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Pharma companies in the US spend about twice as much on advertising as they do on R&D [1]. Recent data compiled by the House Oversight Committee shows the bigge

Pharma companies in the US spend about twice as much on advertising as they do on R&D [1]. Recent data compiled by the House Oversight Committee shows the biggest pharma companies spent $56 billion more on stock buybacks and dividends than they did on R&D over the past five years [2]. Very little of the ridiculous prices that US citizens pay for medicine (directly or via insurance) actually goes towards R&D. [1] https://journals.plos.org/plosmedicine/article?id=10.1371/journal.pmed.0050001 https://journals.plos.org/plosmedicine/article?id=10.1371/jo... [2] https://oversight.house.gov/sites/democrats.oversight.house.gov/files/COR%20Staff%20Report%20-%20Pharmaceutical%20Industry%20Buybacks%20Dividends%20Compared%20to%20Research.pdf https://oversight.house.gov/sites/democrats.oversight.house....

greeneggs 5y ago
Your first link is from 2008, and analyzes data from 2004. I don't see how this proves anything, or even suggests much, about the industry today. Your second link shows that the pharma companies spend almost as much on R&D as on stock dividends and buybacks. Is there any other industry that spends as much on R&D? Apple, for instance, seems to be spending ~6x as much on stock buybacks and dividends as on R&D (approximately, based on the first Google hits). Even your own links contradict your claim that very little goes to R&D.
- ricardobeat 5y ago
  This is not a dick measuring contest. The comment was challenging the notion that pharmaceuticals companies spending the majority of their cash on advertising and stock buybacks is a desired outcome. The specific numbers, especially across industries, are meaningless.
- Lhiw 5y ago
  We're not talking about government action forcing apple to sell iPads for near cost. We're talking about whether using the governments scale to negotiate better pricing is going to put them out of business or in this arguments case whether it will reduce their spending on r&d. The idea that it would is silly at best given how much they spend on marketing compared to r&d. It also ignores how much the government gives them to fund new research with nothing in return, hello Moderna you Brandon loving fucks.
anamax 5y ago
Advertising includes drug samples given to doctors, which many/most of them give to patients who can't afford said drugs. How many of them are you willing to cut off?
- hypertele-Xii 5y ago
  Free samples over R&D? In what world does that sound... sound?
- Afton 5y ago
  In order to make the drug more affordable? I mean... all of them? Maybe I'm not understanding your point?
- Retric 5y ago
  Those free samples very much make treatment less affordable. They don’t need to hand out samples when their treatment is the only option, they need to advertise to out compete generics. It’s shockingly effective, look at say prescriptions for patented opioids vs the vast numbers of equally effective generics. Doctors are extremely susceptible to advertising just like most people, the difference is it’s not their money being spent.
  - emodendroket 5y ago
    In the case of doctors it's more high-touch than plain old ads anyway. The representative stops by and chats them up, maybe they get some sponsored continuing education (which is of course designed to push expensive products), etc.
    - catawbasam 5y ago
      And the reps are often smoking hot, so docs don't mind making a bit of time for conversation.
      - geoduck14 5y ago
        Fun fact: Female secretaries (or other "gatekeepers") are less likely to let hot female sales people back to the doctor.
refurb 5y ago
Terrible take. Your first source vaguely tries to estimate promotional spending (not advertising as you deceitfully claim). Promotional spend has a positive ROI (or you wouldn’t do it). So spending $1B in promotion gets your $1B+ in sales (it’s self funding). Plus stock buybacks and dividends are being criticized? Returning money to investors is “bad”? Who do you think provides capital for drug development? The Grenadier Guards?
- jiggawatts 5y ago
  $1B in R&D can often result in $100B in sales, so it is "even more" self-funding. “Don’t tell me where your priorities are. Show me where you spend your money and I’ll tell you what they are.” – James W. Frick
  - s1artibartfast 5y ago
    Are you claiming that Pharma companies don't want to make money and are therefore not investing more in R&D?
  - catlikesshrimp 5y ago
    Price is not defined by costs. You adjust prices for maximum profit, as in the k of (h,k) of a quadratic equation. If you can produce a drug for 1$ a dose and you can sell it for 100$ at most without losing customers, you do that. If your product costs are too high, you don't advertise. You sell the drug to the government as an "orphan drug".
    - Retric 5y ago
      Price very much depends on cost, the goal is profit maximization not maximizing revenue. Suppose you can sell 1 million sandwiches at 5$ or 1/2 a million at 6$ which you price depends on your cost of production. If it’s costing you less than 4$ you pick the first option if it’s more than 4$ and less than 6$ you pick the second. Though in the real world costs aren’t independent of sales so it’s even more complicated. It’s only when you get extreme markups from a guaranteed monopoly that you can approximate things as revenue maximization. Also, drug R&D numbers are extremely inflated as among other things it’s got tax advantages.

greeneggs 5y ago

Your first link is from 2008, and analyzes data from 2004. I don't see how this proves anything, or even suggests much, about the industry today. Your second link shows that the pharma companies spend almost as much on R&D as on stock dividends and buybacks. Is there any other industry that spends as much on R&D? Apple, for instance, seems to be spending ~6x as much on stock buybacks and dividends as on R&D (approximately, based on the first Google hits). Even your own links contradict your claim that very little goes to R&D.

ricardobeat 5y ago
This is not a dick measuring contest. The comment was challenging the notion that pharmaceuticals companies spending the majority of their cash on advertising and stock buybacks is a desired outcome. The specific numbers, especially across industries, are meaningless.
Lhiw 5y ago
We're not talking about government action forcing apple to sell iPads for near cost. We're talking about whether using the governments scale to negotiate better pricing is going to put them out of business or in this arguments case whether it will reduce their spending on r&d. The idea that it would is silly at best given how much they spend on marketing compared to r&d. It also ignores how much the government gives them to fund new research with nothing in return, hello Moderna you Brandon loving fucks.

anamax 5y ago

Advertising includes drug samples given to doctors, which many/most of them give to patients who can't afford said drugs. How many of them are you willing to cut off?

hypertele-Xii 5y ago
Free samples over R&D? In what world does that sound... sound?
Afton 5y ago
In order to make the drug more affordable? I mean... all of them? Maybe I'm not understanding your point?
Retric 5y ago
Those free samples very much make treatment less affordable. They don’t need to hand out samples when their treatment is the only option, they need to advertise to out compete generics. It’s shockingly effective, look at say prescriptions for patented opioids vs the vast numbers of equally effective generics. Doctors are extremely susceptible to advertising just like most people, the difference is it’s not their money being spent.
- emodendroket 5y ago
  In the case of doctors it's more high-touch than plain old ads anyway. The representative stops by and chats them up, maybe they get some sponsored continuing education (which is of course designed to push expensive products), etc.
  - catawbasam 5y ago
    And the reps are often smoking hot, so docs don't mind making a bit of time for conversation.
    - geoduck14 5y ago
      Fun fact: Female secretaries (or other "gatekeepers") are less likely to let hot female sales people back to the doctor.

refurb 5y ago

Terrible take. Your first source vaguely tries to estimate promotional spending (not advertising as you deceitfully claim). Promotional spend has a positive ROI (or you wouldn’t do it). So spending $1B in promotion gets your $1B+ in sales (it’s self funding). Plus stock buybacks and dividends are being criticized? Returning money to investors is “bad”? Who do you think provides capital for drug development? The Grenadier Guards?

jiggawatts 5y ago
$1B in R&D can often result in $100B in sales, so it is "even more" self-funding. “Don’t tell me where your priorities are. Show me where you spend your money and I’ll tell you what they are.” – James W. Frick
- s1artibartfast 5y ago
  Are you claiming that Pharma companies don't want to make money and are therefore not investing more in R&D?
- catlikesshrimp 5y ago
  Price is not defined by costs. You adjust prices for maximum profit, as in the k of (h,k) of a quadratic equation. If you can produce a drug for 1$ a dose and you can sell it for 100$ at most without losing customers, you do that. If your product costs are too high, you don't advertise. You sell the drug to the government as an "orphan drug".
  - Retric 5y ago
    Price very much depends on cost, the goal is profit maximization not maximizing revenue. Suppose you can sell 1 million sandwiches at 5$ or 1/2 a million at 6$ which you price depends on your cost of production. If it’s costing you less than 4$ you pick the first option if it’s more than 4$ and less than 6$ you pick the second. Though in the real world costs aren’t independent of sales so it’s even more complicated. It’s only when you get extreme markups from a guaranteed monopoly that you can approximate things as revenue maximization. Also, drug R&D numbers are extremely inflated as among other things it’s got tax advantages.