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Drug Research Fallacy

September 03, 1989

Harry Bernstein's otherwise comprehensive July 18 column on drug prices ("Soaring Prices of Drugs Squeeze Workers, Pharmacists") suffered from one error in understanding the drug manufacturing industry.

The column mentioned "the huge amounts of money they spend on research and development." But many studies have shown that the industry as a whole--one of the most profitable industries in the United States--spends less than 10% of its revenue on research and development.

And then the drug companies spend 80% of their income on marketing. The majority of this money is devoted to convincing physicians that not to use their products will jeopardize patients and delay recovery.

A second major drug company expense is devoted to persuading governmental entities to support the use of newer medications in Medicare and state-supported programs.

"Cost effective," a highly touted term in some circles, is little heard in the drug manufacturing industry.

AUGUST L. MAYMUDES

Los Angeles

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