Big Pharma's been caught in its biggest lie yet -- a billion-dollar fraud that's been repeated in the media so often you might even think it's true.

It's the claim that drug prices have skyrocketed because the cost of research and development has gone through the roof... all the way to $1.32 billion per drug as of 2006.

But now, a team of researchers has cut through all the bull and found out how much drug development REALLY costs: $55 million.

What's $1.265 billion between pals, right?

The inflated number is based on a report from the Tufts Center for the Study of Drug Development -- an industry-funded group with enough monkey business to open a zoo.

First, the Tufts team ignored the fact that money spent on drug research is subject to a big, fat tax break -- 39 percent off the top, and up to 50 percent in total, according to the new study in the Journal of Health Economics.

Another massive chunk of the development "cost" is a pure fabrication: It's not money spent on research and development at all.

It's money the drug companies claim to have LOST by not investing in the stock market instead of research.

Try using that logic to claim your mortgage as a "loss."

Team Monkey Business also claimed that at least $121 million per drug is spent on basic research... but as you probably already know, almost all basic research -- 84 percent of it -- is done on your dime by the feds, while much of the rest is carried out in university labs.

Once the researchers corrected these and other glaring errors in the Tufts numbers, they came up with a median cost of just $55 million per drug -- and an average of $75 million.

In other words, the obscene drug markups don't represent the cost of research and development at all.

They're just obscene.

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