It’s deja vu all over again in the ongoing debate of R&D spending vs. promotional spending by the US pharmaceutical industry.
Critics are out again to “prove” that the industry spends much more on promotion than it does on R&D.
Back in 2004, I reviewed the book “The Truth About the Drug Companies: How They Deceive Us and What to do About It,” in which the author Marcia Angell, MD, offered proof that R&D takes a back seat to promotion in the drug industry.
Now, there’s a “new” study by two Canadian authors entitled “The Cost of Pushing Pills: A New Estimate of Pharmaceutical Promotion Expenditures in the United States,” which was recently published in PLoS Medicine.
Their conclusion: The pharmaceutical industry spends almost twice as much on the marketing and promotion of drugs than on research and development (see the story here).
“For the last 50 years, say the authors, there has been an ongoing debate as to which image [see left] of the drug industry is most accurate. The industry promotes a vision of itself, say the authors, as ‘research-driven, innovative, and life-saving,’ but the industry’s critics contend that the drug industry is based on ‘market-driven profiteering.'”
To prove this, the authors use data from 2 different sources: IMS–recently reported to be laying off staff (see “IMS to Cut Jobs“)–and CAM as shown in this table:
Is anyone troubled by the methodology of the authors?
I mean, what could be easier than cherry picking which data to use and to make sure to always use the highest estimate to prove your point, which you obviously believed was true before you even did the “analysis?” I know that certain countries have gone to war based on similar data cherry picking tactics, but to use such techniques to defame the pharmaceutical industry? That’s a crime!
In essence, the authors place more value on the CAM data then on the IMS data. I’m not sure why, since both companies provide services for a fee to the pharmaceutical industry. The main difference between the two company’s methodology is that IMS surveys the industry whereas CAM surveys doctors.
If you ask me, one methodology (IMS’s) overestimates R&D costs and underestimates promotional costs, while the other (CAM’s) is prone to exactly the opposite.
The biggest differences between the datasets involve cost of samples, cost of detailing, and “unmonitored promotion.”
Cost of Samples
There is a large difference between the IMS (US$15.9 billion) and CAM (US$6.3 billion) estimates for cost of samples. Essentially, IMS bases its estimate on the retail value of samples, whereas CAM bases it on the Average Wholesale Price.
Which number would you use?
The PLoS authors use the IMS retail cost estimate because that is how the drug industry itself estimates the value of free samples it gives away! This is just another case where the industry shoots itself in the foot. It’s hard to argue with the PLoS authors’ statement that “it is inconsistent for donations to be reported in terms of retail value and samples in terms of wholesale value.”
Cost of Detailing
The authors point out that “There is a significant discrepancy between the two sets of data in the cost of detailing: US$7.3 billion for IMS and US$20.4 billion for CAM.”
IMS only considers the “cost to field the rep” and doesn’t include in its estimate–as CAM does–indirect costs like costs for the area and regional managers, the cost of the training, and the cost of detail aids such as brochures and advertising material.
The authors claim that “relying on physician-generated data to estimate the amount spent on detailing [which is CAM’s data collection method] is likely to give a more accurate figure than using figures generated by surveying firms [which is IMS’s method]. Companies may not report some types of detailing, for example, the use of sales representatives for illegal off-label promotion, whereas doctors are not likely to distinguish between on- and off-label promotion and would report all encounters with sales representatives.”
I dunno. If it were up to me, I would use a number somewhere in between the IMS and CAM estimate–say $10 billion.
“unmonitored promotion”
I am especially troubled by the $14.4 billion estimate for “unmonitored promotion.” All that the PLoS authors have to say about this is:
“We believe that it is appropriate to correct for unmonitored promotion and that the figure we used is a reliable estimate. The 30% correction factor is based on a direct comparison that CAM is able to make between the data it collects through its surveys and the amount reported by companies.”
May I say that this hardly rises to the level of objective analysis of available data? My analysis would completely discount this number as something that cannot be known and therefore should not be used. Besides, the same could be said for R&D spending and the two estimates would cancel one another.
My “NEW NEW” Estimate
Instead of the estimate of $57.5 billion that the PLoS authors use for promotional spending in the US, my NEW NEW estimate is $32.7 billion, which is pretty close to the $29.6 billion the PLoS authors use for the R&D estimate. This would lead me to conclude that–within the sampling margin of error, the US pharmaceutical industry spends about as much on R&D as it does on promotion. There! Everyone’s happy!
