People are enjoying better health and longer lives, and it’s time to pay the piper, says GlaxoSmithKline Chief Operating Officer Bob Ingram.

Speaking to several hundred people at a Monday luncheon during the 2002 Emerging Issues Forum at North Carolina State University, Ingram outlined the costs of pharmaceutical development in an attempt to fend off public criticism of high prescription drug prices. The criticisms have become louder in recent years as Congress looks at overhauling the Medicare system.

“How much is too much to spend to save or improve human life?” Ingram asks. “It’s increasingly difficult to balance the public demand for new and improved medicines with a willingness to pay the price for developing them.”

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GSK spent $4.5 billion on research and development last year, and R&D expenses represent 17 percent of sales across the pharmaceutical industry, he says. The average development cost for a new drug is $800 million over 12 to 15 years because just one of every 5,000 to 10,000 chemical compounds studied pans out into a commercial product.

“We’re in the failure business. We just need to learn how to fail more quickly and more cheaply,” Ingram says. “We take a gamble on pharmaceutical research because it’s the only hope for people suffering from disease.”

Drugs also save money in the long run by reducing hospitalization costs, he says. For example, a patient who spent $1,700 on clot-busting drugs incurs an average of $6,100 less in other health care costs.

Once drugs do hit the market, Ingram says, manufacturers try to recoup as much of the development cost as possible before competitors come up with follow-on products or the drug’s patent expires, allowing cheaper generic equivalents to be produced.

Yet with all of that expense, price increases accounted for less than a third of the 14.7 percent jump in drug spending nationwide last year, he says, and pharmaceuticals account for just 8 cents of every dollar spent on health care.

Adding a prescription drug benefit to Medicare would be good for the industry in the long run, says Ingram, who has been tapped to lead the industry’s lobbying in Congress. Seniors on fixed incomes are more likely to forgo full-price drugs but would probably purchase discounted drugs, providing manufacturers with some revenue, he says.

The Emerging Issues Forum continues through Tuesday at N.C. State’s McKimmon Center. For more information, visit