Analysis Says U.S. Pharmaceutical Promotion Expense Doubles That of R&D

Drug companies spend nearly twice as much on marketing in the U.S. as they do on R&D, according to a new study appearing in the January 2008 issue of PLoS Medicine.

After analyzing data from market research firms IMS Health and CAM Group, researchers found pharmaceutical companies spent $57.5 billion in domestic marketing in 2004. The National Science Foundation found companies spent $31.5 billion on pharmaceutical R&D spending that year.

These findings counter earlier assertions that industry spending is more balanced. The study cites claims by PhRMA and a 2002 Government Accountability Office report that concluded pharmaceutical companies spend more on R&D than promotions. Instead, the researchers say, as a percentage of the industry’s $235.4 billion in U.S. sales, promotion takes up 24.4 percent of the sales dollar compared with 13.4 percent for R&D.

IMS and CAM collected data differently, so they reported different totals for promotional spending. IMS’ figure was $27.7 billion, while CAM reported that companies spent $33.5 billion. While both companies cited the same amounts spent on direct-to-consumer advertising, they had “major differences” in amounts spent on detailing and samples, the study says.

However, the researchers note even the revised figure is “likely to be incomplete” as other expenses should be included as marketing, such as off-label promotion, ghostwriting and promotion through educational grants. These methods may not have been included in IMS’ or CAM’s totals.

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