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Discussion in 'Pre-Medical - MD' started by basupran, Apr 11, 2004.
I know there are many reasons, but what do you think they are?
drugs cost so much cuz so much research and development goes into making them. Plus if they get a patent on it, it will only last like 15 years so they have a limited time to make up their investment plus profits before they have to start competing with generic brands
I hear over 50% of Pfizer's budget is put towards marketing.
1) Special interest money given to politicians helps keep prices high.
2) Patent law is ridiculous and generics aren't granted for a very long time (changing the dosage schedule of a drug can extend it's patent).
3) R&D costs are high, and for this we have to be thankful to drug companies. The downside of this of course is that many ailments that only inflict a limited population receive little attention from the drug companies because it would be very difficult to pay off the research done for these drugs.
4) We're willing to pay the costs. People want to live long and healthy lives. Since there is rarely competition (aside from generics, and for that see #2), drug companies can keep their prices high since they know people want the best drug available to cure their illness.
Just a few reasons.
R and D, and marketing. Bingo.
I'm not 100% sure, but I think patents for drugs last a lot less than that. However, they are extended when the company changes the dosage schedule (you hear about these: NEW!!! Once a day claritin!!!, when before it was maybe 3 times a day).
Advertising budgets outpace R&D at all major drug companies. Restrict advertising.
Also, pharm companies will charge whatever the market will bear.
You are right...it is 20 years, however, it is from patent application time...it might take a couple of years to get approved...the maximum market time is 14 years..
look up wax hatchman act
Also, the company can't extend patent right that simply...it has to do more with a compositional change...it is amazing, some drugs get a whole new patent by isolating one isomer vs. a racemic mixture....
talking to a guy who worked for merck...and said a bunch of $$ goes into R and D...and there are times where you put in all that money and you end up not being able to use the drug since it was ineffective during clinical trials. so thats a lot of $$ down the drain. they gotta make it up somehow.
I absolutely agree and for that reason I think drug companies really do the public a service. They have developed countless drugs to treat a variety of ailments that might otherwise still be untreatable. However, you can point out to the guy that merck still made 1.4 billion dollars in profit in the 4th quater of 2003!!!! That's profit, not revenue. For a little perspective: their medication Zocor will have sales in 2004 of 4.9 to 5.1 BILLION dollars.
Correct me if I'm wrong, but profit margins have already deducted R&D costs for the quater, so the company is still making 1.4 billion dollars in 3 months. The problem here is part R&D and part stock prices that are hugely dependent on profit margins.
Why are drugs so ridiculously expensive in the United States?
1) Pharmaceutical companies spend a fortune on advertising, some of which is pointless. For example, consumer-direct advertising (i.e., the commercials on TV that instruct you to "ask your doctor about drug X") costs a lot of money, yet the advertisements RARELY say anything about what the drug does. The wining and dining of physicians is also very costly; drug companies spend approximately $12,000/yr/physician. Pretty crazy, eh?
2) Research and development of drugs is very expensive and financially risky. However, drug companies are notorious for inflating their figures for R & D--it's not as expensive as pharmaceutical companies would have you believe. Nonetheless, drug companies are entitled to high profits in light of the financial risk of developing and releasing new drugs (I don't know about 19% profit margins, which is the average profit margin for pharmaceutical companies, a margin that eclipses the 5-6% average for Fortune 500 companies).
3) The government is not the only purchaser of drugs in the United States, which means that the government cannot impose price controls. If the federal government were the sole purchaser of drugs in the US, then pharmaceutical companies would be forced to sell at a lower price, because the government would have tremendous leverage on the market value of the drugs (if you only have one person to sell an item to, you can't exactly screw that person over if they can go elsewhere).
pc way to answer this question is r & d.
however, a large chunk of money goes into marketing. how much do you think those cialis commercials cost? how many mugs do pharms give out in a conference? it's too bad that end users have to pay for the price. i guess that's why a lot of people who can't afford their medication turn to canada and mexico. it's a tragedy
Because R&D is costly and inefficient ($800 million/marketable drug) and we subsidize drug costs for other countries. They have price controls, we don't.
a lot of people here are (rightly so) aggravated at the inflated marketing budgets of some companies, esp. when pfizer devotes 13% of sales income to r&d and 37% to SG&A [sales, general, & admin. expenses], half of which is typically marketing. in other words, you can reasonably say while pfizer spends more on research than any other company in the world ($7 billion), they concurrently spend approx. $9 billion on marketing. but what i dont see are people blaming ourselves, the doctors for it.
typical of medicine in general. so scattered, so concerned about our personal interests that we have no collective voice in the government (the AMA really doesnt do as much as it should to effect serious change). here are two solutions that work only if we band together:
1) stop direct-to-pt advertising. even putting up free charts you get from pharma cos. makes a difference. your clinic/office doesnt need to have advertisements all over the place. dont be a sellout (think back to the simpsons where the church sold out to mr. burns and this is kinda the equivalent).
2) stop taking the bait from pharma reps. if you are serious about lowering the costs of drugs for pts, make pharma marketing costs ineffective and therefore inexcusable. dont go out to free dinners, dont go to free golf sessions, dont take buttloads of pens and post-its and the like. pharma reps blow huge amounts of money seducing physicians -- be stronger than that.
here's my source -- http://www.sageonline.com/data/RodSamples/chatdean.pdf?target=%2Fstocks%2Fcompanyinformation%2Fquotechart&ticker=PCLND . its not the best one, just the first one i could find.
Marketing. This is one of the main reasons why drugs are very expensive. Did you all recall any commercials during the Super Bowl?!
Because it is so hard to sneak them in from South America?
I don't think marketing is the big problem. Drug companies aren't stupid, if the marketing wasn't working then they wouldn't do it. Ads just increase the cost of drugs that are being advertised, and I don't think the OP was talking about increasing Viagra costs. High prices are mainly due to the fact that drug companies only want to develop these drugs with a bigger market. I don't have hard facts, but I know that most development is going into drugs like weight-loss or cholesterol lowering or erectile dysfunction. When was the last time a poor person in Africa needed to lose weight? And I bet the least of their worries is being able to have sex.
Yes, a cure for AIDS would be a blockbuster for any company, but bigger than Lipitor or Viagra? Probably not. Until then, most drugs will be developed by smaller companies with higher R&D costs and thus higher prices.
Oh yes they are smart. Marketing to the public and physicians works very well. Why do you think Universities are implementing a gift law. Here at Iowa, we can't accept more than $3-4/day worth of gifts, food, ect... If the drug companies are giving us money, then it has to be in the form of an "unrestricted educational grant".
Read this webpage:
Each top drug company spends MORE on marketing than R&D.
Very sad isn't it? Additionally, a cure for AIDS is not a blockbuster. A blockbuster is a medication that costs thousands of dollars, and patients must take it for the rest of their lives, e.g. diabetes, ART for AIDS, glaucoma, etc... Cures don't make money, but maintenance drugs make companies filthy rich!
Because my dealer knows I need my fix.
Just a FYI....the patent for the drug lasts 20 years or so, but from the time the companies get the patent to the time the drug is actually on the market is an extremely lengthy process....often, you only get "sales" of the drug for 7 years. It takes 15 years to develop a drug from its early stages through clinicals to FDA approval. The actuall COST of drugs is actually not increasing as much as the media portrays it, but the SPENDING on drugs is, meaning people are now spending money on drugs that weren't previously available. Do most people need Lipitor? no, a healthy diet and exercise can drastically reduce your cholesterol, yet it earns over $1 Billion a year.
as for advertising....of course it is a major part of the budget. Pharmaceutical companies, although they are involved in healthcare, are a business. Businesses #1 goal is to make money, you know, got to look good for the shareholders. To make money, you've got to get your brand out there - you've got to advertise. Just like walmart wouldn't be making as much money if they didn't advertise. Think of how much Walmart or Purdue chicken could reduce their prices by if they stopped advertising, but nobody is yiping about that. Same concept. People need food and clothes as much as they need medicine.
Working for pfizer, I can say that I work with some of the brightest people in the world. The chemists who develop the drugs receive no money bonuses or stock options for developing Lipitor or Zoloft. They just get a pat on the back. They truly do it in an effort to increase the quality of life. Having seen the inside of the pharmaceutical industry, there are definitely some things that need to change and there are some trends in the business that are taking a turn for the worse, but that's a whole new thread. Don't even get me started on that one.
the $800 million dollar figure that we all hear regarding the cost of bringing a new drug to market is totally overblown. many, if not most drugs, costs much less than that to bring to market.
further (and i don't know why i didn't realize this much earlier), the r & d costs are a TAX WRITE OFF. that's right, the public is essentially paying for merck, pfizer etc. to screw us 2X.
Prolly cuz people make them
@japhy yeah that doesn't make a lot of sense
Closing old thread.