A prescription drug's sunk R&D costs do not influence the drug's price, the Congressional Budget Office found.

CBO Report: R&D Costs Do Not Influence Pharma Pricing

The pharmaceutical industry’s spending on research and development as a proportion of its revenue dwarfs virtually all other manufacturing sectors, but those costs do not really impact pricing, according to a new analysis by the Congressional Budget Office.

Drugmakers spend up to 25% of its net revenue (sales less expenses and rebates) on R&D, totaling $83 billion in 2019, up from $38 billion in 2000. That ratio compares to about 2% to 3% of net revenue allocated to R&D for all other industries. Even the R&D-intensive software and semiconductor sectors spend significantly less than 20% on finding and creating new products.

The pharmaceutical industry’s spending on research and development as a proportion of its revenue dwarfs virtually all other manufacturing sectors, but those costs do not really impact pricing, according to a new analysis by the Congressional Budget Office.

Please Login or Become a Paid Subscriber to View this Content

If you are already a paid subscriber, please follow the steps below.
If you are not yet a paid subscriber, please Subscribe now.
For questions about subscriptions or technical assistance, please contact Reshma Eggleston at reshma.eggleston@340breport.com.
« Read Previous Read Next »
Generic selectors
Exact matches only
Search in title
Search in content
Post Type Selectors
×

×

*Sign up for news summaries and alerts from 340B Report

Site Footer