The Average Cost of Developing a New Drug and Clearing

question 20

Multiple Choice

The average cost of developing a new drug and clearing all FDA regulations to get the drug to market are about a billion dollars and are:

• A) paid by the FDA only if the drug is approved
• B) paid by the FDA only if the drug is not approved
• C) paid by the FDA whether or not the drug is approved
• D) paid by the drug companies
• E) paid by the National Institute of Health

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Definitions:

Contribution Margin Ratio

The percentage of each sales dollar that contributes to covering fixed costs and generating profit.

Pre-tax Income

The total earnings of a company before any taxes have been deducted, often considered when assessing the profitability of a company.

Contribution Margin

The contribution margin is the revenue from a product or service minus the variable cost, indicating how much contributes to covering fixed costs and generating profit.

Net Income

A company's overall income following the subtraction of all costs, taxes, and expenses from its gross revenue.