5 ms·

The US pays an unfair burden to cover the cost of developing new drugs. That said, many drug companies seem more concerned with selling drugs that are barely be

by jostmey 10y ago

The US pays an unfair burden to cover the cost of developing new drugs. That said, many drug companies seem more concerned with selling drugs that are barely better than a placebo and have cut back on research efforts.

FireBeyond 10y ago
Not really. The top two spending R&D pharma firms are the Swiss Novartis, and Hoffman-La Roche. J&J, despite having 40% higher revenues ($70B vs $50B) spent nearly $2B less ($8.2B versus $9.9B) on R&D.
- maxerickson 10y ago
  They market drugs in the US though. (I don't think the 'the US bears the burden' argument is especially compelling, I'm just saying that the country where a business is located doesn't reveal where it gets revenue)
  - FireBeyond 10y ago
    Right, and that's really what I'm getting at. The only country in the world (except maybe NZ, who was in the process of phasing it out, and only allowed it as part of a trade deal with the US) where Rx meds are advertised to consumers. Even with marketing spends of 20-25% of revenue, and R&D spends of 10% (and profit margins of typically 20%+), pharma has still managed to convince many Americans that they are struggling, and Americans are feeling the burden, of the US subsidizing the world's drug research (even though the two largest researching firms in the world aren't the US).
    - maxerickson 10y ago
      By "market", I meant selling them, not just advertising. A Swiss company can get revenue from the US just as well as a US company. The location of their research lab won't reveal where they make their profits.
- jedberg 10y ago
  Yeah but those companies sell their drugs for a lot more in the US than elsewhere. Basically, because the US is wealthy and much less regulated, drug companies from around the world make up a lot of their costs by selling things for more here, especially since private insurers have to pick up the tab in most cases.
  - FireBeyond 10y ago
    When a quarter of their revenue goes on sales and marketing that is pretty subjectively "unnecessary" I don't they can claim with a straight face that it's "subsidizing the world". Especially when they're already making $14B a year in profit, in J&J's case.
    - cmdrfred 10y ago
      Also if the risk is so high why are drug companies so profitable over the long term? Pharma firms are head and shoulders the most profitable firms in the S&P 500 every single year.
      - akiselev 10y ago
        High risk, high reward. Why would anyone take a higher risk for a lower reward? Pharmaceutical companies in the S&P500 are so profitable because of barriers to entry, massive capital requirements, and a whole biotechnology industry feeding them acquisitions. Biotech startups going under with zero revenue after raising hundreds of millions of dollars from VCs and institutional investors is a regular occurrence. Since the brunt of the pure research is publicly funded and other investors chasing ROI take care of much of the R&D risk, big pharma companies benefit a lot from other people's money just for providing exit opportunities for smaller companies.
        deleted 10y ago
        [deleted]
robotresearcher 10y ago
The US is paying for "ask your doctor about X" ads, which in many places are forbidden. That's just wasted money.
- refurb 10y ago
  That's just wasted money. Why would a drug company spend money on DTC advertising if it "wasted" money? Your comment suggests they'd be better off not doing it at all.
  - robotresearcher 10y ago
    It's not the companies' money being wasted. It's patients' money. The nation would be better off without the ads. They create an artificially inflated demand.
    - refurb 10y ago
      They create an artificially inflated demand. Doctors are the one's the write scripts, not drug companies. Are you saying doctors can't tell when a patient really needs a drug?
      - robotresearcher 10y ago
        There's a very big difference between push and pull. Why else would drug companies spend billions advertising to consumers?
        refurb 10y ago
        Because there are plenty of patients who, with the right information, will go and talk to their doctor about their problem?

by jostmey 10y ago

FireBeyond 10y ago

Not really. The top two spending R&D pharma firms are the Swiss Novartis, and Hoffman-La Roche. J&J, despite having 40% higher revenues ($70B vs $50B) spent nearly $2B less ($8.2B versus $9.9B) on R&D.

maxerickson 10y ago
They market drugs in the US though. (I don't think the 'the US bears the burden' argument is especially compelling, I'm just saying that the country where a business is located doesn't reveal where it gets revenue)
- FireBeyond 10y ago
  Right, and that's really what I'm getting at. The only country in the world (except maybe NZ, who was in the process of phasing it out, and only allowed it as part of a trade deal with the US) where Rx meds are advertised to consumers. Even with marketing spends of 20-25% of revenue, and R&D spends of 10% (and profit margins of typically 20%+), pharma has still managed to convince many Americans that they are struggling, and Americans are feeling the burden, of the US subsidizing the world's drug research (even though the two largest researching firms in the world aren't the US).
  - maxerickson 10y ago
    By "market", I meant selling them, not just advertising. A Swiss company can get revenue from the US just as well as a US company. The location of their research lab won't reveal where they make their profits.
jedberg 10y ago
Yeah but those companies sell their drugs for a lot more in the US than elsewhere. Basically, because the US is wealthy and much less regulated, drug companies from around the world make up a lot of their costs by selling things for more here, especially since private insurers have to pick up the tab in most cases.
- FireBeyond 10y ago
  When a quarter of their revenue goes on sales and marketing that is pretty subjectively "unnecessary" I don't they can claim with a straight face that it's "subsidizing the world". Especially when they're already making $14B a year in profit, in J&J's case.
  - cmdrfred 10y ago
    Also if the risk is so high why are drug companies so profitable over the long term? Pharma firms are head and shoulders the most profitable firms in the S&P 500 every single year.
    - akiselev 10y ago
      High risk, high reward. Why would anyone take a higher risk for a lower reward? Pharmaceutical companies in the S&P500 are so profitable because of barriers to entry, massive capital requirements, and a whole biotechnology industry feeding them acquisitions. Biotech startups going under with zero revenue after raising hundreds of millions of dollars from VCs and institutional investors is a regular occurrence. Since the brunt of the pure research is publicly funded and other investors chasing ROI take care of much of the R&D risk, big pharma companies benefit a lot from other people's money just for providing exit opportunities for smaller companies.
      - deleted 10y ago
        [deleted]

robotresearcher 10y ago

The US is paying for "ask your doctor about X" ads, which in many places are forbidden. That's just wasted money.

refurb 10y ago
That's just wasted money. Why would a drug company spend money on DTC advertising if it "wasted" money? Your comment suggests they'd be better off not doing it at all.
- robotresearcher 10y ago
  It's not the companies' money being wasted. It's patients' money. The nation would be better off without the ads. They create an artificially inflated demand.
  - refurb 10y ago
    They create an artificially inflated demand. Doctors are the one's the write scripts, not drug companies. Are you saying doctors can't tell when a patient really needs a drug?
    - robotresearcher 10y ago
      There's a very big difference between push and pull. Why else would drug companies spend billions advertising to consumers?
      - refurb 10y ago
        Because there are plenty of patients who, with the right information, will go and talk to their doctor about their problem?