Drug companies spend nearly double on marketing compared with research

As first seen in the Canadian Press

Drug companies spend almost twice as much on marketing and promoting their products than on research and development, says a new study.

In their analysis of data from two market research companies, Marc-Andre Gagnon and Joel Lexchin of Toronto's York University found that American drug companies spent US$57.5 billion on promotional activities in 2004.

By comparison, spending on industrial pharmaceutical research and development in the United States was $31.5 billion in the same year, according to a report by the National Science Foundation, which included public funding for industrial research.

The types of marketing included in the US$57.5 billion figure, compiled using data from market research companies IMS and CAM, included free samples, direct-to-consumer drug advertising, meetings between company representatives and doctors to promote products, e-mail promotions and direct mail, said the study.

The findings, published this week in the journal Public Library of Science Medicine, confirm "the public image of a marketing-driven industry," say the study authors.

It's not a surprising conclusion, says Steve Morgan, an expert on the economics of the pharmaceutical industry at the University of British Columbia.

"It's been known for a long time that manufacturers of prescription drugs spend more money on marketing than they do on research and development," says Morgan, who heads the program in pharmaceutical policy at the university's Centre for Health Services and Policy Research.

Still, the conclusions are alarming, says one of the authors.

"It is common knowledge that drug companies spend a lot on promotion," Joel Lexchin said in an interview.

"But even I didn't realize that the figure was as high as we estimate it is."

The pharma industry has for decades promoted itself as innovative and research-driven. Critics, however, contend that drug companies have acted based on market-driven profiteering.

The gulf in spending in 2004, the latest year for which figures were available, has been reported for previous periods, says Morgan.

"This goes back to commissions of inquiry that were held in Canada and the United States in the 1950s," he said.

In the late 1950s, then-Democratic Senator Estes Kefauver launched a public review of the business dealings of the prescription drug industry through the U.S. Senate's anti-trust and monopoly subcommittee.

The senator accused the industry of predatory pricing, extravagant cost increases brought on by excessive marketing and selling new products that were no more effective than drugs already widely established on the market.

The issue was studied in depth again in the 1960s and 80s.

However, there hasn't been a comprehensive study of drug industry profits and spending in more than a decade, giving governments very little new information on research spending.

In the United States, direct-to-consumer marketing of prescription drugs is allowed, and drug companies buy television, radio and print ads to promote products directly to the public.

But in Canada the rules are stricter and so-called "reminder advertising" or disease-awareness ads are more prevalent, without direct mention of drug difficulties, such as "may cause abnormal bleeding," or "may cause dizziness."

In the United States, drug companies also spend more on advertising to doctors, so they aren't caught off guard by patients demanding a certain type of prescription after having seen the drugs on television or elsewhere.

Canadian firms also tend to underspend on research, compared with other developed countries.

"Canada has long been a relatively low performing country in terms of pharmaceutical research and development," said Morgan.

"Against our international comparisons, and particularly against the United States, manufacturers spend a smaller percentage of sales on research and development in Canada than they do in other countries."

But the ratio of spending on marketing versus research in Canada is likely similar to that of the United States - it's just that drug companies spend a lot more on both in the U.S., says Morgan.

In their analysis, called The Cost of Pushing Pills: A New Estimate of Pharmaceutical Promotion Expenditures in the United States, Gagnon and Lexchin suggest that governments should force the industry "in the direction of more research and less promotion."

"Health Canada and the (U.S. Food and Drug Administration) could promote research if they change the criteria for how they approve drugs," said Lexchin.

"Then the drug companies would be forced to put their money into more innovative research, and the drugs that would come out of that would not be the ones you need to promote so much."

However, altering the way drug firms spend on promotion "would require profound changes, not just in industry practice," said Morgan.

Consumers and the medical profession are the true drivers behind the research-based pharmaceutical industry, Morgan contends, not the drug companies themselves.

"The reality is that firms behave in ways that we provide them incentives to behave," said Morgan.

"It's not really their responsibility to change practice as much as it's the responsibility of people who pay for drugs, and in particular doctors who prescribe them and patients who request them," he said.

"It's those persons' responsibilities to change the incentives - to change the way we reward manufacturers and start putting more emphasis on rewarding truly innovative products rather than rewarding products that are just promoted intensively."