Activists Slam Drug Dev. Cost Study

By THE ASSOCIATED PRESS

Filed at 5:31 p.m. ET

NEW YORK (AP) -- A study saying that each new drug costs pharmaceutical companies an average $802 million to develop was immediately attacked Friday by the industry's critics, who called the figure inflated.

The finding by the Boston-based Tufts Center for the Study of Drug Development is $300 million more than the amount usually cited by drug companies themselves to defend big profits and patent rights. It dwarfs the $110 million figure cited by a consumer group.

Activists contended that the Center is partially funded by the pharmaceutical industry and noted that the study's methodology wasn't immediately fully disclosed. They also said it focused too much on new compounds when many of the drugs approved every year are updated versions of existing medicines.

The pharmaceutical industry and the activists are each seeking ammunition before the next legislative session, when Congress may try to add a drug benefit to Medicare that would likely require deep discounts from pharmaceutical companies.

The industry has long argued cutting its profits would slow down expensive research and development needed for new cures.

Joseph A. DiMasi, director of economic analysis at the Tufts center and the author of the study, dismissed suggestions that the industry's funding of the Center had an influence.

``The pharmaceutical industry has been under fire for years. Politics didn't play a role in releasing the study,'' he said.

The study follows a report by Public Citizen over the summer which put drug development costs at $110 million -- a figure the industry called much too low.

This week, the Consumer Project on Technology issued a study on drug development costs that focused on ``orphan'' drugs, or those for a small market. It said which said clinical trials for the drugs cost $7.9 million before taxes, including costs for failed products. Industry officials said the study was flawed.

Companies receive a 50 percent tax credit for clinical expenses for orphan drugs, through a program to encourage development of medicines for diseases that affect less than 200,000 people. The study used 129 tax returns claiming the credit in 1997 and 1998.

James Love, the study's co-author, conceded his report was not directly comparable with the Center's research. For instance, it does not include costs incurred before actual drug trials. Also, orphan drug trials are smaller than those of traditional trials.

``Still, it is a long way from $8 million to $802 million,'' said Love.

Other critics of the Tufts study said it should have taken into account tax credits that companies receive for research and development. DiMasi contended that those were negligible.

The $802 million average cost includes $403 million that a company potentially loses by not having invested in something more reliable than drug development, which is risky. Activist say that loss is theoretical and should not be figured in. DiMasi says it is standard economic practice.

In contrast, Public Citizen's report includes tax rebates and excludes opportunity costs. Public Citizen said it based some of its research on an earlier DiMasi study, along with information from the Food and Drug Administration and the National Institutes of Health.

The Tufts center released a study in 1991 which pegged the cost of drug development at $231 million. That study was updated by the industry in the mid-1990s to $500 million.

Other reports have put the cost of drug development at anywhere from $675 million to $800 million. DiMasi's study though will carry clout because it will eventually be published in an academic journal with the methodology laid out.

DiMasi says that clinical trials are the main reason for the price hike. He says more drugs are being tested which creates competition for patients so recruiting is more expensive.

ALL INFORMATION, DATA, AND MATERIAL CONTAINED, PRESENTED, OR PROVIDED HERE IS FOR GENERAL INFORMATION PURPOSES ONLY AND IS NOT TO BE CONSTRUED AS REFLECTING THE KNOWLEDGE OR OPINIONS OF THE PUBLISHER, AND IS NOT TO BE CONSTRUED OR INTENDED AS PROVIDING MEDICAL OR LEGAL ADVICE.  THE DECISION WHETHER OR NOT TO VACCINATE IS AN IMPORTANT AND COMPLEX ISSUE AND SHOULD BE MADE BY YOU, AND YOU ALONE, IN CONSULTATION WITH YOUR HEALTH CARE PROVIDER.