Mike the Mad Biologist

Pharma Spends Twice as Much on Advertising as Research

Posted by Mike on January 4, 2008
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PhRMA, the lobbying group for the pharmaceutical companies, claims that drug companies spend more on research than on advertising. A recent study from PLoS Medicine debunks this claim:

The value of our estimate over these others is that it is not based on extrapolating from annual reports of firms that are both diversified and multinational. Our estimate is driven by quantifiable data from highly reliable sources and concerns only the promotion of pharmaceutical products in the US. The derivation of our figure is thus transparent and can form the basis for a vigorous debate.

From this new estimate, it appears that pharmaceutical companies spend almost twice as much on promotion as they do on R&D. These numbers clearly show how promotion predominates over R&D in the pharmaceutical industry, contrary to the industry’s claim. While the amount spent on promotion is not in itself a confirmation of Kefauver’s depiction of the pharmaceutical industry, it confirms the public image of a marketing-driven industry and provides an important argument to petition in favor of transforming the workings of the industry in the direction of more research and less promotion.

The article is pretty clear for non-specialists (I think), so head on over and check it out.

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  1. #1 Left_Wing_Fox
    January 4, 2008

    This doesn’t surprise me at all. I knew a few small video production houses that made a LOT of money off Pharma promotional events even after Sept 11, when a lot of other advertising in smaller corporations were slowing down. Lots of money being thrown around in the drug business.

  2. #2 Dave Briggs
    January 7, 2008

    PhRMA, the lobbying group for the pharmaceutical companies, claims that drug companies spend more on research than on advertising. A recent study from PLoS Medicine debunks this claim:

    I hear people taking shots at the pharmaceutical companies a lot. I try to remind them that no one is perfect, but if one of their pills saves your life you tend to look at them in a new light! Also, they have to spend 100s of millions to bring new drugs to market, so they need to recoup that before they make it into the profit margin.
    Dave Briggs :~)

  3. #3 A
    January 7, 2008

    Dave Briggs said, “if one of their pills saves your life you tend to look at them in a new light!”
    Well, yes, but you may consider that the new drug was first invented by taxpayer-funded research (through NIH at universities), then perhaps developed more by a small venture-capital company, and finally, a big drug company buys the small company. It(big co.) still has then the expense of further FDA-required clinical studies.
    So you may already have paid for the development of the new drug, through your taxes (but not for the clinical studies).

    Much of big-drug research is to develop ‘me-too’ drugs (which replace equally or more efficient drugs, for which patent protection is expiring) so that the company can push patent-protected non-generic higher-profit drugs. So to push these higher-profit drugs, a big advertisement budget is needed. Otherwise doctors would continue to prescribe the drugs they already know (and which are now available as generics). This is a problem, when the ‘new improved’ me-too drug is not actually any better than the previously used one.–

    Then, if you go to a pharmacy, why are there so many combination drugs (fighting the sniffles AND giving pain relief, or against cough AND nasal congestion, or…), rather than just single-component drugs ? These combinations again can be patented (?), sold and promoted as brands, at a higher cost to the consumer.–

    Re D. Briggs: ” Also, they have to spend 100s of millions to bring new drugs to market, so they need to recoup that before they make it into the profit margin.” Yes, but the drug cos. are doing very well, and their profit comes after deduction for the expensive trials.
    The pharmaceutical industry is known to have a higher markup and profit/sale than other industries. (the top 20′s 2004 sales and profits are listed at
    http://store.publicintegrity.org/rx/list.aspx?act=topcompanies ).
    Because their profits depend much on the existing regulatory and licensing arrangements, they also spend much on lobbying congress.

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