Analytical Framework for Examining the Value of Antibacterial Products. 5.1.2 R&D Costs


R&D costs for a new rapid POC diagnostic are variable based on whether the diagnostic would require the development of a new platform (i.e., instrumentation) along with the test.  Other factors also influence R&D costs, such as the existence of a predicate device.  Given that there currently are FDA-approved MRSA tests in the market, we assume that the new rapid POC diagnostic for detecting MRSA colonization will likely have a predicate device which will allow the manufacturer to pursue FDA clearance through the 510(k) route.

While the precise sequence of the steps may vary from case to case, the R&D costs associated with bringing a device to market generally include: development of engineering drawings, definition of the final materials list, device bench testing, development of design controls as well as costs related to market research to establish that a clinical need and a market for a new device, or a new version of a device, exists.  Table 22 presents estimates for the different R&D cost components.  Based on Table 22, we estimate the total R&D cost for a rapid POC diagnostic for MRSA at $1.4 million.  For sensitivity analysis, we assume that the R&D costs follow a triangular distribution with a lower bound of $1.0 million and an upper bound of $2.0 million, with a likely point estimate of $1.4 million.

Table 22: R&D Costs for a New Rapid POC Diagnostic Requiring a 510(k) Approval

R&D Component Cost ($)
Total $1,397,000
Exploratory research – engineering drawings, final material list, and bench testing $1,000,000
Identification of Predicate Devices $15,000
Development of Design Controls $200,000
Development of SOPs $30,000
Development of a Risk Management System $30,000
Holding a pre-Submission Meeting with FDA $2,000
Preparation of Indications for Use $20,000
Validation of Device Sterility $75,000
Investigational Device Exemption (IDE) Approval [a] $25,000

Source: Eastern Research Group, Inc., 2012

[a] This cost component may not be applicable to a POC diagnostic for MRSA.

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