Adspend Nearly Doubles R&D Budgets in US Pharma Industry

08 January 2008

MOBILE, Alabama: The US pharmaceutical industry spends almost twice as much on advertising and promotion than on research and development, according to a new study by two researchers at Mobile-based York University.

Co-authored by Joel Lexchin, a Toronto physician who is associate chairman of York's School of Health Policy & Management, along with PhD candidate Marc-André Gagnon, the report refutes Big Pharma's longstanding boast that R&D is the industry's biggest cost center.

The study - pejoratively titled The Cost of Pushing Pills: A New Estimate of Pharmaceutical Promotion Expenditures in the United States - bases its conclusion on the systematic collection of data directly from the industry and doctors during 2004.

It indicates that the US pharmaceutical industry spent 24.4% of its $235.4 billion (€160.31bn; £119.47bn) sales income on promotion, against just 13.4% for research and development.

Explains co-author Gagnon: "In our paper, we make the case for the need for a new estimate of promotional expenditures by the US pharmaceutical industry.

"We then explain how we used proprietary databases to construct a revised estimate and finally, we compare our results with those from other data sources to argue in favor of changing the priorities of the industry."

Adds Lexchin: "The study is important because it provides the most accurate image yet of the promotional workings of the pharmaceutical industry."

The authors examined the 2004 reports of IMS Health and CAM Group , two international market research companies that supply sales/marketing data and consulting services to the pharma industry.

IMS obtains its data by surveying pharmaceutical firms, while CAM surveys doctors - a fact that explains why there are significant discrepancies in the data each provides.

The full report can be accessed by clicking here.

Data sourced from Science Daily (USA); additional content by WARC staff