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Quality Digest

FDA Compliance

Compliance Costs Estimated at $80 Billion

Published: Tuesday, March 22, 2005 - 23:00

AMR Research recently released a study that predicts that the cost of compliance for companies will reach $80 billion over the next five years. The firm also estimates that regulated organizations will spend close to $15.5 million on compliance-related activities in 2005. Although an average company will spend approximately $500,000, leading business are using the results as an opportunity to identify and transform business areas in need of improvement.

The study found that compliance to Food and Drug Administration requirements cost regulated companies $1 billion, HIPPA regulations cost $3.6 billion and Sarbanes-Oxley compliance cost regulated companies $6.1 billion, making it the most expensive compliance item.

The study also revealed that companies are rethinking how to fund compliance initiatives. Respondents indicated that in 2004, 35 percent of them had specific budgets for compliance, but almost two-thirds of them had to pull from other areas to fund the projects. More companies (40%) indicated that they have compliance budgets for 2005.

“Compliance is an all-encompassing set of activities that cross business and IT groups,” says John Hagerty, vice president of research at AMR Research. “Companies that see the big picture will put these mandates to work for them and use them as a catalyst to improve or even rethink many parts of their organizations.”

For more information, visit www.amrresearch.com.

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