Thursday, November 1, 2007

How Pharma Pads Its Research Costs

In HOOKED I mentioned in passing that the drug industry claims that it spends more on research and development than on marketing, while virtually all independent economists put the figures at roughly 12% of revenues going to R&D while as much as 30% of revenues go to marketing. Besides that little white lie, the industry routinely pads its research numbers by slipping into the research column activities that really cannot be construed as research by any fair-minded criterion. The only specific example I was able to give, however, was "seeding trials"-- pretend post-marketing clinical trials which are really more disguised bribery, in which physicians are paid to give the drug to patients and to fill out meaningless "data" forms, the whole idea being to get practitioners to get used to prescribing the drug more and more.

I recently received from Donald Light, health systems professor at University of Medicine and Dentistry of New Jersey and an affiliate of the University of Pennsylvania Center for Bioethics, a copy of a recent book chapter he wrote. Among many other good things he provides a very handy list of these fake "research" budget items. Besides seeding trials, his list includes:

  • executive costs of negotiating with other firms for new product licensing
  • costs for medical writers and PR staff to write media stories about trials while they are in progress, to stimulate market demand
  • support for medical journal supplements and ads in those journals, as those are often the venue where lower-quality clinical trials can get published
  • lectures and CME courses to inform practitioners about current research
  • legal fees related to patents and licenses, and other research-related matters
  • land and construction costs for buildings in which some research is done, even if only a small amount of space is devoted to research
  • company-wide technical upgrades such as new computers or software
Light D. Basic research funds to discover important new drugs: who contributes how much? In: Burke MA, de Francisco A, eds. Monitoring financial flows for health research 2005: beyond the global numbers. Geneva, Switzerland: Global Forum for Health Research, 2006.

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