Update #1: An Idea of Scale– Big Pharma in America

I am a little over a third done my research this summer and need to provide a much-needed update! So far, I have looked at roughly 55 sources in forms of documentaries, YouTube videos, newspaper and magazine articles, government reports, and research studies. Because of this extensive research so far, I plan to devote a lot of my remaining time to sorting through this and making it more understandable.

As referenced above, one of the issues I have faced so far is the sheer quantity of information. To further narrow my research into this massive topic, I am focusing solely on the marketing practices surrounding prescription drugs in the United States, with attention to three focus groups: consumers, medical professionals, and pharmaceutical companies.

Pharmaceutical advertising is unbelievably influential in our society. It comes in a variety of forms including direct-to-consumer advertising (DTCA), advertising to doctors, advertising to medical students, and paying for research costs (this research ending up in medical journals!). As time progresses, advertising spending increases annually with recent focus on bronchitis, emphysema, blood clots, rheumatoid arthritis, psoriasis, cancer, inflammatory diseases, and HIV. The great majority of this spending is by the top 13 pharmaceutical companies which includes Johnson & Johnson, Novartis, Roche, Pfizer, and Merck. These companies represent what is commonly referred to as “Big Pharma.” Last year alone, the pharmaceutical industry spent $6.46B on advertising, according to Kantar Media. $1.52B of this was spent by Pfizer.

Prices per pill for many prescription drugs in the United States are much higher than that of other countries. Part of this is because international governments can negotiate directly with branded companies, sometimes even threatening to disallow a certain drug to be sold in that country. In the United States, our government lacks this power and has laws in place to prevent this. Instead, independent pharmacy benefit managers negotiate with pharmaceutical companies, but tend to lean towards higher prices. Their negotiating power is substantially less than that of a government abroad. Another reason cited by many of my sources for these higher domestic prices is the high amount spent on marketing.

Something interesting that I’ve found so far is that these Big Pharma companies typically spend more on marketing than on research and development each year. Additionally, the marketing expenditures on annual reports of these companies do not tell the full story. Marketing techniques often leak slightly into R&D. Included in the research and development expenditure is the cost of trials, and repeating these trials until a desired result is achieved. Additionally, drug evaluation by doctors is sometimes included in the R&D expenditures, but also plays a role in marketing in terms of getting a name out for a drug and increasing word-of-mouth familiarity.

DTCA can further be broken down into print ads, television commercials, and ads that appear on the radio or internet. The FDA has strict guidelines and regulations concerning these ads, but unfortunately, many ads still contain misleading information. Frequently, consumers believe that the FDA approves commercials and ads before they air, but this is not the case. Instead, they can review an ad when it goes public, but not before unless the pharmaceutical company asks for a consultation. Because ads permeate every orfice of our society and influence the decisions of consumers and medical professionals alike, misleading information is dangerous to the public. Of course, these marketing techniques also have their benefits, like encouraging consumers to seek professional medical advice, which I hope to write more about next week!

This is just a bit of what I’ve been looking into! As you can see, the topic at hand is quite broad with many ideas to cover. My plan is to continue researching and discovering next week, answering my original questions with more quantitative data and expanding my information library. I will devote my last week to finishing my research, organizing my information, and preparing my poster and presentation. I’m excited to continue expanding this knowledge of the industry and diving into more information in the coming weeks!