Average body mass index (BMI) and depression prevalence grew over the last several decades, increasing medical expenditures. There is a strong correlation between obesity and depression but limited evidence on the causal effect of weight on mental health. I use an index of genetic risk for high BMI as a source of exogenous variation in weight to provide novel evidence on the effect of weight on mental health. This is one of the first studies to use genetics as an instrument for BMI and to examine the causal relationship between weight and depression.

The research and development costs of 68 randomly selected new drugs were obtained from a survey of 10 pharmaceutical firms. These data were used to estimate the average pre-tax cost of new drug development. The costs of compounds abandoned during testing were linked to the costs of compounds that obtained marketing approval. The estimated average out-of-pocket cost per new drug is US$ 403 million (2000 dollars). Capitalizing out-of-pocket costs to the point of marketing approval at a real discount rate of 11% yields a total pre-approval cost estimate of US$ 802 million (2000 dollars).