6 ms·

are you sure that the cost of development is the real issue? the last numbers I saw, 2015, showed marketing budgets for medicine to be often times twice what w

are you sure that the cost of development is the real issue? the last numbers I saw, 2015, showed marketing budgets for medicine to be often times twice what was being spent on R&D in the US. currently, only four countries allow this time of marketing: New Zealand, Brazil, Hong Kong, and United States. it sounds like the US isn't necessarily subsidizing drug R&D, and instead is subsidizing marketing.

aaavl2821 8y ago
it costs aver $2.7B to get a drug approved based on the most accepted estimates. biggest cost is cost of failure. r&d is hard, highly regulated and expensive
- jerrysievert 8y ago
  I'm not arguing that it isn't expensive, but when, for instance Johnson & Johnson spends $8.2B/yr on R&D, and spends $17.5B that same year on marketing those same drugs, it's hard to argue that the cost of R&D is the major issue here. edited to add: especially when you look at the US R&D tax credit, available under section 41 of the tax code.
  - maxerickson 8y ago
    You're counting ads for baby shampoo and band aids as drug marketing. I'm sure Johnson & Johnson does spend an awful lot on marketing drugs, but boy do the details hidden in SGA sure get hand waved away.
  - aaavl2821 8y ago
    as another commenter said, that marketing spend also includes JNJs massive consumer products business and med device business Also, pharma increasingly buys new products through acquisitions rather than develop them in house these days. So you have to look at the balance sheet, not just the p&l. Note that JNJ spent $30B buying actelion last year among other smaller acquisitions
AnthonyMouse 8y ago
> the last numbers I saw, 2015, showed marketing budgets for medicine to be often times twice what was being spent on R&D in the US. The marketing expense isn't necessarily avoidable. Suppose it costs $50M to research a drug and patients will pay $1000 for a course of treatment. If you do no marketing then you get forty thousand customers and can't recover your R&D. If you spend $100M on marketing then you get two hundred thousand customers and more than recover both your R&D and your marketing expense. Spending more on marketing can allow them to do R&D they otherwise couldn't by providing more customers to spread the R&D costs over.
- peterashford 8y ago
  ...except, at least in NZ where they do some of that marketing, the drugs are purchased via the state body Pharmac, which will not pay the inflated prices that the drug companies charge in the US.
  - disordinary 8y ago
    The reason for the advertising in NZ is that Pharmac will often fully fund generics, if you want to buy the brand name drug you have to pay extra on top. For instance, I just got a new prescription for inhalers, the pharmacy told me if I wanted ventolin it would be $5 but the generic was fully subsidised.
    - peterashford 8y ago
      sure, my point (which I probably was not very clear about) was more that the cost of marketing in NZ still isn't going to ratchet up profitability to the level of the US with their higher prices
- disordinary 8y ago
  Surely though the best marketing is the effectiveness of the product, if it's a good product then doctors will prescribe it. I don't know if it's true or not, but looking at US movies/tv shows it seems like everyones taking medication which I doubt they actually need. Here I don't know very many people who actively take regular medication, I know that people who move here complain at how doctors are stingy with prescriptions, yet life expectancy is longer than the US.
snowwrestler 8y ago
Are you sure that the "R&D" numbers you saw represent all the costs of developing a new drug and bringing it to market?
refurb 8y ago
First off spending more on marketing than R&D is bullshit. That's only true if you add up S&GA which encompasses a lot more than just marketing. Second, marketing is costly since a lot of it is done in person. Hiring thousands of sales reps doesn't come cheap. It's not due to DTC commercials since only a small number of products actually have those. Finally, you don't market something unless you bring in more money than you spend. So marketing pays for itself.

aaavl2821 8y ago

it costs aver $2.7B to get a drug approved based on the most accepted estimates. biggest cost is cost of failure. r&d is hard, highly regulated and expensive

jerrysievert 8y ago
I'm not arguing that it isn't expensive, but when, for instance Johnson & Johnson spends $8.2B/yr on R&D, and spends $17.5B that same year on marketing those same drugs, it's hard to argue that the cost of R&D is the major issue here. edited to add: especially when you look at the US R&D tax credit, available under section 41 of the tax code.
- maxerickson 8y ago
  You're counting ads for baby shampoo and band aids as drug marketing. I'm sure Johnson & Johnson does spend an awful lot on marketing drugs, but boy do the details hidden in SGA sure get hand waved away.
- aaavl2821 8y ago
  as another commenter said, that marketing spend also includes JNJs massive consumer products business and med device business Also, pharma increasingly buys new products through acquisitions rather than develop them in house these days. So you have to look at the balance sheet, not just the p&l. Note that JNJ spent $30B buying actelion last year among other smaller acquisitions

AnthonyMouse 8y ago

> the last numbers I saw, 2015, showed marketing budgets for medicine to be often times twice what was being spent on R&D in the US. The marketing expense isn't necessarily avoidable. Suppose it costs $50M to research a drug and patients will pay $1000 for a course of treatment. If you do no marketing then you get forty thousand customers and can't recover your R&D. If you spend $100M on marketing then you get two hundred thousand customers and more than recover both your R&D and your marketing expense. Spending more on marketing can allow them to do R&D they otherwise couldn't by providing more customers to spread the R&D costs over.

peterashford 8y ago
...except, at least in NZ where they do some of that marketing, the drugs are purchased via the state body Pharmac, which will not pay the inflated prices that the drug companies charge in the US.
- disordinary 8y ago
  The reason for the advertising in NZ is that Pharmac will often fully fund generics, if you want to buy the brand name drug you have to pay extra on top. For instance, I just got a new prescription for inhalers, the pharmacy told me if I wanted ventolin it would be $5 but the generic was fully subsidised.
  - peterashford 8y ago
    sure, my point (which I probably was not very clear about) was more that the cost of marketing in NZ still isn't going to ratchet up profitability to the level of the US with their higher prices
disordinary 8y ago
Surely though the best marketing is the effectiveness of the product, if it's a good product then doctors will prescribe it. I don't know if it's true or not, but looking at US movies/tv shows it seems like everyones taking medication which I doubt they actually need. Here I don't know very many people who actively take regular medication, I know that people who move here complain at how doctors are stingy with prescriptions, yet life expectancy is longer than the US.

snowwrestler 8y ago

Are you sure that the "R&D" numbers you saw represent all the costs of developing a new drug and bringing it to market?

refurb 8y ago

First off spending more on marketing than R&D is bullshit. That's only true if you add up S&GA which encompasses a lot more than just marketing. Second, marketing is costly since a lot of it is done in person. Hiring thousands of sales reps doesn't come cheap. It's not due to DTC commercials since only a small number of products actually have those. Finally, you don't market something unless you bring in more money than you spend. So marketing pays for itself.