Sunday, April 19, 2009

Pharmaceutical industry perturbed by the Drug Savings and Choice Act

In the April Dose of Reality, Neil Davis shows how the pharmaceutical industry, which is not happy about the provisions in the Medicare Prescription Drug Savings and Choice Act of 2009, is, in effect, a giant marketing machine, but not really an industry devoted to finding new drugs to cure illness. (You read that right.)
It is the most profitable of all industries in the United States, with profits equaling 25 percent of sales. Big Oil isn’t even close.…

In 2000, drug company expenditures for marketing and administration amounted to 36 percent of sales income, but only 14 percent of income went to research and development. Thus, the expenditure for marketing and administration was two and a half times that for drug research and development.

Also, of seventy-eight drugs approved by the Food and Drug Administration (FDA) in 2002, only seventeen contained new active ingredients, and only seven were classified by FDA as improvements over older drugs. Not one of these improved products came from a major drug company.

So, going by the numbers, the truth is that big pharmaceutical companies are primarily marketing machines. Their high profits and large marketing costs are the true reasons that the public has to pay such high prices for pharmaceuticals. It is not due to the need to cover the cost of developing new drugs.

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