Posted on: Sunday, August 17, 2003
Drug firms defend rush to advertise and profit
| • | Drug ads changing health landscape |
| • | Biggest marketing cost is selling doctors |
By Deb Price
Detroit News
WASHINGTON — Each televised prescription drug advertisement represents a race to recoup millions in research and development dollars before a drug's patent expires.
While drugmakers have exclusive rights to a patented drug for 20 years, they generally apply for a patent at the start of the lengthy drug-approval process, leaving them with a truncated period — often as little as eight years — to profit from the drug before generics are released, said Jeff Trewhitt, spokesman for the Pharmaceutical Research and Manufacturers of America.
As generic competition intensifies, and research and development costs increase, advertising increasingly has become part of the formula that drugmakers rely on to stay profitable.
"The simple reality is the branded products are the ones that innovate, and (the drug companies) expend an obscene amount of money to get new products on the market," said Eric Dezenhall, an image consultant for several major drug companies.
"If I invest my career, heart, soul and money into developing an innovative drug, it is not an act of diabolical greed to try to make that money back as quickly as possible," Dezenhall said.
Generics can take 80 percent of a successful drug's market share within two years after a patent expires. The use of generics has grown from 19 percent of the market in 1984, when Congress passed legislation that made it easier for generics to get onto the market, to 52 percent today.
"The situation gets complicated by the fact that for every five potential medicines that go into human clinical testing, only one comes out approved," Trewhitt said. "Four are discarded as failures, with no return on investment."
Only three of every 10 medicines on the market will make more money than it took to develop, according to a Duke University study. That means the profitable drugs not only have to make up for losses on the seven unprofitable drugs, they must generate profits high enough to plow back into research and development of new drugs.
However, critics such as Sen. Debbie Stabenow, D-Mich., cite a Families USA study that concluded drugmakers are spending 2› times more on advertising, marketing and administrative costs than on developing new drugs.
Stabenow complains that profits are more likely to be channeled into "me-too" drugs — slight variations on successful drugs that enable the manufacturer to extend a patent and profits without creating anything new.
"The purple pill becomes a pink pill. The daily dose becomes a weekly dose," said Stabenow, who wants Congress to change tax credits for drugmakers so they can't write off more for marketing drugs than what they spent on their research and development.
