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> Other countries benefit from our new drugs yet won’t pay market prices for them, and it’s $2 billion to create a new drug these days, minimum. What makes you

by deogeo 7y ago

> Other countries benefit from our new drugs yet won’t pay market prices for them, and it’s $2 billion to create a new drug these days, minimum. What makes you think drug prices in other countries aren't 'market' prices? Is it because they're negotiated on a country-wide level by the governments? I.e. because the buyer is a larger entity than the seller? But when the buyer is smaller than the multinational drug company, such as an individual or a medium-sized insurance company, then the price somehow is a market price? > What about the fact that Americans are essentially subsidizing world health care via private R&D? This tired argument again. Given that pharmaceutical companies spend more on just marketing than they do on R&D [1], isn't it more accurate to say that the US is subsidizing drug ads? How high would drug prices have to get, and how small the R&D budget, before you'd stop claiming the US is 'subsidizing' R&D? Or would whoever pays the highest price always be hailed as subsidizing R&D, to try and guilt everyone else into paying more? > The reason a huge majority of pharma innovation happens here is because there is an incentive for it. Given that drugs are sold internationally, pharma could continue their extortionate pricing in the US no matter where the drugs are developed, so the cost of drugs doesn't act as an incentive for where to conduct innovation. [1] https://www.washingtonpost.com/news/wonk/wp/2015/02/11/big-pharmaceutical-companies-are-spending-far-more-on-marketing-than-research/ https://www.washingtonpost.com/news/wonk/wp/2015/02/11/big-p...

zaroth 7y ago
Your Washington Post article is misleading. They are conflating “SG&A” with “Marketing”. Pfizer, for example, does spend more on “SG&A” than it does on “R&D” but marketing makes up just a small part of “SG&A”. > Pfizer topped that list with $622.3 million in ad spending last year. Pfizer came in fourth on FierceBiotech's list of R&D budgets, with $7.9 billion. That means DTC ads were less than one-tenth the size of its R&D budget. Moreover, look across any number of research industries be it Pharma, Tech, Industrial Automation, whatever, you will find SG&A as a rule of thumb tends to roughly equal R&D spending as a total share of expenses. [1] - https://www.fiercepharma.com/regulatory/does-pharma-spend-more-on-marketing-than-r-d-a-numbers-check https://www.fiercepharma.com/regulatory/does-pharma-spend-mo...
rayiner 7y ago
> This tired argument again. Given that pharmaceutical companies spend more on just marketing than they do on R&D [1], isn't it more accurate to say that the US is subsidizing drug ads? How high would drug prices have to get, and how small the R&D budget, before you'd stop claiming the US is 'subsidizing' R&D. Annual drug R&D spending isn’t “small.” In 2014-2017, pharmaceutical R&D was about the same size as total VC investment nationwide. (There is some overlap between the two numbers.) Additionally, the “marketing expenditure” angle is an ignorant trope. The pharmaceutical industry is as efficient as other high tech industries in concerting revenue to R&D. In 2017 US pharma companies spent 20% of revenues on R&D. That’s at the top of the range compared to companies like Intel, Facebook, Apple, and Google. https://www.theatlas.com/charts/N1Gs8E4v https://www.theatlas.com/charts/N1Gs8E4v. Few would deny that Google is a highly innovative, R&D-heavy company, but it's at 15%.
- deleted 7y ago
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by deogeo 7y ago

zaroth 7y ago

Your Washington Post article is misleading. They are conflating “SG&A” with “Marketing”. Pfizer, for example, does spend more on “SG&A” than it does on “R&D” but marketing makes up just a small part of “SG&A”. > Pfizer topped that list with $622.3 million in ad spending last year. Pfizer came in fourth on FierceBiotech's list of R&D budgets, with $7.9 billion. That means DTC ads were less than one-tenth the size of its R&D budget. Moreover, look across any number of research industries be it Pharma, Tech, Industrial Automation, whatever, you will find SG&A as a rule of thumb tends to roughly equal R&D spending as a total share of expenses. [1] - https://www.fiercepharma.com/regulatory/does-pharma-spend-more-on-marketing-than-r-d-a-numbers-check https://www.fiercepharma.com/regulatory/does-pharma-spend-mo...

rayiner 7y ago

> This tired argument again. Given that pharmaceutical companies spend more on just marketing than they do on R&D [1], isn't it more accurate to say that the US is subsidizing drug ads? How high would drug prices have to get, and how small the R&D budget, before you'd stop claiming the US is 'subsidizing' R&D. Annual drug R&D spending isn’t “small.” In 2014-2017, pharmaceutical R&D was about the same size as total VC investment nationwide. (There is some overlap between the two numbers.) Additionally, the “marketing expenditure” angle is an ignorant trope. The pharmaceutical industry is as efficient as other high tech industries in concerting revenue to R&D. In 2017 US pharma companies spent 20% of revenues on R&D. That’s at the top of the range compared to companies like Intel, Facebook, Apple, and Google. https://www.theatlas.com/charts/N1Gs8E4v https://www.theatlas.com/charts/N1Gs8E4v. Few would deny that Google is a highly innovative, R&D-heavy company, but it's at 15%.

deleted 7y ago
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