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3/7/2006 10:10:00 PM

Updated 02/24/06

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Continue to Attack Drug Companies with Misinformation

By Amy Menefee
March 9, 2005

     Your mother might have told you that if you say something enough times, youll start to believe its true. And while thats fine if youre trying to build a little-engine-that-could mentality in a six-year-old, its not okay for grown-ups trying to do journalism.

     No, grown-ups need facts, and those facts are often backed up by numbers. Thats where things can get dicey. Reporters shouldnt take numbers from any side in a debate without checking them out. But if you decide something is true and keep repeating it in the news, people will believe you.

     New York Times reporter Gardiner Harris did just that in a March 4 story in which he declared without attribution that The drug industry has long spent billions of dollars annually far more than it spends on research trying to persuade doctors to prescribe its pills.

     Thats just not true. Numbers reported by the companies themselves reveal the opposite. And marketing can mean lots of things including drug samples that actually reduce prescription costs for patients who need to try new drugs. Tufts Universitys Center for the Study of Drug Development, an academic nonprofit research group, publishes a yearly study on the pharmaceutical industry. In its Outlook 2005, the center estimated a seven-year process for bringing a new drug to market. Tufts has also conducted several studies to determine the average cost of bringing a drug to market. The most recent update to that study, in 2001, estimated $802 million.

     Figures reported by member companies of the Pharmaceutical Research and Manufacturers of America (PhRMA) for 2003 show more than $33 billion spent on R&D. In contrast, total marketing expenses were reported at $25.3 billion, with only $3.3 billion of that in direct-to-consumer advertising.

     Broadcast news coverage of Marcia Angells recent book release is probably the greatest source of misinformation about this subject. Angell, an M.D. who previously edited The New England Journal of Medicine, authored The Truth About the Drug Companies: How They Deceive Us and What to Do About It. She made the rounds on the broadcast circuit when the book was released in the fall of 2004.

     In one chapter of her book, Angell dismissed Tufts figures on bringing new drugs to market and came up with her own, even though she admitted she doesnt have the information needed to make such an estimate. She proceeded to shave about $600 million magically from the industrys estimate. Her fuzzy-math solution was to take an industrywide total for one years R&D costs and divide by the number of new drugs put on the market. This calculation is absurd. For one thing, it does not allow for the multi-year process required to develop a drug and bring it to market. Also, Angells marketing figures are inflated, because she combined direct-to-consumer advertising with all other forms of marketing, including prescription samples, and administrative costs.

     But one great thing about America is that you can write a book and the book tour will follow. In Angells case, on Sept. 2, 2004, NBCs Today gave her free rein to promote her ideas in September with no one questioning them. She lumped together marketing and administration in her assessment. That meant she combined the seemingly countless costs of running a business with the marketing of the products. Then she said drug companies spend far less on research and development. In fact, her appearance on the show was devoted to hammering the point that drug companies actually spend less than they make in profits. Imagine a public company trying to make a profit.

     Angell also criticized the amounts and percentages spent on R&D on CBS Sunday Morning, Oct. 10, 2004. CBS reporter Martha Teichner, however, is to be commended for using a realistic figure: $3 billion in direct-to-consumer drug advertising.

     Of course, all of this is based on criticizing a company for being profitable. On ABCs Oct. 12, 2004, Nightline, Ted Koppel and Jake Tapper painted a picture of an America where people are choosing between buying food and buying prescriptions and pointed to the drug companies as the culprit. Tapper even suggested that price controls were the answer, tying the lower cost of drugs in Canada to that system.

     Although Angell was already interviewed extensively in the report, Tapper reiterated her points when interviewing Alan Holmer, then head of PhRMA. To Tappers credit, he did pose the question, Whats wrong with profits? However, he did not follow up on Angells answer: Well, you cant make the case that your prices have to be high to cover R&D if your profits are greater than the R&D. This was another criticism (using wrong figures) of the percentage spent on R&D, while all parties ignored the simple laws of supply and demand.

     Whats the result of such stories? The Washington Post reported last month on a study by the Kaiser Family Foundation, stating that 70 percent of respondents think the pharmaceutical companies are more concerned about making profits than developing new drugs. When it came to trusting drug companies justification for research, 81 percent did not believe the companies are putting as much money into research as they say. It seems as if Dr. Angells version of the truth, passed on through the media, has circulated widely.


  • Demonizing Drugmakers: The Political Assault on the Pharmaceutical Industry by Doug Bandow, senior fellow at the Cato Institute:

  • Improving Health Care: A Dose of Competition, a July 2004 report from the Federal Trade Commission and the Department of Justice:

  • This is the link to the Tufts' 2005 Outlook:

  • This is the link to the Center for the Study of Drug Development home page.


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