Do Big Pharma Profits = Better Medicine?

A common refrain from the Pharma companies is that without sky high US drug prices they could not afford to innovate and produce new cures and improved medical treatments. Patients will die if they lose the incentive and funds to innovate. Is M4A an innovation killer? Will we be condemning future patients to die because the cure they need won’t be invented by some Pharma research lab?

You first might want to take a look at what Big Pharma actually does with the money it makes and borrows. Goes into new advances in medicine right? Not so much.

“from 2006 through 2015, the 18 drug companies in the Standard & Poor’s 500 index spent a combined $526 billion on buybacks and dividends”--an amount that exceeded by 11% the companies’ R&D spending of $465 billion during these years.

More money goes to line the pockets of executives and shareholders then to R&D, then there is marketing:

Nine out of 10 major pharmaceutical companies spent more on sales marketing than researching new drugs.

A lot of this marketing is spent on doctors to influence doctors prescription decisions. 

In a recent JAMA study, Larkin and his team found that when gifts were removed from the equation, "there were reductions in the proportion of branded [versus generic] drugs prescribed after the pharmaceutical detailer couldn't give gifts anymore. We think it's pretty clean evidence that the gifts actually influence doctors," and he says "the reductions were pretty large.

Then there is the $$$ spent on lobbying:

New reports show just how significant that amount of money was for 2018. Last year, more than $220 million was spent attempting to sway lawmakers.

The fact is much of the cost of innovation in medicine is not paid by Pharma companies:

In reality, it is the federal government that funds 84 percent of initial drug research, and charitable organizations additionally contribute on top of that. A recent study showed that all 210 of the new drugs approved by the FDA between 2010 and 2016 were funded by the National Institutes of Health.

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And drug companies’ contributions to R&D are even slimmer when considering government tax credits that come with these expenditures, which can reduce corporate costs by almost 50 percent.

And while the drug industry purports to focus on cures for Alzheimer’s, rare cancers, and other neglected diseases, it actually prioritizes “me-too” drugs (tweaks of competitors’ medications introduced simply to gain market share) and drugs for non-life-threatening conditions like male baldness. Seventy-eight percent of patents recently approved by the FDA were for medications already on the market; and only 1 percent of R&D funding was allotted to rare and neglected diseases between 2000 and 2011.

Not only is big Pharma wildly inflating what it spends to bring new drugs to the market but most of the drugs it brings to market add nothing to patient welfare. When it comes to R&D a quick buck will win out over what patients need 100% of the time. No wonder they spend so much influencing what doctors prescribe.

From a German study of new drugs and treatments:

Alarmingly, only a quarter of those drugs showed any significant medical added benefit based on the available evidence. What’s more, 16% showed even a minor added benefit, and a whopping 58% of studied drugs did not show any added benefit over standard patient care.

Those inspirational TV ads showing Pharma researchers bringing us better medicine are pure BS. What Parma companies are really good at is generating cash for execs and shareholders and pushing redundant or ineffective, and often dangerous treatments into the market because it’s cheaper and generates more profit than delivering real innovation. Innovation for patients health? Not a priority. 

Amazon outspends any of the drug companies on R&D, with profit margins that are a fraction of any Pharma company. Automobile manufacturers spend as much as Pharma on R&D with much lower profit margins. And those industries don’t benefit from large amounts of government and charity funded research as well as huge tax breaks for research.

Big Pharma is running a scam. They could operate like any other industry today, all of whom must innovate or die, while living with fiercely competitive pricing. But why do that when you can milk the suckers for $$$billions. It’s a system that is totally corrupt, incredibly expensive and wildly inefficient. M4A and the reigning in of Big Pharma’s power can’t come soon enough.