These include indications of the likely range of each variable, although the model allows entry of values outside of these ranges for most of these variables. OTA also developed a hypothetical schedule of development costs over the development period, incorporating the preclinical and the clinical phases as well as the period to submit an NDA and gain FDA approval, as shown in Exhibit A-2. 1990 Dollars Yr. I trials, phase II, phase III, NDA submission, and at market approval. It is assumed that a typical product development cycle takes an average of 13 years.
Riskier ventures tend to require higher rates than less risky ones.
A typical rate used by large pharmaceutical companies is 12 percent. Together with daily patients taking the medication this variable determines expected revenue to a pharmaceutical company. This is a fundamental value driving this model. The alternative would be annual number of prescriptions written. Generally, the more patients taking the medication, the higher will be revenue, given a stable price.