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This analysis aims to quantify the increase in drug development costs since the 1962 Kefauver-Harris Amendment.

May 10, 20260 citationsOpen Access

Drug Development Cost Increase Analysis

Key Points

This analysis aims to quantify the increase in drug development costs since the 1962 Kefauver-Harris Amendment.
Uses the Baily (1972) study as the primary source
Adjusts historical costs for inflation using CPI data
Conducts Monte Carlo sensitivity analysis to validate findings
Drug development costs increased approximately 105 times in real terms since 1962
Independent estimates confirm increases of 100-400 times
Validated against comparisons of generic vs. brand-name drugs and other price categories

Abstract

Website: https://manual.warondisease.org/knowledge/appendix/drug-development-cost-analysis.html Abstract: Drug development costs have increased approximately 105x in real terms since the 1962 Kefauver-Harris Amendment. This analysis uses the Baily (1972) academic study as the primary source, adjusts for inflation via Bureau of Labor Statistics CPI data, and validates the finding against six independent real-world price comparisons: generic vs. brand-name drugs, supplements vs. prescriptions, compounding pharmacies vs. FDA-approved products, veterinary vs. human drugs, orphan drug pricing, and historical antibiotic economics. Monte Carlo sensitivity analysis confirms the estimate is robust across plausible input ranges. The magnitude is consistent with independent estimates of 100-400x from multiple research groups. Summary: Rigorous analysis of the 105x increase in drug development costs from pre-1962 to 2024, using Baily (1972) academic study with CPI adjustments and sensitivity analysis

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