The pharmaceutical industry exaggerates the expense of developing new drugs fivefold and then uses the inflated figure to justify high drug prices and profit margins, misleading Congress, according to a new report by Public Citizen, a consumer advocacy group.
The report asserts that researching and developing new drugs costs companies just 20% of the $500 million the Pharmaceutical Research and Manufacturers of America says the cost is.
Public Citizen's report alleges that research "may cost far less than $500 million . . . and may be less than $100 million for every new drug (including failed drugs). The evidence also shows that the drug industry isn't all that innovative, as it produces far more `me-too,' or copycat, drugs of little medical importance than life-saving medicines."
The report is posted on the group's Web site: www.citizen.org.
PhRMA officials have said they stand behind the organization's $500 million estimate and also have asserted that most pharmaceutical research is performed by private companies and not through publicly funded projects.
"We have absolute confidence that the methodology behind that $500 million estimate is sound," said Jeff Trewhitt, a PhRMA spokesman.
Public Citizen's report disagrees, citing the National Institutes of Health's findings that tax dollars funded more than half of the research that led to the top five-selling drugs in 1995.
"The NIH and its grantees do fundamental basic research that leads to new ideas and new theories but generally not products," Trewhitt said.