The expensive stuff is when you go into humans.
I can only guess what "five arms" you are referring to, but toxicity studies and efficacy studies often require different animals. Not just mice but transgenic mice, or nude mice with xenografts, etc. This has to be pricey to get the statistical power you need for a drug candidate.
I've also heard that the FDA likes to see more than one animal, so either rats or monkeys may be dosed as well. It all adds up.
Five arms, refers to an experiment with three dosages, a null control and a positive control.
Yes, you can outsource things, which is exactly what I'm doing (it's cheaper and more ethical), but also the model has become really good where you don't have to sack an animal for each time point. That cuts down on costs by a lot.
That's great for your cell-based experiments; and many of the greatest biology discoveries were made with this toolset in the first half of the 20th century.
But what about in vivo experiments with mice and rats? What about X-ray crystallography? What about high throughput screening and counterscreening in the range of millions done before a compound is even considered to be a drug candidate?
This is hard stuff, and it's necessary stuff. Exacting conditions are absolutely essential to achieve the highest chance of reproducibility. Even so, it has been famously reported that somewhere around 11% of published findings can be reproduced independently[0].
[0] http://www.nature.com/nature/journal/v483/n7391/full/483531a...