[netjiro]

> Funds which they will use to drive massive amounts of additional R&D to make even better treatments at lower costs.

This is a _myth_

Big Pharma is an insanely inefficient structure for turning money into useful R&D results.

Big Pharma often spends on the order of 25-30% on marketing, vs 15% on R&D. From societal standpoint this is horribly inefficient considering that most medical costs are paid for communal money via taxes and/or insurance programs.

R&D should be paid by government funds. Testing should be transparent and open. Production should be done by private companies. This would be a significantly more efficient use of our money. It would also align R&D expenditures much better with actual costs to society for medical issues.

[zaroth]

I do not concede the point as it relates to Big Pharma, but in this particular case I was talking specifically about the $3B that was earned by the CF Foundation.

Are you contending that the non-profit CF Foundation is going to take their $3B and not do something useful with it to serve the CF population?

> For well over a decade, CFF has employed a venture philanthropy model that provides upfront funding to pharmaceutical companies to help reduce the financial risk associated with the development of drugs to treat CF. As a result, the organization has a pipeline of drugs in various phases of development and reinvests the funds from any royalties it owns to advance drug discovery and efforts to find a cure.

> The proceeds of the sale will dramatically accelerate and expand the foundation’s research, care, and patient programs and significantly boost its funding of research targeting the genetic cause of CF. The organization also plans to use the funds to strengthen the specialized care and support that people with CF and their families receive at more than one hundred and twenty centers across the country and to expand its resources for people with CF and their families.

[rayiner]

Typical R&D spend in pharma as percentage of revenues is 10-20%. That’s in the same range as Google, Intel, or Microsoft, which are widely considered to be very efficient structures for turning money into innovation. By your reasoning, we could cut out a lot of the fat and get better R&D for less by nationalizing Google.

[eecc]

Of the main customer of Google was the government itself then why not? (The point is: it’s not. So so what’s your point?)

[rayiner]

Who the customer is has no bearing on whether a company spending 15% of revenues on R&D is a sign of efficiency or inefficiency. If your premise was true—that you can achieve increased efficiency by nationalizing research because it lets you cut out the other costs of running a company, then that principle would be applicable to Google as well as Novartis.

[sykhotic]

But if twice as much is spent on marketing then in the case of pharmaceuticals it appears this is inefficient. These drugs tend to be necessary for people in ways that Google is not. There are cases where people live in penury due to high drug costs. From the perspective of beneficial to society it seems from my perspective that this is inefficient. Whether or not Google is efficient isn’t relevant in this matter as far as I can tell.

The typical argument for justifying high drug costs is that it costs lots of money to do R&D. This argument loses weight when the marketing costs are twice the R&D costs. Further to this point is the fact that the actual discovers aren’t the ones getting the big rewards of their discoveries. So it all appears inefficient in ways that don’t matter when applied to Google due to the fact that ultimately we are talking about peoples’ financial and physical health.

[dodobirdlord]

> But if twice as much is spent on marketing then in the case of pharmaceuticals it appears this is inefficient.

Marketing includes the cost of bringing the new compound to the attention of medical professionals who might benefit from knowing about it. This means hosting conferences, having representation at conferences/trade shows/exhibitions, seminars and other educational material, etc. Medical professionals are busy people who don't have time to independently research every new compound being brought to market, so someone has to make it very easy for them to learn about new compounds and easy for them to determine if it's something they need to care about. Hospitals and pharmacies have to be convinced that it's something that should be stocked, insurance companies have to be convinced that the treatment is cost effective enough to justify covering.

> These drugs tend to be necessary for people in ways that Google is not. There are cases where people live in penury due to high drug costs. From the perspective of beneficial to society it seems from my perspective that this is inefficient.

The resources that are expended to create new drugs could in the short term be spent far more efficiently on saving lives were it all donated to the Bill and Melinda Gates Foundation. The benefit to society of drug research is not the well being of those people that a drug can treat when it is created, but rather that the drug now exists and will be available for all time. On the balance of the moral calculus, what happens during the 10-15 year window in which the drug is available and still protected by patent is totally negligible.

[Entalpi]

Lets not say that Google and Pharma companies operate under the same conditions. There are enough of brainjuice in the world to study both in isolation.

[vonmoltke]

> Big Pharma often spends on the order of 25-30% on marketing, vs 15% on R&D.

That is also a myth, perpetuated by people who do not understand how to read an income statement. Please provide a source for that, and if the source is or is using the SG&A line from an income statement, it's wrong.

[mft_]

Do you really think that the marketing spend doesn't result in greater returns than without the spend in the first place?

If a company could increase its bottom line by cancelling marketing spend, that's an easy equation to figure out.

Or... maybe (profit after marketing - marketing spend) > (profit without marketing).

And as (in a reasonable stable company) the research spend will be related to profit... marketing spend likely does result in more money being available for research.

[sykho]

In European countries the marketing spend is essentially zero for all companies since they are banned from advertising. As you say, marketing clearly does increase profits for the pharmaceutical companies in the U.S. However, from a societal point of view it seems to me that it is much better for society for there to be no marketing of drugs. My wife is a physician and listening to her and her colleagues they all hate drug company TV commercials.

The current system seems to incentivize companies to hold on to patents by making minor, insignificant changes to drugs to maximize profits. They are incentivized to ignored exotic diseases that have too small of a market share for each individual disease but affect, collectively, a lot of people. There is also the fact that in a system like the U.S. where people have large out of pocket expenses at the point of contact with the health care system having companies maximize profits for a particular life saving drug causes some people to view said maximization with disgust.

[mft_]

> In European countries the marketing spend is essentially zero for all companies since they are banned from advertising.

Advertising direct to the public is banned in many countries, but not the US - I assume this is what you're referring to. However, pharma companies can and do spend billions on marketing to healthcare professionals within the EU.

> However, from a societal point of view it seems to me that it is much better for society for there to be no marketing of drugs.

Your point about the societal value of drug marketing is complex. In some cases, I totally agree with you that it's not money well spent - selling one beta blocker or statin against five others with broadly comparable data hardly helps the cause of humanity. However, in other cases the marketing/sales actually helps ensure that patients are given the drugs that they need - doctors aren't infallible, and not all doctors are created equally.

> The current system seems to incentivize companies to hold on to patents by making minor, insignificant changes to drugs to maximize profits.

This is actually relatively rare.

> They are incentivized to ignored exotic diseases that have too small of a market share for each individual disease but affect, collectively, a lot of people.

Like it or not, the overall cost of discovering a drug, then testing it all the way through the many phases over many years, is roughly billions. Rare diseases can be ignored because it's simply not sensible business to develop drugs for them. Unless a company can find a way of charging a very high price, or find short cuts to development, or the current system of regulations is eased, this won't change.

[vonmoltke]

> In European countries the marketing spend[ing] is essentially zero for all companies since they are banned from advertising.

Companies are prohibited from advertising to doctors? I thought it was just direct-to-consumer.

[sykho]

It appears you are correct. Direct to consumer advertising is heavily regulated but not outright banned. In Germany in 2017 the advertising expenditure was around 1.6 billion euros. In 2017 advertising expenditures in the U.S. were 24 billion dollars. There appears to be a big disparity in advertising amounts in the EU vs. the U.S. Germany’s population is more than 1/5 the population of the U.S. and spends far less than 1/5 of the U.S. advertising budget.

From [1] it appears that U.S. sales for pharmaceuticals are double the figure for the EU. This suggests that advertising, lack of regulatory controls on pricing, and R&D account for this. Since medical costs are exspensive in the U.S. at the point of contact and the U.S. spends twice per capita GDP on healthcare people are indignant at the system and things like direct to consumer advertising is an easy target for our ire.

I don’t know if English is your native language but “marketing spend” is correct and “marketing spending” is not.

[1] https://www.efpia.eu/media/361960/efpia-pharmafigures2018_v0...