List date(s) this work was published or aired.
2/10/2012
Provide a brief synopsis of the story or stories, including any significant findings.
For a decade, drug company executives, politicians, and policy makers have tossed around estimates of the cost of developing a new medicine is in the neighborhood of $1 billion for each new drug. But this ignores one of the most uncomfortable facts about the pharmaceutical industry: research costs are rising while productivity has been dropping. Using a new method created by Bernard Munos, an industry researcher, I came up with per-company estimates of R&D costs that start at $3.7 billion per new drug and go as high as $12 billion, showing both the high cost of drug development and the waste caused by bad decisions at many companies.
Explain types of documents, data or Internet resources used. Were FOI or public records act requests required? How did this affect the work?
There were two types of documents that went into this report. First there were the approval reports made by the FDA, which are publicly available, but which had been collated by Munos going back 16 years. Then there were the R&D expenditures filed by the Securities and Exchange Commission. These were accessed from a database called FactSet. I had previously reported that the cost per NME was $4 billion, in a profile of Munos written for Forbes Magazine last year.
Explain types of human sources used.
Bernard Munos was a key source for this story. So were many current and former industry executives who had told me on background that drug development costs were much higher than they were often portrayed to be.
Results:
Our new estimate gained significant traction. It was repeated by high-profile writers like Megan McCardle, Derek Lowe, and Andrew Sullivan, and imitated by the Wall Street Journal months later. Novartis used the new estimate as part of its annual presentation to investors and analysts. It drew responses from the Tufts Center For Drug Development, and from many former industry executives who either agreed or disagreed with the new estimates.
Follow-up (if any). Have you run a correction or clarification on the report or has anyone come forward to challenge its accuracy? If so, please explain.
Some former executives, including Susan Desmond-Hellmann (the former president of Genentech) and Mark Murcko, the former chief technological officer of Vertex Pharmaceuticals. Steve Paul, the former head of research at Eli Lilly, argued that R&D costs from companies include more than just R&D, and more than just the R&D required to get a drug approved. But, by the same token, these are costs that companies developing drugs have to take, and without accepting that there is no way to easily see how the expense of developing a new medicine is increasing or how different companies compare to one another.
Advice to other journalists planning a similar story or project.
A lot of the data about what pharmaceutical companies do is public and misinterpreted, if you know where to look.