Joseph A DiMasi1, Zachary Smith2, Kenneth A Getz2. 1. Tufts Center for the Study of Drug Development, Tufts University, Boston, Massachusetts. Electronic address: joseph.dimasi@tufts.edu. 2. Tufts Center for the Study of Drug Development, Tufts University, Boston, Massachusetts.
Abstract
PURPOSE: The extent to which new drug developers can benefit financially from shorter development times has implications for development efficiency and innovation incentives. We provided a real-world example of such gains by using recent estimates of drug development costs and returns. METHODS: Time and fee data were obtained on 5 single-source manufacturing projects. Time and fees were modeled for these projects as if the drug substance and drug product processes had been contracted separately from 2 vendors. The multi-vendor model was taken as the base case, and financial impacts from single-source contracting were determined relative to the base case. FINDINGS: The mean and median after-tax financial benefits of shorter development times from single-source contracting were $44.7 million and $34.9 million, respectively (2016 dollars). The after-tax increases in sponsor fees from single-source contracting were small in comparison (mean and median of $0.65 million and $0.25 million). IMPLICATIONS: For the data we examined, single-source contracting yielded substantial financial benefits over multi-source contracting, even after accounting for somewhat higher sponsor fees.
PURPOSE: The extent to which new drug developers can benefit financially from shorter development times has implications for development efficiency and innovation incentives. We provided a real-world example of such gains by using recent estimates of drug development costs and returns. METHODS: Time and fee data were obtained on 5 single-source manufacturing projects. Time and fees were modeled for these projects as if the drug substance and drug product processes had been contracted separately from 2 vendors. The multi-vendor model was taken as the base case, and financial impacts from single-source contracting were determined relative to the base case. FINDINGS: The mean and median after-tax financial benefits of shorter development times from single-source contracting were $44.7 million and $34.9 million, respectively (2016 dollars). The after-tax increases in sponsor fees from single-source contracting were small in comparison (mean and median of $0.65 million and $0.25 million). IMPLICATIONS: For the data we examined, single-source contracting yielded substantial financial benefits over multi-source contracting, even after accounting for somewhat higher sponsor fees.
Authors: Joseph A DiMasi; Zachary Smith; Ingrid Oakley-Girvan; Andrew Mackinnon; Mary Costello; Pamela Tenaerts; Kenneth A Getz Journal: Ther Innov Regul Sci Date: 2022-09-14 Impact factor: 1.337