For every $1 spent on R&D by the world’s ten largest drug companies, they spend $1.49 on marketing. You read that correctly: the major pharmaceutical companies spend more on marketing their drugs than they do developing them in the lab, according to data published by the British newspaper BBC on pharmaceutical spending today.
The release of the information was well-timed. The FDA just approved the Olysio – Sovaldi combination drug for the treatment of hepatitis C. These drugs have been widely criticized for their cost. Gilead’s Sovaldi is currently priced at $84,000 for a full course of treatment. J&J’s Olysio costs $66,000 for 12 weeks of the drug. When purchasing them for use off-label, hep c patients (or their insurance companies) have been paying around $150,000 for the treatment.
The expense of these drugs is so great that the U.S. Senate Finance Committee opened an investigation into Sovaldi’s price over the summer. Gilead justified the price based on its novelty and efficacy. No doubt, Gilead also justified it by the expense of creating it and reaching FDA approval. Now, this data casts a shadow on that claim for every manufacturer going forward.
Whistleblowers have frequently caught pharmaceutical companies crossing the line into illegal conduct when marketing their drugs. The result has been some of the nation’s leading settlements under the False Claims Act.
Perhaps it is time for the country to reconsider the marketing tactics of big pharma.
Pharmaceutical companies spend billions every year to convince doctors and other medical professionals to prescribe their products. Teams of sales representatives, estimated in number at approximately 400,000 individuals in the United States on a CNNMoney list of the “Best Jobs in America”, drive from doctor’s office to hospital to detail medical staff about the science behind their drugs. Doctors are also invited to educational lectures hosted by the company to listen to a peer tout the benefits of the medicine for their patients.
The drug companies don’t stop there, though. They also run direct to consumer ads to ensure that there is consumer demand. When a patient walks into a doctor’s office, they want them to ask for their drug by name. In 2012, pharma spending on television topped $2 billion and another $1 billion was spent on magazine advertising targeted at consumers.
Paul Graham of the startup accelerator Y Combinator has frequently been quoted using the phrase, “Make something people want.” The extensive marketing budgets of pharmaceutical companies leave open the question of whether they are really creating drugs that differentiate themselves. Instead, they have become marketing machines. It’s time to spend more on drug development and less on marketing tactics. Because a good product will sell itself.