Grabowski, HGVernon, JM2013-04-231994-120167-6296https://hdl.handle.net/10161/6703This study finds that the mean IRR for 1980-84 U.S. new drug introductions is 11.1%, and the mean NPV is 22 million (1990 dollars). The distribution of returns is highly skewed. The results are robust to plausible changes in the baseline assumptions. Our work is also compared with a 1993 study by the OTA. Despite some important differences in assumptions, both studies imply that returns for the average NCE are within one percentage point of the industry's cost of capital. This is much less than what is typically observed in analyses based on accounting data.CommerceCosts and Cost AnalysisData CollectionDrug IndustryDrugs, InvestigationalHealth PolicyIncomeResearch Support as TopicUnited StatesUnited States Food and Drug AdministrationUnited States Office of Technology AssessmentJournal article