Exploring the impacts of increasing cost transparency requirements in pharmaceutical R&D

Healthcare business graph and medical examination, with stethoscope and businessman in blurred background, photo by ipopba/Adobe Stock

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What is the issue?

The costs of researching and developing new medicines are large and the R&D process takes many years, with much uncertainty about how successful any new medicine in the R&D pipeline will prove to be. Insights on the size and nature of R&D costs are important and can affect views on how much it is reasonable to pay for a new medicine. Transparency in R&D costs is therefore unsurprisingly of public interest.

How are we helping?

RAND Europe has been commissioned by Merck Sharp and Dohme to undertake an independent literature review to collect evidence of:

  • Precedence and methodologies for capturing and communicating R&D costs, in particular R&D costs attributed to a specific project/product
  • Measures by which these methodologies could be applied to biopharma innovation and their viability and validity
  • Impact of these methodologies and their communication on future innovation trends.

We will analyse this evidence to consider the impacts (positive and negative) on medicines pricing and innovation, and how these should be considered as part of the ongoing transparency and pricing debate.

We are carrying out a detailed literature review to capture the types of information reflected in the costs of drug R&D and the degree of transparency which is achievable. We are taking an international approach and are capturing a wide range of sources including policy documents and relevant databases as well as academic studies, to try to identify discussions of the implications of, and expectations of some stakeholders for, greater R&D cost transparency.

The output of this work will be a publicly available report.