Sales revenues for new therapeutic agents approved by the United States Food and Drug Administration from 1995 to 2014: a retrospective study

Olivier J. Wouters, Aaron S. Kesselheim, Jouni Kuha and Jeroen Luyten

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Objectives: This study aimed to analyze worldwide sales of new therapeutic agents and to estimate the time it takes for product sales to exceed industry-wide average drug development costs. Methods: Data obtained from company reports were analyzed to track worldwide sales of new medicines approved by the US Food and Drug Administration from 1995 to 2014. All sales figures were reported in 2019 US dollars. Kaplan-Meier curves were used to evaluate the time it took for discounted product sales to exceed the average costs associated with developing 1 new drug (accounting for the costs of failed trials), using published estimates of these costs. Results: Based on data for 361 of 558 new therapeutic agents approved over the study period (median follow-up 13.2 years), mean sales revenue per product was $15.2 billion through the end of 2019; the median was $6.7 billion. These products jointly generated global sales of $5.5 trillion since approval. Revenues were highly skewed, with the 25 best selling products (7%, 25 of 361) accounting for 38% of this amount ($2.1 trillion of $5.5 trillion). Approximately 47% of products had discounted sales that exceeded the estimated industry-wide average costs of development within 5 years of approval, and 75% within 10 years. After attributing potential production, marketing, and other costs, these numbers dropped to 21% of products within 5 years of approval, and 46% within 10 years. Conclusions: Sales of new medicines approved from 1995 to 2014 were highly skewed, but many products had net discounted sales that exceeded the industry-wide average costs of development within 10 years of approval. An understanding of how sales revenues accrue in the years after initial approval, alongside data on business costs, can inform discussions about how to incentivize private investment in innovation while ensuring affordable prices for patients and the healthcare system.

Keywords: pharmaceutical policy; drug prices; research and development; revenues (search for similar items in EconPapers)
JEL-codes: C1 (search for similar items in EconPapers)
Pages: 9 pages
Date: 2024-10-31
New Economics Papers: this item is included in nep-his
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Published in Value in Health, 31, October, 2024, 27(10), pp. 1373 - 1381. ISSN: 1098-3015

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