Study: Marketing exceeds R&D in U.S. pharma

A new study by two York University researchers estimates the U.S. pharmaceutical industry spends almost twice as much on promotion as on R&D.

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TORONTO—A new study by two York University researchers estimates the U.S. pharmaceutical industry spends almost twice as much on promotion as on R&D.
The researchers' estimate is based on the systematic collection of 2004 data directly from the industry and doctors, which shows the U.S. pharmaceutical industry spent 24.4 percent of the sales dollar on promotion, versus 13.4 percent for R&D, as a percentage of domestic sales of $235.4 billion.
For the report, titled "The Cost of Pushing Pills: A New Estimate of Pharmaceutical Promotion Expenditures in the United States," the authors examined the 2004 reports of IMS Health (IMS) and CAM Group (CAM), two international market research companies that provide the pharma industry with sales/marketing data and consulting services. IMS obtains its data by surveying pharma  firms, while CAM surveys doctors. The researchers used 2004 data because it was the latest year in which information was available from both organizations.
CAM reported total promotion spending by the U.S. pharmaceutical industry as $33.5 billion in their 2004 report, while IMS reported $27.7 billion for the same year. The authors observed, however, important differences in figures according to each promotion category. By selectively using both sets of figures provided by IMS and CAM, in order to determine the most relevant data for each category, and adjusting for methodological differences between the ways IMS and CAM collect data, the authors arrived at $57.5 billion for the total amount spent on pharmaceutical promotion in 2004. The industry spent approximately $61,000 in promotion per physician during 2004, according to co-author Marc-André Gagnon.
The authors also note that the  number of meetings for promotional purposes dramatically increased in the U.S. pharmaceutical industry from 120,000 in 1998 to 371,000 in 2004, which they say further supports their assertion that the U.S. pharmaceutical industry is marketing-driven.
"Even our revised promotion figure for 2004 is apt to be understated, as there are other promotion avenues that are not likely to be taken into consideration by IMS or CAM, such as ghost-writing and off-label promotion," says Gagnon. "Also, seeding trials, which are designed to promote the prescription of new drugs, may be allocated to other budget categories."
Their study appears in the Jan. 3, 2008 issue of PLoS Medicine, an online journal published by the Public Library of Science.

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