Figuring out what it costs to bring a new drug to market is surprisingly difficult. How do you account for the costs of all the potential failed drugs that needed to be tested in order to get that one successful drug to patients? To answer this question, the team led by Sham Mailankody did something clever. They identified pharmaceutical companies that only had one drug on the market. They then determined when the company first started working on that molecule and added up the companies R&D costs (as reported on their tax returns) for every year from that point until FDA approval.

Now, this total cost would include R&D costs for drugs the company was working on that never made it to market, but that’s OK. The question is how much money it takes to get that one successful drug. If 100 drugs had to fail, this includes the cost of those failures as well.