Because developing new drugs costs more and more (cross-border guide)

Context

In a nutshell

• Average drug development cost at $2.23 billion in 2024
• 65% increase compared to 2014, about 25% with inflation
• Trump calls for Europe to pay more for new medicines
• Zero duties on generics then massive increases according to the administration

Key facts

Development cost 2024: $2.23 billion Increase compared to 2014: 65% in raw percentage Historical comparison: 30% more than in 2012 according to Tufts Oncology weight: 41% of all clinical trials Incidence of rare cancers: 74% of oncology studies started in 2024 Biopharmaceutical companies: 20 largest in the world analyzed by Deloitte

President Donald Trump has repeated it several times: according to him, European governments benefit from US pharmaceutical spending without contributing enough. Higher prices paid in the United States, he says, generate the profits that fund research and innovation from which the rest of the world also benefits. That's why Europe should pay more for new medicines, Trump says. The tenant of the White House reports that customs tariffs remain on standby until 2028, but then they will be 100% for a year and 200% thereafter, as highlighted in a previous in-depth analysis. How true is this statement? The point is difficult to verify, also because the relationship between development costs and drug prices remains one of the most opaque aspects of the pharmaceutical industry.

Operational details

Developing a drug has always been difficult and characterized by a high percentage of clinical failures, but today the nature of the medicines on which global scientific research focuses has also changed. Many new treatments are biologically more complex, and this exponentially increases the costs of research, laboratory work, and industrial production. For decades, many of the best-selling drugs were small chemical molecules, usually taken in the form of pills: statins to lower cholesterol, antidepressants, painkillers like aspirin. Today, companies are moving toward more complex research areas: specialized drugs, gene therapies, and highly specialized treatments for smaller groups of patients, explains Amanda Cole, director at the Office of Health Economics. This category includes, for example, RNA-based therapies, such as mRNA vaccines against Covid-19, cell and gene therapies, and monoclonal antibodies. The latter are proteins produced in the laboratory: they work similarly to natural antibodies and are designed to recognize specific targets. Keytruda, an immunotherapy used in the treatment of certain cancers, is one such key example. These are drugs that can offer great value to patients, but developing them is an extraordinary scientific and economic challenge. For a long time, pharmaceutical innovation focused on parts of the body that scientists knew relatively well, whereas today entirely unprecedented biological frontiers are being explored that require cutting-edge diagnostic tools and technologies. This transition pushes the overall average cost for each single approved drug upward, highlighting how the data in the Deloitte report reflect a structural transformation of the entire international pharmaceutical sector and its related corporate business models.

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Key points

The increasing complexity of research is also directly reflected in the type of clinical studies needed to obtain regulatory approvals from competent authorities worldwide. According to IQVIA, oncology now accounts for 41% of all clinical trials, and 74% of oncology trials initiated in 2024 evaluated drugs for rare cancers. Finding eligible patients for such targeted trials requires much longer timeframes, global hospital networks, and highly specialized centers. At the same time, the economic and regulatory landscape continues to evolve under the pressure of international political statements and trade policies that could redefine the cash flows of major pharmaceutical multinationals. For cross-border workers and residents active in the Canton of Ticino region, understanding the dynamics of global pharmaceutical costs helps decipher news concerning the evolution of health insurance premiums and the sustainability of regional healthcare systems, which are influenced by the list prices of innovative treatments. Those wishing to delve deeper into the management of their personal finances, the impact of the cost of living, or pension planning can consult the dedicated tools available online. For a comprehensive assessment of your economic and tax situation, including details on your payslip and withholding taxes, check your position now with the salary calculator calcolatore stipendio.

Source: rsi.ch