US drug firms challenge critics' numbers on R&D

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US drug firms challenge critics' numbers on R & D

WASHINGTON, Aug 15 (Reuters) - The pharmaceutical industry said Tuesday that

a report by consultants Ernst & Young casts doubt on a consumer group's

allegations that drug makers have overstated the cost of developing new

drugs.

The Pharmaceutical Research and Manufacturers of America said the Ernst &

Young report found that a study released last month by the consumer group

Public Citizen had ignored the opportunity cost of research and development

funding--money foregone by investing in a drug project rather than investing

the funds elsewhere.

" In several key aspects, the Public Citizen approach deviates from standard

methodologies adopted by previous research and the financial and accounting

communities, " said the Ernst & Young study.

In July, Public Citizen accused the pharmaceutical industry of overstating

the cost of developing new drugs while doling out millions of dollars for

lobbying against legislation that would rein in prices paid by cash-strapped

senior citizens.

According to Public Citizen, the pharmaceutical industry spends about $110

million a year after taxes on research and development of new drugs, not

$500 million as industry lobbyists assert.

But Ernst & Young said the $500 million figure, estimated in a 1991 study,

was " reasonably accurate " and did not contain marketing costs.

Drug research and development remained a highly risky process, the

consultancy added.