@article{210f5ebf86dc4636a201d810fdbe3aa6,
title = "A novel perspective on pharmaceutical R&D costs: opportunities for reductions",
abstract = "Introduction: R&D costs as an element of medicines{\textquoteright} pricing play a prominent role in the discussions regarding the affordability of medicine. This paper investigates the details of R&D costs and the potential for reductions. Areas covered: The manuscript focuses on the constitution of R&D costs in relation to medicines{\textquoteright} pricing and its potential developments. This manuscript builds on a cost-of-opportunity approach to explore the results of potential changes in drug development and its possible economic, political, and societal impacts. Expert opinion: The cost of capital is the largest cost category that could be affected by authorities. Public institutions can affect these costs by increasing public investments in R&D and reducing the amount of development time that is associated with a high capital need. In order to affect the cost of failure, it is key to understand its drivers. A government taking risks as the funder of early innovation yields an opportunity to introduce an alternative model for medicine development. Next, to control pricing, it is important to adequately reward innovation in order to ensure improved quality of care, access, and affordability of systems. Innovation, high-quality care, access, and affordability require entrepreneurial and changing positions of governments, authorities, public institutions, and the pharmaceutical industry.",
keywords = "Affordability, cost of capital, cost of failure, cost-based pricing, drug development, R&D costs, transparency, value-based pricing",
author = "{van der Schans}, Simon and {De Loos}, Frans and Cornelis Boersma and Postma, {Maarten J.} and Hans B{\"u}ller",
note = "Funding Information: Early failure occurs at academic institutes and start-ups as a result of their involvement in the early pioneering phases when the chance of failure is the greatest. Failure of these parties means not receiving a patent or generating a proof-of-concept. This phase is primarily funded with subsidies, grants, and public capital through academic institutes [,]. For start-ups, failure could mean that the business must be liquidated as they are generally funded by government subsidies, grants, and also venture capital [,]. Start-ups with faster economic potential are usually funded with venture capital. In general, the financial support for start-ups for preclinical or early clinical development is derived from grants and subsidies []. While we discuss ways to reduce the chance of failure and, with that, reduced costs of failure, it is important to note that interventions related to managed entry agreements also affect the failure profile of medicine development. Conditional or accelerated approval or payments based on limited or preliminary data are associated with additional costs (post launch studies) and a risk that patients do not receive the optimal treatment, and there is uncertainty of the outcomes []. The possibility of failure to achieve desired results for approval or full payment is attributed to a higher failure rate in the approval phase with greater costs associated with this. A high failure rate late in the development process substantially increases the cost of failure. Therefore, a review of the early access system in this context would be advised with its possible effect on R&D costs and health outcomes. The national authorization and reimbursement systems would benefit from more cooperation between countries in data collection, post-marketing research, as well as data analysis, and interpretation []. Publisher Copyright: {\textcopyright} 2021 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group.",
year = "2022",
month = oct,
day = "21",
doi = "10.1080/14737167.2022.1987219",
language = "English",
volume = "22",
pages = "167--175",
journal = "Expert Review of Pharmacoeconomics and Outcomes Research",
issn = "1473-7167",
publisher = "Taylor and Francis Ltd.",
number = "2",
}