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Paul Krugman’s ‘Serious Drug Problem’ is based on bad statistics

New York Times economist continues paper’s reliance on incorrect information about drug research costs.

By Dan Gainor
May 6
, 2005

     Once the New York Times latches on to bad information, it just keeps recycling it. Economist Paul Krugman did just that in a May 6, 2005, column, headlined “A Serious Drug Problem,” detailing what he considers to be problems in the health care system.

     Krugman relied on information in a book by Marcia Angell, the former editor in chief of The New England Journal of Medicine. That book, “The Truth About the Drug Companies,” has been criticized for the very information Krugman cited.

     According to the column, Angell “shows convincingly that drug companies spend far more on marketing than they do on research - and that much of the marketing is designed to sell ‘me, too’ drugs, which are no better than the cheaper drugs they replace.”

     A study by Tufts University’s Center for the Study of Drug Development, an academic nonprofit research group, showed that Angell, and now Krugman, relied on poor information. Tufts’ center estimated a seven-year process for bringing a new drug to market and they studied the costs involved in that process. The most recent update to that study, in 2001, estimated $802 million for a single new drug.

    Krugman’s reliance on Angell’s information ignores other realities of the pharmaceutical industry, including:

  • What Angell calls “marketing costs” includes administration, which includes everything from salaries to buildings.
  • Figures for 2003 show more than $33 billion spent on R&D, more than $8 billion higher than total marketing expenses, with only $3.3 billion of that in direct-to-consumer advertising.

     This isn’t the first time The Times has repeated this information as fact. 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.”

     The Krugman column added that “It should be possible to pay less for medicine, yet encourage more real innovation.” It should indeed, yet many critics of the pharmaceutical industry complain about costs while simultaneously arguing for longer and more detailed FDA trials and regulations.

     Krugman has authored numerous articles and, according to his own Web site, 18 books including, “The Age of Diminished Expectations” in 1989. By continuing to promote bad information, he is adding to the diminished expectations for the American media.


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