Pharmaceutical advertising accounts for high costs

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Pharmaceutical Advertising Works, But At What Cost?; BlueCross BlueShield of Tennessee Finds Prescription Drug Spending Spurs Escalating Health Care Costs. | Health Care > Health Care Regulation & Policy from AllBusiness.com

Drug companies spent $2.5 billion on direct-to-consumer ads in 2000, a 35-percent increase from the $1.8 billion spent in 1999. Merck & Company's Vioxx was the most-heavily advertised drug and accounted for more of last year's increased drug spending than any other single drug. Merck spent $160.8 million to promote Vioxx to consumers - more than ,more>PepsiCo spent to advertise Pepsi or Budweiser spent to advertise its beer, the study said.

 

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Off the Charts: Pay, Profits and Spending by Drug Companies.
Refuting industry claims that high drug prices are necessary to sustain research and development efforts.

LINKS HIGH DRUG PRICES TO ADVERTISING, PROFITS, AND ENORMOUS EXECUTIVE SALARIES

Washington, D.C. - A new report by the consumer health organization Families USA refutes the pharmaceutical industry's claim that high and increasing drug prices are needed to sustain research and development. The report documents that drug companies are spending more than twice as much on marketing, advertising, and administration than they do on research and development; that drug company profits, which are higher than all other industries, exceed research and development expenditures; and that drug companies provide lavish compensation packages for their top executives.

The report comes on the heels of a recent Families USA analysis that found prices rose more than twice the rate of inflation last year for the 50 most-prescribed drugs to seniors.

Among the nine pharmaceutical companies examined in the report - Merck, Pfizer, Bristol-Myers Squibb, Pharmacia, Abbott Laboratories, American Home Products, Eli Lilly, Schering-Plough, and Allergan - all but one (Eli Lilly) spent more than twice as much on marketing, advertising, and administration than they did on research and development, and Lilly spent more than one and one-half times as much. Six out of the nine companies made more money in net profits than they spent on research and development last year.

Pay, Profits and Spending by Drug Companies