Eroom's Law
Observation / industry analysis · Scannell, J.W. et al. 'Diagnosing the decline in pharmaceutical R&D efficiency.' Nature Reviews Drug Discovery 11, 191–200 (2012) (2012)
Eroom's Law is the observation that the number of new drugs approved per billion U.S. dollars spent on R&D has halved roughly every 9 years since 1950, the inverse of Moore's Law.
Core Concepts
The Problem
Despite massive increases in R&D spending, pharmaceutical productivity has declined, leading to a few breakthrough drugs at enormous cost.
The Claim
The drug discovery process suffers from systematic inefficiencies that cause diminishing returns on investment, including regulatory hurdles, a tendency to pursue 'me-too' drugs, and the depletion of low‑hanging targets.
Key Evidence
- •The Scannell et al. analysis of FDA approvals and R&D expenditures shows a consistent long‑term trend with only brief upticks around major drug classes. Subsequent studies have reinforced the pattern.
Practical Implication
Without structural changes, the cost of new medicines will continue to rise, limiting access and innovation; focusing on true moonshot approaches may break the trend.
Nuance & Limits
Some recent data suggests a possible reversal due to gene therapies and mRNA vaccines, but the long‑term trend remains a cautionary tale.
Source Material
Citation Density
High — widely referenced in pharmaceutical economics and healthcare policy
Gaps
- ⚠ The exact causes remain debated; some researchers argue it is partly a measurement artifact or that productivity is improving when accounting for improved patient outcomes.
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