|
| |
| Olga Rozanova |
| |
| ''Comparison of the costs of drug development under different methods of calculation'' |
| ( 2026, Vol. 0 No.0 ) |
| |
| |
| This paper compares two methods for estimating drug development costs: the conventional cost per expected approval and the probabilistic cost to achieve at least one approval with a given confidence level. The paper shows that, for typical success rates and high confidence levels, the probabilistic approach requires 2–4 times more trials—implying that standard average-cost figures can underestimate reliable investment by a similar factor. Extending the model to multiple phases, the analysis demonstrates that while the gap between the two objectives narrows over time, stochastic transitions often leave portfolios underfunded for subsequent phases. Thus, expected-value estimates carry a high risk of failing to meet confidence-based portfolio goals, with direct implications for research funding and policy design.
|
| |
| |
| Keywords: costs of drug development, pharmaceutical R& D, number of clinical trials |
JEL: O3 - Technological Change; Research and Development: General
I1 - Health: General |
| |
Description of Appendix:
Please make the uploaded Appendix publicly available to readers.
EB-24-00490-Appendix.pdf |
| |
| |
| Manuscript Received : Nov 19 2024 | | Manuscript Accepted : Apr 27 2026 |
|
