Everyone complains about the high cost of drugs and when pharmaceutical companies are asked why, they invariably cite R&D costs and regulatory approval. What I wonder about is how much they spend on advertising these drugs to the public and how that compares with the R&D and approval process? We’ve all seen them, ad nauseum on TV to say nothing of magazines and newspapers.
It is well known that the only industrialized countries that allow this are New Zealand and of course the US. A related question is how much drug prices could be reduced if this savings to the drug industry from eliminating advertising were required to be directly subtracted from the retail cost to the consumer?
If there are any advertising people out there perhaps they would have info from trade magazines?
Here’s the Washington Post’s take, which does include both direct-to-consumer and trade marketing. The data they found, sourced from GlobalData, concluded that nine of the ten largest pharma companies spent more on sales/marketing than on R&D in 2013.
they have spent more on marketing than R&D for a long time. It costs a lot to go see Drs. in person and buy them lunches, give free samples, etc.
A lot of the pharma salespeople are former cheerleaders. Because most Drs. are men.
Thanks – Suspicions Confirmed!
While the statistic about pharmaceutical reps being cheerleaders are true, it doesn’t directly have to do with doctors being male. The statistic also includes the male reps. The actual quality they are looking for is extrovertism, which is common in people who become cheerleaders. Though, the fact that cheerleaders tend to be physically attractive is also a positive, male or female (remember, no matter the gender of the doctor, the staff is mostly female, and you have to get through the staff to get to the doctor.)
We have drug reps in the UK too, and advertising; although not “ad nauseum”, and mostly confined to OTC drugs. There is also strong pressure on GPs to prescribe generic drugs.
The reps will be trying to get GPs to prescribe the new stuff by persuading them that there are some benefits. Since the budget for these drugs is held by the GP surgeries (over £1m for some) and this is closely monitored, there is some incentive to reduce prescription costs to the minimum.
my Dr. banned the sales reps a while back. But I guess that’s very rare. I think he may take samples without talking to them.
Also, much of the R&D (maybe most) is done by public Universities.
So the big Pharma company gives them money for research, which is a tax-deductible contribution. Then if the research finds an effective drug, the Pharma company licenses it from the University for commercial sale, with a small percentage going to the University.
Just to prevent what appears to be confirmation bias here, we spend billions on supplements with little to no known health benefits and the Supplements Industry spends so little on research that it doesn’t even make their annual reports.
While I am not defending the industries advertising practices using the term “Big Pharma” which is a pejorative nickname was a red flag for me.
CAM, (excluding supplements) costs are 11.2% of total out-of-pocket expenditures on health care, exceeding the brand prescription 9.5% spending.
While ads do have an impact on this the issue and concerns that you have framed are much broader than just FDA approved medications.
There’s no “confirmation bias” at play here, the enormous sum of money that pharmaceutical companies devote to direct-to-consumer advertising is an objective fact (see the above link).
While I am not explicitly for direct advertisements the above numbers included both direct-to-consumer and trade marketing
Twitter spends 44% on marketing and salesforce 53%. They both spend more on marketing than they do on R&D. So the question is why is it explicitly worse for pharmaceutical companies to do so.
Of course, that data does not support the conclusion that the price of expensive drugs is driven up more by marketing than by R&D. It’s not unplausible to suppose that a major part of the revenue for many pharma companies comes from generics and other drugs where the R&D costs have long amortised. Yet, the companies still have marketing expenses for these drugs, which drive up the overall marketing budget but not the overall R&D budget. To answer the OP’s question, we would need data that breaks down marketing and R&D expenses by the various drugs.
In assessing BigPharma’s relative spending on marketing vs research, don’t forget that some promotional expenses (e.g. payments to doctors) are hidden under other items. Paying a doctor to write a paper endorsing your drug could be classed as research! :rolleyes:
Twitter doesn’t charge its primary users at all; one of Salesforce’s big selling points is that it is cheaper than the alternative (a company buying/managing its own system). Meanwhile, the pharmaceutical industry argues that the principal reason drugs are so expensive is the high cost of R&D, when in fact R&D isn’t their biggest cost. Moreover, much of the marketing is seen as unnecessary if not downright stupid.
Well, only two of the ten biggest pharma companies (Novartis and Sanofi) make the list of the top 20 generics companies. Most of “Big Pharma” isn’t terribly interested in the high-volume, low-margin generics business, which is dominated by groups such as Teva Pharmaceuticals (from Israel) and the Indian-based Sun Pharmaceuticals. GSK and its ilk are not spending any significant amount of marketing dollars on generics, because they don’t make or sell any significant volume of generics. The marketing money goes to the name brands.
Twitter! Seriously! What does twitter have in common with drug companies trying to influence the public to pressure their Dr. to proscribe a brand name prescription drug over a generic or another brand name drug?
Bribing Drs. with the promise of 2 wks in Hawaii for them and the spouse in return for writing X # of Rx’s but then they probably write it off to advertising expense. This is what, in part, we’re paying 10 or $20 /pill for.
This shows a lack of understanding of what marketing is. It is only an expense in the accounting sense. Good marketing makes a company money. If a drug did not have a good marketing plan, they would not sell as many and would have to charge more money per dosage in order to stay in business.
This does not generally happen - although there are some rare exceptions. Lyrica (pregabalin) was licensed straight out of a university research lab and went to market unchanged, as an example.
Universities do the fundamentals - how do we make the molecules that we want, how does this signalling pathway work, what does this protein do and can it be therapeutically relevant etc etc etc. This is, unequivocally, the scientific ecosystem that supports pharmaceutical research and you are correct that pharma is an active funder of it. It’s also pretty good at turning up lead molecules that can be developed into drugs - but no university lab has the resources or interest to do this. All of the heavy lifting in drug development is done in pharma, and it’s a long, long way to go from ‘Hey! my molecule blocks this receptor at 1 nM’ to ‘Hey! my drug blocks this receptor at 1nM’.
Not necessarily. Good marketing enables a company to charge more for its product than they otherwise could. This improves their margins and makes them more profitable, but it doesn’t seem to benefit the consumer.
As said, the US is also one of only two countries that permit “direct to consumer” drug advertising, the other being New Zealand. Any outrage at the vast amounts spent should be entirely secondary to the inappropriate nature of the practice itself. It’s a bit like being outraged at the amount child brothels spend on advertising.
Twitter isn’t really such a good comparison, as they’re mostly providing a service, not innovating new products.
I’d compare Twitter to Walgreens or CVS, while I’d compare the big pharmaceutical companies more to Google or Apple, both of which spend more on R&D than marketing, although they do both spend astronomical sums on both subjects.
That’s why people tend to think it’s broken; ostensibly the pharmaceutical companies are in the business of developing new drugs, while in reality, they’re more like marketing companies that engage in some R&D on the side.
However, that doesn’t really have much to do with drug pricing; retail pricing isn’t really driven by cost, as much as it’s driven by what the market will bear, that will still make a profit. In other words, the cost of the item doesn’t have much bearing on what it’s sold for. Canned soda is a great example; most of the cost is the can, and the total cost, including shipping, advertising and everything else is probably on the order of $0.15-0.20 per can or so. But they sell them for $0.50-$0.80 in most places.
Pharmaceuticals are no different. The main reason the big boys research new drugs is because their patents expire, and they’re opened up to lower-cost competition from Teva, Sun, etc… They don’t want to get into the lowest-cost price wars, so they basically cut those drugs loose and move on to newer, patent-protected ones that they can charge more for.
It’s totally mercenary, but it does drive pharmaceutical R&D very efficiently, and has come up with treatments for a lot of conditions. Where it falls down is in a couple of areas- they tend to stick it to price-insensitive consumers (i.e. cancer patients who need the drugs to live, and will pay anything) and they don’t spend a lot of R&D money on developing treatments that won’t be profitable.