drug at the counter. One example is the turnaround, a technical term for upgrading a factory. Facilities have to shut down for repairs and upgrades, and experiments don’t stop when this happens. A lab relocation
has to carefully handle the experiments in progress, an extremely precise operation. Small costs like this add up over decades for a price tag in the millions (or even billions).
If you’re interested in what drives the cost of medical drugs, read on for some of the major contributing factors.
Length of Time
A clinical trial can take several years to complete, requiring millions in investment to pay for the basic costs. Trials can require all sorts of new equipment, staffing and the costs of running a lab full time. Multiply those costs over a decade’s worth of time and the costs of a drug begin to climb drastically.
The time factor is important because society needs a full understanding of the effects of a drug, and sometimes those effects may not manifest for years. A pharmaceutical test consists of many phases as well. Pre-clinical and clinical can both take 5-7 years to complete, on average.
Cost of Failure
One of the major reasons that drug costs are increasing is that there is a high cost of failure. Very few of the drugs tested will actually make it to market, and those that do will need to recoup a cost numbering into the billions at times. This can seem unrealistic, but the amount of testing required defers the opportunity to profit off a drug by more than a decade, which is a dramatic investment for any company.
Part of the challenge is meeting regulations involved in the safe manufacturing of drugs, but a failed trial can impact a company in other ways. Any company losing up to $1 billion in a failure sees a plummeting stock price and faces serious downsizing.
Part of the big contributor to the cost of research is in sample size. Early-stage testing looks primarily at animals, but as trials progress, they require human volunteers. Early trials look only at dosages to test toxicity, but later stage trials require patients exhibiting certain symptoms. Those volunteers can be hard to find and may add to the expense of data collection.
Even the most efficient trials take several years to complete, requiring many volunteers and staff along the way.
There are several reasons why the costs of a prescription drug may be high other than the major ones cited above. For example, funding for a trial may dry up and require a suspension. A suspension means an experiment will go into storage or may be moved. Things never stop, they just get delayed until the next source of funding is found, now with the added cost of storage.
The costs of a prescription drug are varied, and the returns can be difficult to judge from a consumer or regulatory standpoint. The line is very obscured. It’s clear that more testing leads to a more reliable drug, but more must be done to try and lower or control some of the costs associated with pharmaceutical drugs.