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Study: Drug Makers Focus on Promotion

Pharmaceuticals: A report says less is spent on R&D than on other costs. The industry calls the findings simplistic.

July 18, 2002|RONALD D. WHITE | TIMES STAFF WRITER

A consumer health advocacy group blasted the pharmaceutical industry Wednesday with a study saying drug makers spend far more on overhead, lavish executive compensation and marketing campaigns aimed at hospitals, doctors and patients than they do on research and development.

The report from Washington-based Families USA also scoffed at the industry's boasts about the extent of its spending on new drug development, arguing that the drug makers have dedicated far more resources to "life-cycle" spending designed to develop new patents for old drugs or to come out with slightly altered and more expensive versions of older drugs in an effort to keep cheaper generic drugs off the market.

"The industry is paying much more attention to that now than it is to breakthrough science," said Ron Pollack, director of Families USA, a nonprofit organization that advocates "high-quality, affordable health and long-term care for all Americans." Pollack said the group's study showed that spending on marketing, advertising and administration was often double that of R&D for many large pharmaceutical manufacturers.

The pharmaceutical industry, backed by at least some Wall Street analysts, fired back that the group's arguments and figures were either dated, specious or simplistic.

The Pharmaceutical Research and Manufacturers Assn. of America trade group issued a statement saying: "The only way the pharmaceutical industry critics are able to get a number higher than $30 billion [the industry's total R&D spending] is to lump in 'administrative costs' with advertising and promotion. What are administrative costs? They are the operating costs that every business in America has to pay such as state and federal taxes, the electric bill, the trash collection bill, the copier repair bill, ... rent and other costs of running a business."

The trade group also noted that spending on research and development has nearly doubled to $30.3 billion from $16.9 billion.

But other researchers independently bolstered the consumer group's arguments, saying that the industry has engaged in less hard science than in the past and successfully spends billions on marketing and persuasion.

"The sales reps go door to door to the doctors' offices to bring plenty of free samples for patients and materials to market their products," said Dr. Meredith Rosenthal, lead author of a recent New England Journal of Medicine article titled "Promotion of Prescription Drugs to Consumers."

"The drug companies spend the bulk of their promotional dollars on the doctors with everything from notepads [to] free pens, and they bring lots of study results to keep the doctors informed on developments."

Families USA said that Merck & Co., for example, spent less than $2.5 billion on R&D last year but spent more than $6 billion on marketing, advertising and administration. For the industry as a whole, the study said promotional spending more than doubled from 1996 to 2001, from $9 billion to $19 billion.

Merck spokesman Greg Reaves said that promotional activities directed at doctors and patients were beneficial in that they helped reach some of the millions of Americans who have high cholesterol, for example, and persuaded them to visit their doctors and make inquiries.

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