A novel perspective on pharmaceutical R&D costs: opportunities for reductions

Simon van der Schans*, Frans De Loos, Cornelis Boersma, Maarten J. Postma, Hans Büller

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review


Introduction: R&D costs as an element of medicines’ 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’ 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.

Original languageEnglish
Pages (from-to)167-175
Number of pages9
JournalExpert Review of Pharmacoeconomics and Outcomes Research
Issue number2
Publication statusE-pub ahead of print - 21 Oct 2022


  • Affordability
  • cost of capital
  • cost of failure
  • cost-based pricing
  • drug development
  • R&D costs
  • transparency
  • value-based pricing


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