Article • Dean Baker’s Beat the Press
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That would be an implication of research by Tufts University professor Joseph DiMasi. He found that it cost an average of $2.6 billion to develop a new drug in the United States. By contrast, the Wall Street Journal reported that a company in China developed a new cancer drug for just $70 million, less than 3 percent of DiMasi’s estimate.
Given the enormous difference in costs, the United States and the world economy would be much better served if we shifted drug development to efficient countries like China. The United States should instead focus on producing goods and services in which it has a comparative advantage. Unfortunately, our trade deals have been pushing in the opposite direction, trying quite explicitly to protect the U.S. drug industry by increasing the strength of patent and related protection. Of course the best outcome would be to move away from research financed by patent monopolies and moving toward more modern and efficient mechanisms.
(The $70 million estimate may not include any discounting for money spent in the past. The proper methodology would impute interest to money spent ten years ago as opposed to yesterday. It also is only the cost for a successful drug. It doesn’t factor in the cost of failures, as does DiMasi’s estimate.)