For drug development companies and the industry itself, the cost of developing new drugs has been a huge issue in recent years. An oft-cited 2003 study reported an average cost (before taxes) of $800 million to successfully bring a new drug to market, and another study, published in 2006, puts figures of $500 million to $2 billion for the same. The actual numbers have been the subject of much debate, with many pointing out that less innovative drug development costs much less, but the fact remains that developing a new drug is an uneconomic activity for drug development companies.
Why is this the case? Simply put, coming up with a new drug is expensive because it is a complicated and time-consuming activity. Component drug development procedures, such as R&D and clinical trials, must be complicated and expensive. Chemical compounds can have all sorts of effects on the human body, so extensive and extensive safety testing must be done before a drug is approved for human ingestion. And even with those drugs that are effective and non-toxic at first, many side effects can be subtle and aggravated, only becoming apparent after certain periods of time. Therefore, this process must be laborious and slow, because all bases must be covered.
Agencies like the Food and Drug Administration regulate the drug development process very strictly and protect the welfare of consumers by ensuring that pharmaceutical development companies are as demanding as they need to be. These same companies must make up for lost time by developing and refining processes to get most, if not all, procedures right in as few tries as possible.