Activity-based costing in pharmaceutical development

Pharmaceutical development costs represent a large and escalating part of sales and profits. In many companies, managers have found that the traditional cost accounting methods are not very useful for improving the efficiency and effectiveness of development activities. To complement traditional systems, we propose activity-based costing (ABC) as a powerful tool for helping both to control costs and to provide ideas for reducing lead times. This article reviews the principles of activity-based costing and illustrates the application of these methods to data management processes in clinical development. Drug Dev. Res. 43:164-173, 1998. (C) 1998 Wiley-Liss, Inc.