‘Don’t price drugs based on how expensive R&D was,’ says new UN report

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That the cost of development of any new drug is extremely high has been a known fact that the biotech and pharmaceutical industry has grappled with for a long time. This issues have recently become more publicized as high profile clinical trials have shed light on the dichotomy between keeping the development, testing and manufacturing processes in line with regulatory constraints and the business-dependent issues of development costs, profits and selling price.

This week, a United Nations panel issued a report that addresses the rising costs of commercial drugs, patent issues as well as associated development-related matters.

One of the most urgent points involved the allegedly disproportionate cost of drugs relative to what the UN believes, or recommends, they should cost. The report, specifically, calls on governments to negotiate a binding treaty “de-linking” R&D costs from the final price of drugs in areas where market incentives have been insufficient, such as for new antibiotics or for tropical diseases.

The report on the United Nation’s Secretary General High Level Panel on Access to Medicines is publicly available and can be read here.

That the cost of developing a new drug is high is not news. A recent manuscript, published earlier this year, titled Innovation in the pharmaceutical industry: New estimates of R&D costs, estimated that the cost to bring a new drug to market is approximately $2.56 billion.

The pharmaceutical industry has largely criticized the report, with the Biotechnology Innovation Organization saying:

“Sadly the United Nations High Level Panel ignored the real issues that impact or delay delivery of innovative treatments and cures throughout the developing world, while focusing on policy recommendations in the one area – intellectual property – that would actually undermine ongoing research and development by hundreds of companies, universities and researchers.”

While much of the UN’s report is focused on developing countries, there are parallels and potential impacts of such actions that would affect the pharma and biotech industries globally.

There is no doubt that the cost of drugs has lately become a significant topic with high international interest, and it will be interesting to see how things play out now that the report has seen light.

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