Two Canadian medical researchers, Doctors Marc-Andre Gagnon and Joel Lexchin, have estimated that U.S. pharmaceutical industry marketing expenses in 2004 were $57.5 billion dollars. This amount is almost twice industry expenditures for research and development of drugs ($31.5 billion in 2004) and amounts to an average expenditure of $61,000 per physician in promotion per year. This estimate is based on the most recent and reliable data available from two large international companies who...
Two Canadian medical researchers, Doctors Marc-Andre Gagnon and Joel Lexchin, have estimated that U.S. pharmaceutical industry marketing expenses in 2004 were $57.5 billion dollars. This amount is almost twice industry expenditures for research and development of drugs ($31.5 billion in 2004) and amounts to an average expenditure of $61,000 per physician in promotion per year. This estimate is based on the most recent and reliable data available from two large international companies who collect information on the details of pharmaceutical company drug promotional expenses.
|Type of Promotion||Estimate (US$ Billions)||Percent of Total Estimate|
The figure accompanying this article gives the details from the published study (PLOS Medicine, January, 2008) and we explain some of the categories.
Drug samples are given by drug companies to physicians so they can get patients started on a new drug, later leading to large expenditures by patients and insurers on these usually quite expensive products. The study estimated that in 2004, $15.9 billion of such samples were given to doctors, making up 27.7 percent of promotional expenditures.
Detailing in this study includes the total cost of a sales representative’s visit to a physician, accounting for the expenses of regional sales managers, promotional material handed out and the costs of training the sales representatives. The calculated expense for this was $20.4 billion in 2004, making it the largest component, 35.5 percent, of promotional expenses.
DTCA (Direct To Consumer Advertising) needs no explanation since people in the United States are constantly besieged by it. Although it amounted to “only” $4 billion in 2004 and made up just 7 percent of the total promotional expenditures, it clearly works, roping in patients to ask their doctors for heavily advertised drugs, often relying on ads that overstate the benefits and minimize the risks.
Medical meetings are those sponsored by drug companies and expenditures for these in 2004 were $2 billion, 3.5 percent of promotional spending.
Unmonitored promotion refers to promotional expenses that were not reported by the two companies providing most of the data for this article. To gather this information the authors surveyed doctors directly. This amounted to $14.4 billion in 2004 and represented 25 percent of promotional expenditures.
The authors pointed out that these data may well underestimate total promotional expenditures by drug companies because of the unavailability of data from three types of well-documented promotional activities that companies would never admit to. First is the thriving business of companies getting professional journalists, who have not been involved in a study, to ghost-write often drug-favorable articles that appear under the names of real researchers. The second unmeasured category is illegal off-label promotion of drugs, that is, promotion of Food and Drug Administration-approved drugs for treatments not approved by the agency. This has been the subject of massive fines against companies such as Pfizer for illegally promoting the painkiller Neurontin. The third is for so-called “seeding trials,” in which, disguised as research, companies attempt to get more doctors used to using their drugs.
The finding that, as a percentage of U.S. domestic pharmaceutical sales in 2004, 13.4 percent went to research and development but 24.4 percent went to promotion is not consistent with the “research uber alles” image the industry tries to project. The authors of this study quote a recent book stating that the image of life-saving “researchers in white coats” was now contested by the one of greedy “reps in cars.”
The pharmaceutical industry keeps beating the undocumented drum that controls on drug prices would stifle research and thus innovation, and they have successfully promoted a complicated, ultimately unworkable Medicare Part D to pay for drugs that disallows either negotiated or controlled prices. This study provides a well-documented reminder that the industry is much more financially committed to massive promotional expenses than to research and development of drugs.