Huge pharmaceutical companies pour far more money into marketing and advertising their products than they spend trying to develop new and better drugs to meet the nation's medical needs, a new report by Families USA reveals.
The report, Profiting from Pain: Where Prescription Drug Dollars Go, shows that the nine publicly traded U.S. drug companies, which manufacture 50 of the drugs most often prescribed to seniors, spent $45.4 billion on marketing and advertising in 2001 and only $19.1 billion on research and development.
"High prices are needed, the industry contends, to finance research and development so manufacturers can bring newer, better drugs to market. If steps are taken to rein in drug prices, so the industry argument goes, manufacturers will be forced to slash R&D. This report belies that argument," the report's introduction finds.
In recent public statements, President George W. Bush has repeated the industry argument that the high cost of drugs is necessary to support research and development.
"The drug industry should stop scaring America's seniors with false claims that drug price moderation will prevent research on new medicines," said Ron Pollack, Families USA executive director.
While working families pay more and more for their prescription drugs, the pharmaceutical industry has been the most profitable U.S. industry for each of the past 10 years, according to the report.
The report also reveals that drug companies' profits far outstrip the amount of money spent on R&D. The firms made about $30.6 billion in profits in 2001--more than 60 percent more than their expenditures on research and development. Merck & Co. Inc.'s profits were nearly three times its R&D budget and Bristol-Myers Squibb Co.'s profits were more than twice what it spent on R&D.
Drug company executives also have reaped big profits from pain, according to the report's figures. The drug industry's top five most highly paid executives pocketed more than $183 million in compensation in 2001, while the five executives with most value in unexercised stock options held more than $322 million in those options.
"In light of huge industry profits, enormous executive compensation packages and big marketing budgets," industry claims that it is making efforts to moderate drug prices, "are both irresponsible and wrong," Pollack said.
On top of trying to justify their high prices for prescription drugs, the drug companies have joined their congressional allies and the Bush White House to oppose legislation to establish a Medicare prescription drug benefit to help seniors pay those the soaring drug prices that force many seniors to chose between medicine and meals. And just the day before the report was released, Senate Republicans blocked a move to make cheaper generic versions of drugs more accessible to seniors to provide older Americans with some relief from soaring drug costs.
Learn More
