Big Pharma doesn’t really do as much basic research as they claim. They do a fair bit but I’d guess it’s mostly universities funded by NIH (and other governments’) grants making the most important discoveries. Then philanthropists, investors, more government grants, etc. often fund the early stage clinical trials and the creation of the small company. Big Pharma does obviously invent a lot of medications in house but it seems like the more typical path is that they buy a small company in later stage trials and provide the marketing and manufacturing/distribution at scale.
Which is fine. They aren’t pure evil or good. The discoverer, university, people who took financial risk get paid. But there’s other ways for scientists, universities, and early investors to get their return (which usually funds the next round of research). Government “bounties” is one idea. Like, if you create a miracle cure, rich governments buy the IP rights for x amount and release all claims on the patents so it’s generic from the start. If done correctly, the savings to national healthcare systems (and the 17 systems the U.S. has duct taped together) would cover the bounty and then some. Big Pharma’s manufacturing and distribution would still be important in that system and they could focus on things without bounties.
Honestly, I’d like to see that anyway, especially for diseases that are sort of ignored by capitalism. It’s perfectly ok if the bounty system loses money curing things Big Pharma isn’t so interested in (like less famous third world diseases). It’s not like bombs and roads are profitable for governments.
I think you’re both right. Companies do spend a lot of money on R&D, that’s true. But it’s not really the point.
Studies show that companies spend far more on marketing than they do on R&D, a lot more. That is the issue in a nutshell. These companies rake in billions and spend a fraction of that on R&D. The vast majority of their spending is on marketing (a lot of which is in the form of direct-to-consumer advertising - something only legal in the USA and New Zealand), executive compensation, and stock buybacks.
Big Pharma Spent More on Stock Buybacks and Dividends than R&D: A July report from the U.S. House Committee on Oversight & Reform found that 14 of the largest drug makers spent $57 billion more on stock buybacks and dividends than R&D, between 2016 and 2020.
Overhead Advertising and Corporate Overhead Outweigh R&D: A 2019 study from the Campaign for Sustainable Rx Pricing (CSRxP) found Big Pharma spends more than twice as much on corporate overhead and advertising as it does on R&D.
Profits Over Patients: Drug makers used a windfall from the Tax Cuts and Jobs Act of 2017 to boost profits for shareholders instead of investing in R&D. In fact, the increase in payouts to Wall Street and board members was 17 times larger than the increased investment in R&D that year.
Additionally, the R&D that they do is of limited value in many cases.
Nearly two-thirds of the country’s top-selling prescription drugs—92 of the 135 drugs data was available for—were rated as offering patients low added benefit by health agencies in France and Canada, the researchers found, relying on the foreign agencies as no U.S. agency compares prescription drugs for effectiveness.
And those limited benefit drugs are the ones they are spending the most direct-to-consumer marketing dollars on so people will harass their doctors to prescribe the drug they just saw on TV rather than the equally effective drug the doctor was already giving them. Such advertising really needs to be illegal here as it is almost everywhere else and everyone other than the pharmaceutical companies seems to agree.
If we cut the pharmaceutical companies’ marketing budgets, eliminate direct-to-consumer advertising, regulate and rein in executive compensation and stock buybacks, they will be able to spend just as much on R&D as they do now AND sell drugs in the USA as inexpensively as they do on the rest of the planet.
Big Pharma doesn’t really do as much basic research as they claim. They do a fair bit but I’d guess it’s mostly universities funded by NIH (and other governments’) grants making the most important discoveries. Then philanthropists, investors, more government grants, etc. often fund the early stage clinical trials and the creation of the small company. Big Pharma does obviously invent a lot of medications in house but it seems like the more typical path is that they buy a small company in later stage trials and provide the marketing and manufacturing/distribution at scale.
Which is fine. They aren’t pure evil or good. The discoverer, university, people who took financial risk get paid. But there’s other ways for scientists, universities, and early investors to get their return (which usually funds the next round of research). Government “bounties” is one idea. Like, if you create a miracle cure, rich governments buy the IP rights for x amount and release all claims on the patents so it’s generic from the start. If done correctly, the savings to national healthcare systems (and the 17 systems the U.S. has duct taped together) would cover the bounty and then some. Big Pharma’s manufacturing and distribution would still be important in that system and they could focus on things without bounties.
Honestly, I’d like to see that anyway, especially for diseases that are sort of ignored by capitalism. It’s perfectly ok if the bounty system loses money curing things Big Pharma isn’t so interested in (like less famous third world diseases). It’s not like bombs and roads are profitable for governments.
Not sure that’s true. At least in my experience, a lot of our docs do research funded by pharmaceutical companies
The stats I’ve seen in the past indicate they spend more on marketing and lobbying than they do on R&D.
Feel free to provide evidence to the contrary.
I think you’re both right. Companies do spend a lot of money on R&D, that’s true. But it’s not really the point.
Studies show that companies spend far more on marketing than they do on R&D, a lot more. That is the issue in a nutshell. These companies rake in billions and spend a fraction of that on R&D. The vast majority of their spending is on marketing (a lot of which is in the form of direct-to-consumer advertising - something only legal in the USA and New Zealand), executive compensation, and stock buybacks.
Big Pharma Spent More on Stock Buybacks and Dividends than R&D: A July report from the U.S. House Committee on Oversight & Reform found that 14 of the largest drug makers spent $57 billion more on stock buybacks and dividends than R&D, between 2016 and 2020.
Overhead Advertising and Corporate Overhead Outweigh R&D: A 2019 study from the Campaign for Sustainable Rx Pricing (CSRxP) found Big Pharma spends more than twice as much on corporate overhead and advertising as it does on R&D.
Profits Over Patients: Drug makers used a windfall from the Tax Cuts and Jobs Act of 2017 to boost profits for shareholders instead of investing in R&D. In fact, the increase in payouts to Wall Street and board members was 17 times larger than the increased investment in R&D that year.
Additionally, the R&D that they do is of limited value in many cases.
And those limited benefit drugs are the ones they are spending the most direct-to-consumer marketing dollars on so people will harass their doctors to prescribe the drug they just saw on TV rather than the equally effective drug the doctor was already giving them. Such advertising really needs to be illegal here as it is almost everywhere else and everyone other than the pharmaceutical companies seems to agree.
If we cut the pharmaceutical companies’ marketing budgets, eliminate direct-to-consumer advertising, regulate and rein in executive compensation and stock buybacks, they will be able to spend just as much on R&D as they do now AND sell drugs in the USA as inexpensively as they do on the rest of the planet.