Winning FDA approval for a new drug or medical treatment requires extensive—and expensive—human trials for safety and effectiveness. Costs vary widely, depending largely on the conditions being treated and the number of subjects required. Roughly 50 stem-cell cardiac therapies are currently in trials in the United States. Among them are these two, both designed for "no hope" populations, meaning that relatively few participants are required—perhaps 100 to 300.
Estimated cost of clinical trials for therapy developed by Cedars-Sinai Heart Institute in Los Angeles and the small biotech company Capricor: $7 million to $10 million
Estimated cost of clinical trials for Louisiana-based TCA Clinical's treatment for severe coronary ischemia, now in Phase II: $13 million
When wider applications are involved, costs increase dramatically. Here are the latest estimates for bringing a new drug to approval from Joseph DiMasi, director of economic analysis at the Tufts Center for the Study of Drug Development, who updated the center's most recent data to account for inflation.
Average out-of-pocket cost of developing a new drug, from inception to approval: $494 million
Average out-of-pocket clinical cost for each new drug: $153.2 million
Average out-of-pocket cost for each phase of clinical trials:
Phase I - $18.6 million
Phase II - $28.8 million
Phase III - $105.8 million
A version of this article appeared in the December/January 2010 issue of Fast Company magazine.