[complaintdept]

Pharma spends more on marketing drugs than developing them. If marketing drugs is prohibited, especially through dubious kickback schemes with doctors and hospitals, there'd be a lot more room for lowering prices.

The profit motive really doesn't deliver great outcomes in medicine, between the enormous information asymmetry between patient and doctor (and even other doctors), doctors with perverse financial incentives, and believing (whether it's true or not) that your life or wellbeing are on the line if you're wrong, it's ideal for all sorts of chicanery. (/rant)

[LorenPechtel]

I do agree there would be a benefit from removing the marketing. But the benefit would be little more than what is spent on said marketing.

It comes back to the same thing--where is the money going to come from? Few medicines actually have a high per-unit production cost. The cost is usually mostly amortizing R&D and the production equipment. (And looking at R&D overall--you have to count the spending on the failures as well as on the successes.) Sell fewer pills and you don't cut that R&D cost, you just distribute it across fewer pills.

[a_puppy]

Hmmm, the marketing question is complicated and I'm not sure what to think.

From a profit point of view, presumably the advertising department pays for itself; in other words, the advertising department generates money for the R&D department, rather than taking money from the R&D department.

But, the advertising presumably increases the number of people taking the drug. If it's teaching patients/doctors about a valuable new drug that will make peoples' lives better, then it's a social good. But if it's persuading patients/doctors to buy the drug unnecessarily, then it's a waste.

(Also, sometimes two pharma companies have competing drugs that are basically equivalent. So they get trapped in a "Red Queen's race" where they both spend money on advertising to try to gain market share. In the end they've both spent a bunch of money on ads and ended up back where they started. For those cases, banning marketing would be a clear win.)

Edit: Also, keep in mind that "ban/regulate pharma advertising" is a different proposal than "medicare negotiation".

[sudosysgen]

You're thinking at the level of one drug. But that's not the right level, it misses too many second order effects.

If someone is sick, they've likely been diagnosed by a doctor, who will treat them. This is how the consumer will know at all they might want to take the drug.

So the effect of the advertisement is to change the course of treatment as the consumer will ask their doctor for that drug ("ask your doctor if $drug is right for you"), and a doctor needs to prescribe it to begin with.

So the "Red Queen's Race" is not a sometimes. It's in fact almost always the situation at hand, generally between multiple courses of treatment.

We can observe from countries with no prescription drug advertising and similar levels of development that health outcomes are broadly similar. So we can be quite confident that this kind of advertising doesn't lead to significantly more appropriate treatment in aggregate, and it's therefore most likely to be a race to the bottom.

[a_puppy]

I'm not an expert on this stuff, so I'm not sure what's the answer. But this article says that about 90% of pharma marketing dollars are spent on marketing to doctors, not to consumers: https://www.pewtrusts.org/en/research-and-analysis/fact-shee... So it seems like pharma companies are mostly spending money on R&D and on advertising to doctors, not on direct-to-consumer advertising.

[sudosysgen]

This is not true anymore, as advertising to patients has been the major driver of growth, perhaps due to Medicare and the rise of expensive biologics, leading to advertising to consumers becoming the predominant sink.

In 2016, pharma companies spent more on direct to consumer ads than they spend on marketing to doctors (excluding free samples, which are somewhere in between, though ultimately the drug being free is really of concern to the patient far more than the doctor), see: https://jamanetwork.com/journals/jama/fullarticle/2720029

In 2016, we have 9.6 billion in direct-to-consumer spending, 13.5 billion in free samples, and 6.8 billion in everything else. So clearly, advertising to consumers is the dominant venue.

[sydbarrett74]

That hasn't been true for awhile, mostly since it's now illegal to send doctors on expensive junkets or offer more than the smallest dollar amount inducements. So Big Pharma has intensified D2C marketing, where they can exercise much more leverage and prey on the relative ignorance of the average person.

[lathiat]

In Australia, prescription drugs generally cannot be advertised to consumers. Additionally, prescriptions for all drugs are written in the generic drug name form and not the branded form.

That said, where this currently seems to fall apart is the pharamacies.. most only stock a single "brand" and pricepoint for many drugs, two at most. Most pharamcies aren't online so you can't easily compare prices. In practice, I have frequently observed over many different prescriptions a price different of 1-2x between pharamcies in the same area for the exact same thing and dosage. Additionally, the way we fill scripts here you don't even get the price until you go to pay and theyve already labelled your box with your script, etc.

There's also largely no pricing on the shelves, even if you can see the behind the counter ones.

The only thing that saves us, is that "many" but not all drugs are subsidised by our public health care and the government negotiates the price. But for any non-subsidised drug it's open season and also much of the pricing is "per dispense" and not at all related to the drug quantity.

e.g. 4x10mg or 28x5mg of the same drug has the same price.

Also recently the much-publicised Ozempic which is used for weightloss and diabetes which is $150/dose here, because the price is fixed by that government negotiated price for diabetic patients but off-label prescribers get the same price even when not subsised by the government and they actually have to pay the full $150. They launched the literal exact same drug for weight loss as "Wegovy" but they vary the recommended dosages a little so that in practice you can't cross-fulfill the prescription. The exact same 1mg is $150 when sold as Ozempic and $250 when sold as Wegovy :) And for some straight reason the weight loss dose is "2.8mg" but the diabetic doses are 1mg and 3mg.

[Loughla]

I hear that a lot, but have never seen numbers. Googling it doesn't help me either. Would you know of any resources?

[js2]

Derek Lowe is as good a source as any (he works as a research scientist but I've always believe writes in good faith):

https://www.science.org/content/blog-post/don-t-drug-compani...

Pharma companies spend about 2x on sales and administration as they do on R&D. However, this compares favorably to large tech companies where the ratio is closer to 2-8x.

So yes, the statement that "pharma companies spend more marketing drugs than developing them" seems strictly true, but lacks context. Therefor, I rate this claim: mostly true. :-)

[mandmandam]

I think the main difference there is that tech companies don't spend 67% of their marketing money schmoozing your doctor.

Of the $30 billion that Pharmas spends marketing in the US, $20bn is aimed at doctors.

There's about a million doctors in the US.

That's ~$20,000 per doctor, each of whom has a significant degree of implicit trust and authority.

Even if a doctor believes they are not swayed by marketing, studies have shown that these efforts can subconsciously affect their decisions.

And $20k/year/doctor just seems awfully high. There must be a more efficient way to help doctors make those sorts of decisions...

***

Responding by edit due to rate limit:

> Who else should they advertise to then?

No one. It's not a brand affiliation issue, it's a facts and awareness issue. Doctors can read journals and papers and peer reviews just fine!

There's no need for them to be told what to do on paid Hawaiian vacation weekends in 5 star hotels. You can see why they prefer things this way though.

> it is morally worse to advertise and influence people who don't know any better.

So don't.

[tomohelix]

Who else should they advertise to then? The consumers aren't knowledgeable enough to make the decision on which drug they should take. Doctors are the only one qualified.

In fact, it is morally worse to advertise and influence people who don't know any better. At least, doctors are educated and it is their duty, both ethically and professionally, to learn about new drugs that best treat their patients. That is the whole point of a Medical Science Liaison. They are the "advertisers" for a pharma to make sure doctors know about the drug their companies make.

Mind you, at this level, advertising is a bit different. These MSLs are legally required to disclose both the indicators and the side effects and have strict rules in what they are allowed to give and say to doctors. There are hundreds of laws in place to prevent corruption/bribery. Of course there are bad actors everywhere, but at least, it is more regulated than Congress's "lobbying" and Supreme Court's "gifts".

[FireBeyond]

The US and NZ are the only two countries in the world that allow direct-to-consumer advertising of prescription medications - and New Zealand is trying to get rid of it (and only allowed it following pressure from the US for a trade agreement).

[tomohelix]

You can't gift doctors a paid vacation, there are rules and laws already in place. Also, MSLs are not simply "salepeople". They often require a PhD so their job description is more about "spreading knowledge" than "advertising" a drug.

Like it or not, having an expert in the hospital who know everything there is about a specific drug is a lot more effective than requiring every doctor to read about every new drugs. By your argument, this type of job should be removed and doctors are responsible for finding out about new drug themselves.

Maybe that is better, maybe not. But the first thing that would happen is adoption rate of new treatment would drop and people who would otherwise recover may die because their doctors were too busy trying to treat people instead of reading journals.

[mandmandam]

> You can't gift doctors a paid vacation

They don't call it a vacation, they call it a conference.

An hour or two of "information sessions", with a big goody bag, and 2 or 3 days of fine dining, tours, and golf; all held in a plush 5 star hotel at $500 / night or more with all travel included.

> there are rules and laws already in place

What rules there are are not enforced. The regulatory office is flooded [0]:

"With the risks clear, Schwartz and Woloshin took a look at regulatory activity by the Food and Drug Administration and Federal Trade Commission and state attorneys general. They found a lackluster response to the skyrocketing medical marketing across the board. In fact, the FDA’s Office of Prescription Drug Promotion, which regulates consumer and professional promotional material, actually saw a decrease in regulatory activity. Though submissions increased from 34,182 in 1997 to *97,252* in 2016, violation letters dropped from 156 to *11* in those respective years. The finding “suggests the possibility of less oversight,” the authors conclude, possibly because FDA reviewers may be “overwhelmed by the massive increase in promotional submissions.”

Emphasis added.

> Like it or not, having an expert in the hospital who know everything there is about a specific drug is a lot more effective than requiring every doctor to read about every new drugs.

Do you think unbiased third party sources can't perform this role? And having an expert in every hospital is not what we're talking about [0].

If you think these companies are spending twenty thousand dollars per doctor per year just to better educate them and get better outcomes, I don't know what to tell you. That's a lil naive bud.

To take just one example of many: Remember Purdue? Remember how they told doctors that their new form of opiates (Oxycontin) was non-addictive and so much safer? ... Remember how few doctors made noise about this, compared to the massive number who swallowed it whole and prescribes the shit like candy? Remember how those brave doctors were ruthlessly and relentlessly smeared, and how Purdue got away with all this despite there being mountains of evidence for so, so long?

> the first thing that would happen is adoption rate of new treatment would drop and people who would otherwise recover may die

To me that just sounds like scare mongering and an imagination deficit. There's better ways of doing this, and no excuse for the current system.

0 - https://arstechnica.com/science/2019/01/healthcare-industry-...

[HeatrayEnjoyer]

At that price they might have teams dedicated to groups of a few dozen doctors, perfecting the company's manipulation to each of the doctors' personality. Somehow for-profit pharma always finds a way to be even more horrifying...

[mandmandam]

They are already doing this, without doubt.

They identify thought leaders, analyze their data (who knows what data and how they analyze it?) to identify the best approaches, and have salesfolk and MSLs assigned to specific doctors, all to build relationships with tailored approaches and proven strategies. This is coupled with gifts disguised in various ways.

It bears repeating: submissions to the FDA’s Office of Prescription Drug Promotion, which regulates consumer and professional promotional material, hit 97,252 in 2016. This resulted in 11 violation letters.

Ninety-seven thousand submissions. Eleven violation letters. No typo.

$20k/doc/yr.

There may be more recent stats; I'm not finding them right now.

[credit_guy]

Here's a report from the Congressional Budget Office [1] that states that as of 2019 the Pharma industry in the US spent $83 Billion on R&D. And here's a Statista link with the total Pharma advertising in the US per month. About $1.1 BN, which would annualize to less than $15 BN per year.

So no, the Pharma industry does not spend more on advertising than on R&D, not even close.

[1] https://www.cbo.gov/publication/57126

[2] https://www.statista.com/statistics/1407234/pharma-ad-spend-...

[js2]

You're not comparing the same numbers as Lowe did. So first thing, I was just summarizing what Derek Lowe wrote in 2013. If you click through, what he's comparing is SG&A to R&D. Quoting his post:

We're talking SG&A, "sales, general, and administrative". That's the accounting category where all advertising, promotion and marketing ends up. Executive salaries go there, too, in case you're wondering. Interestingly, R&D expenses technically go there as well, but companies almost always break that out as a separate subcategory, with the rest as "Other SG&A". What most companies don't do is break out the S part separately: just how much they spend on marketing (and how, and where) is considering more information than they're willing to share with the world, and with their competition.

That means that when you see people talking about how Big Pharma spends X zillion dollars on marketing, you're almost certainly seeing an argument based on the whole SG&A number. Anything past that is a guess - and would turn out to be a lower number than the SG&A, anyway, which has some other stuff rolled into it. Most of the people who talk about Pharma's marketing expenditures are not interested in lower numbers, anyway, from what I can see. So we'll use SG&A, because that's what we've got.

What he found is that SG&A spending was about twice R&D spending in 2013, then compared that ratio (2x) to large tech companies where the ratio was even worse (up to 8x).

For the pharma companies, SG&A was about 30% of revenue while R&D was anywhere from 12.5%-25% of revenue. (See his post I linked for the exact numbers he used.)

Now, looking at your CBO report, one thing I note is this tidbit:

The share of revenues that drug companies devote to R&D has also grown: On average, pharmaceutical companies spent about one-quarter of their revenues (net of expenses and buyer rebates) on R&D expenses in 2019, which is almost twice as large a share of revenues as they spent in 2000.

So R&D spending as a percent of revenue has increased to 25% industry wide since Lowe's post where it seemed to be a bit lower.

Search for SG&A spending in the pharma industry, I ended up like you did at statista:

https://www.statista.com/statistics/266321/sganda-to-sales-r...

The range is 38%-52%. So SG&A spending (50% of revenue) is still about 2x R&D spending (25% of revenue), with the numbers being a bit better than when Lowe wrote his post in 2013.

Now, whether SG&A is the right number to use as a stand-in for advertising, I don't know. I was just going by what Lowe wrote since he works in the pharma industry and is a well-respected name on this site.

[credit_guy]

> Now, whether SG&A is the right number to use as a stand-in for advertising, I don't know.

It is not. SG&E [1] includes a lot of things, including all labor costs (all the salaries for all the employees) and all rent.

As an example, Novo Nordisk, the maker of Ozempic, has annual operating expenses of about $20 billion and in 2023 launched an advertising campaign for Ozempic/Wegovy of a bit less than $0.5 billion/year.

[1]https://en.m.wikipedia.org/wiki/SG%26A

[2]https://www.macrotrends.net/stocks/charts/NVO/novo-nordisk/o....

[3]https://www.opensecrets.org/news/2024/07/ozempic-producer-no....

[js2]

> SG&E [1] includes a lot of things, including all labor costs (all the salaries for all the employees)

Lowe addresses that: Interestingly, R&D expenses technically go there [SG&A] as well, but companies almost always break that out as a separate subcategory, with the rest as "Other SG&A"

[complaintdept]

https://www.washingtonpost.com/news/wonk/wp/2015/02/11/big-p...

https://www.ahip.org/news/articles/new-study-in-the-midst-of...

I'm sure there's plenty more out there.

[sudosysgen]

This is especially true since marketing drugs is essentially a negative sum game, it's banned in most developed countries with no discernible drawback.