7 ms·

Pharma spends more on marketing drugs than developing them. If marketing drugs is prohibited, especially through dubious kickback schemes with doctors and hospi

Pharma spends more on marketing drugs than developing them. If marketing drugs is prohibited, especially through dubious kickback schemes with doctors and hospitals, there'd be a lot more room for lowering prices. The profit motive really doesn't deliver great outcomes in medicine, between the enormous information asymmetry between patient and doctor (and even other doctors), doctors with perverse financial incentives, and believing (whether it's true or not) that your life or wellbeing are on the line if you're wrong, it's ideal for all sorts of chicanery. (/rant)

Loughla 2y ago
I hear that a lot, but have never seen numbers. Googling it doesn't help me either. Would you know of any resources?
- complaintdept 2y ago
  https://www.washingtonpost.com/news/wonk/wp/2015/02/11/big-pharmaceutical-companies-are-spending-far-more-on-marketing-than-research/ https://www.washingtonpost.com/news/wonk/wp/2015/02/11/big-p... https://www.ahip.org/news/articles/new-study-in-the-midst-of-covid-19-crisis-7-out-of-10-big-pharma-companies-spent-more-on-sales-and-marketing-than-r-d https://www.ahip.org/news/articles/new-study-in-the-midst-of... I'm sure there's plenty more out there.
- js2 2y ago
  Derek Lowe is as good a source as any (he works as a research scientist but I've always believe writes in good faith): https://www.science.org/content/blog-post/don-t-drug-companies-spend-more-marketing https://www.science.org/content/blog-post/don-t-drug-compani... Pharma companies spend about 2x on sales and administration as they do on R&D. However, this compares favorably to large tech companies where the ratio is closer to 2-8x. So yes, the statement that "pharma companies spend more marketing drugs than developing them" seems strictly true, but lacks context. Therefor, I rate this claim: mostly true. :-)
  - mandmandam 2y ago
    I think the main difference there is that tech companies don't spend 67% of their marketing money schmoozing your doctor. Of the $30 billion that Pharmas spends marketing in the US, $20bn is aimed at doctors. There's about a million doctors in the US. That's ~$20,000 per doctor, each of whom has a significant degree of implicit trust and authority. Even if a doctor believes they are not swayed by marketing, studies have shown that these efforts can subconsciously affect their decisions. And $20k/year/doctor just seems awfully high. There must be a more efficient way to help doctors make those sorts of decisions... *** Responding by edit due to rate limit: > Who else should they advertise to then? No one. It's not a brand affiliation issue, it's a facts and awareness issue. Doctors can read journals and papers and peer reviews just fine! There's no need for them to be told what to do on paid Hawaiian vacation weekends in 5 star hotels. You can see why they prefer things this way though. > it is morally worse to advertise and influence people who don't know any better. So don't.
    - HeatrayEnjoyer 2y ago
      At that price they might have teams dedicated to groups of a few dozen doctors, perfecting the company's manipulation to each of the doctors' personality. Somehow for-profit pharma always finds a way to be even more horrifying...
      - mandmandam 2y ago
        They are already doing this, without doubt. They identify thought leaders, analyze their data (who knows what data and how they analyze it?) to identify the best approaches, and have salesfolk and MSLs assigned to specific doctors, all to build relationships with tailored approaches and proven strategies. This is coupled with gifts disguised in various ways. It bears repeating: submissions to the FDA’s Office of Prescription Drug Promotion, which regulates consumer and professional promotional material, hit 97,252 in 2016. This resulted in 11 violation letters. Ninety-seven thousand submissions. Eleven violation letters. No typo. $20k/doc/yr. There may be more recent stats; I'm not finding them right now.
    - 2y ago
- deleted 2y ago
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sudosysgen 2y ago
This is especially true since marketing drugs is essentially a negative sum game, it's banned in most developed countries with no discernible drawback.
a_puppy 2y ago
Hmmm, the marketing question is complicated and I'm not sure what to think. From a profit point of view, presumably the advertising department pays for itself; in other words, the advertising department generates money for the R&D department, rather than taking money from the R&D department. But, the advertising presumably increases the number of people taking the drug. If it's teaching patients/doctors about a valuable new drug that will make peoples' lives better, then it's a social good. But if it's persuading patients/doctors to buy the drug unnecessarily, then it's a waste. (Also, sometimes two pharma companies have competing drugs that are basically equivalent. So they get trapped in a "Red Queen's race" where they both spend money on advertising to try to gain market share. In the end they've both spent a bunch of money on ads and ended up back where they started. For those cases, banning marketing would be a clear win.) Edit: Also, keep in mind that "ban/regulate pharma advertising" is a different proposal than "medicare negotiation".
- sudosysgen 2y ago
  You're thinking at the level of one drug. But that's not the right level, it misses too many second order effects. If someone is sick, they've likely been diagnosed by a doctor, who will treat them. This is how the consumer will know at all they might want to take the drug. So the effect of the advertisement is to change the course of treatment as the consumer will ask their doctor for that drug ("ask your doctor if $drug is right for you"), and a doctor needs to prescribe it to begin with. So the "Red Queen's Race" is not a sometimes. It's in fact almost always the situation at hand, generally between multiple courses of treatment. We can observe from countries with no prescription drug advertising and similar levels of development that health outcomes are broadly similar. So we can be quite confident that this kind of advertising doesn't lead to significantly more appropriate treatment in aggregate, and it's therefore most likely to be a race to the bottom.
  - a_puppy 2y ago
    I'm not an expert on this stuff, so I'm not sure what's the answer. But this article says that about 90% of pharma marketing dollars are spent on marketing to doctors, not to consumers: https://www.pewtrusts.org/en/research-and-analysis/fact-sheets/2013/11/11/persuading-the-prescribers-pharmaceutical-industry-marketing-and-its-influence-on-physicians-and-patients https://www.pewtrusts.org/en/research-and-analysis/fact-shee... So it seems like pharma companies are mostly spending money on R&D and on advertising to doctors, not on direct-to-consumer advertising.
LorenPechtel 2y ago
I do agree there would be a benefit from removing the marketing. But the benefit would be little more than what is spent on said marketing. It comes back to the same thing--where is the money going to come from? Few medicines actually have a high per-unit production cost. The cost is usually mostly amortizing R&D and the production equipment. (And looking at R&D overall--you have to count the spending on the failures as well as on the successes.) Sell fewer pills and you don't cut that R&D cost, you just distribute it across fewer pills.
lathiat 2y ago
In Australia, prescription drugs generally cannot be advertised to consumers. Additionally, prescriptions for all drugs are written in the generic drug name form and not the branded form. That said, where this currently seems to fall apart is the pharamacies.. most only stock a single "brand" and pricepoint for many drugs, two at most. Most pharamcies aren't online so you can't easily compare prices. In practice, I have frequently observed over many different prescriptions a price different of 1-2x between pharamcies in the same area for the exact same thing and dosage. Additionally, the way we fill scripts here you don't even get the price until you go to pay and theyve already labelled your box with your script, etc. There's also largely no pricing on the shelves, even if you can see the behind the counter ones. The only thing that saves us, is that "many" but not all drugs are subsidised by our public health care and the government negotiates the price. But for any non-subsidised drug it's open season and also much of the pricing is "per dispense" and not at all related to the drug quantity. e.g. 4x10mg or 28x5mg of the same drug has the same price. Also recently the much-publicised Ozempic which is used for weightloss and diabetes which is $150/dose here, because the price is fixed by that government negotiated price for diabetic patients but off-label prescribers get the same price even when not subsised by the government and they actually have to pay the full $150. They launched the literal exact same drug for weight loss as "Wegovy" but they vary the recommended dosages a little so that in practice you can't cross-fulfill the prescription. The exact same 1mg is $150 when sold as Ozempic and $250 when sold as Wegovy :) And for some straight reason the weight loss dose is "2.8mg" but the diabetic doses are 1mg and 3mg.

Loughla 2y ago

I hear that a lot, but have never seen numbers. Googling it doesn't help me either. Would you know of any resources?

complaintdept 2y ago
https://www.washingtonpost.com/news/wonk/wp/2015/02/11/big-pharmaceutical-companies-are-spending-far-more-on-marketing-than-research/ https://www.washingtonpost.com/news/wonk/wp/2015/02/11/big-p... https://www.ahip.org/news/articles/new-study-in-the-midst-of-covid-19-crisis-7-out-of-10-big-pharma-companies-spent-more-on-sales-and-marketing-than-r-d https://www.ahip.org/news/articles/new-study-in-the-midst-of... I'm sure there's plenty more out there.
js2 2y ago
Derek Lowe is as good a source as any (he works as a research scientist but I've always believe writes in good faith): https://www.science.org/content/blog-post/don-t-drug-companies-spend-more-marketing https://www.science.org/content/blog-post/don-t-drug-compani... Pharma companies spend about 2x on sales and administration as they do on R&D. However, this compares favorably to large tech companies where the ratio is closer to 2-8x. So yes, the statement that "pharma companies spend more marketing drugs than developing them" seems strictly true, but lacks context. Therefor, I rate this claim: mostly true. :-)
- mandmandam 2y ago
  I think the main difference there is that tech companies don't spend 67% of their marketing money schmoozing your doctor. Of the $30 billion that Pharmas spends marketing in the US, $20bn is aimed at doctors. There's about a million doctors in the US. That's ~$20,000 per doctor, each of whom has a significant degree of implicit trust and authority. Even if a doctor believes they are not swayed by marketing, studies have shown that these efforts can subconsciously affect their decisions. And $20k/year/doctor just seems awfully high. There must be a more efficient way to help doctors make those sorts of decisions... *** Responding by edit due to rate limit: > Who else should they advertise to then? No one. It's not a brand affiliation issue, it's a facts and awareness issue. Doctors can read journals and papers and peer reviews just fine! There's no need for them to be told what to do on paid Hawaiian vacation weekends in 5 star hotels. You can see why they prefer things this way though. > it is morally worse to advertise and influence people who don't know any better. So don't.
  - HeatrayEnjoyer 2y ago
    At that price they might have teams dedicated to groups of a few dozen doctors, perfecting the company's manipulation to each of the doctors' personality. Somehow for-profit pharma always finds a way to be even more horrifying...
    - mandmandam 2y ago
      They are already doing this, without doubt. They identify thought leaders, analyze their data (who knows what data and how they analyze it?) to identify the best approaches, and have salesfolk and MSLs assigned to specific doctors, all to build relationships with tailored approaches and proven strategies. This is coupled with gifts disguised in various ways. It bears repeating: submissions to the FDA’s Office of Prescription Drug Promotion, which regulates consumer and professional promotional material, hit 97,252 in 2016. This resulted in 11 violation letters. Ninety-seven thousand submissions. Eleven violation letters. No typo. $20k/doc/yr. There may be more recent stats; I'm not finding them right now.
  - 2y ago
deleted 2y ago
[deleted]

sudosysgen 2y ago

This is especially true since marketing drugs is essentially a negative sum game, it's banned in most developed countries with no discernible drawback.

a_puppy 2y ago

Hmmm, the marketing question is complicated and I'm not sure what to think. From a profit point of view, presumably the advertising department pays for itself; in other words, the advertising department generates money for the R&D department, rather than taking money from the R&D department. But, the advertising presumably increases the number of people taking the drug. If it's teaching patients/doctors about a valuable new drug that will make peoples' lives better, then it's a social good. But if it's persuading patients/doctors to buy the drug unnecessarily, then it's a waste. (Also, sometimes two pharma companies have competing drugs that are basically equivalent. So they get trapped in a "Red Queen's race" where they both spend money on advertising to try to gain market share. In the end they've both spent a bunch of money on ads and ended up back where they started. For those cases, banning marketing would be a clear win.) Edit: Also, keep in mind that "ban/regulate pharma advertising" is a different proposal than "medicare negotiation".

sudosysgen 2y ago
You're thinking at the level of one drug. But that's not the right level, it misses too many second order effects. If someone is sick, they've likely been diagnosed by a doctor, who will treat them. This is how the consumer will know at all they might want to take the drug. So the effect of the advertisement is to change the course of treatment as the consumer will ask their doctor for that drug ("ask your doctor if $drug is right for you"), and a doctor needs to prescribe it to begin with. So the "Red Queen's Race" is not a sometimes. It's in fact almost always the situation at hand, generally between multiple courses of treatment. We can observe from countries with no prescription drug advertising and similar levels of development that health outcomes are broadly similar. So we can be quite confident that this kind of advertising doesn't lead to significantly more appropriate treatment in aggregate, and it's therefore most likely to be a race to the bottom.
- a_puppy 2y ago
  I'm not an expert on this stuff, so I'm not sure what's the answer. But this article says that about 90% of pharma marketing dollars are spent on marketing to doctors, not to consumers: https://www.pewtrusts.org/en/research-and-analysis/fact-sheets/2013/11/11/persuading-the-prescribers-pharmaceutical-industry-marketing-and-its-influence-on-physicians-and-patients https://www.pewtrusts.org/en/research-and-analysis/fact-shee... So it seems like pharma companies are mostly spending money on R&D and on advertising to doctors, not on direct-to-consumer advertising.

LorenPechtel 2y ago

I do agree there would be a benefit from removing the marketing. But the benefit would be little more than what is spent on said marketing. It comes back to the same thing--where is the money going to come from? Few medicines actually have a high per-unit production cost. The cost is usually mostly amortizing R&D and the production equipment. (And looking at R&D overall--you have to count the spending on the failures as well as on the successes.) Sell fewer pills and you don't cut that R&D cost, you just distribute it across fewer pills.

lathiat 2y ago

In Australia, prescription drugs generally cannot be advertised to consumers. Additionally, prescriptions for all drugs are written in the generic drug name form and not the branded form. That said, where this currently seems to fall apart is the pharamacies.. most only stock a single "brand" and pricepoint for many drugs, two at most. Most pharamcies aren't online so you can't easily compare prices. In practice, I have frequently observed over many different prescriptions a price different of 1-2x between pharamcies in the same area for the exact same thing and dosage. Additionally, the way we fill scripts here you don't even get the price until you go to pay and theyve already labelled your box with your script, etc. There's also largely no pricing on the shelves, even if you can see the behind the counter ones. The only thing that saves us, is that "many" but not all drugs are subsidised by our public health care and the government negotiates the price. But for any non-subsidised drug it's open season and also much of the pricing is "per dispense" and not at all related to the drug quantity. e.g. 4x10mg or 28x5mg of the same drug has the same price. Also recently the much-publicised Ozempic which is used for weightloss and diabetes which is $150/dose here, because the price is fixed by that government negotiated price for diabetic patients but off-label prescribers get the same price even when not subsised by the government and they actually have to pay the full $150. They launched the literal exact same drug for weight loss as "Wegovy" but they vary the recommended dosages a little so that in practice you can't cross-fulfill the prescription. The exact same 1mg is $150 when sold as Ozempic and $250 when sold as Wegovy :) And for some straight reason the weight loss dose is "2.8mg" but the diabetic doses are 1mg and 3mg.