Analysis Finds Industry Spending on Advertising, Overhead and Profits More Than Double Funding for R&D
Washington, D.C. – The Campaign for Sustainable Rx Pricing (CSRxP) released the findings of a study Wednesday that found the largest pharmaceutical manufacturers in the U.S. spend just 22 cents out of every dollar on research and development (R&D). The study, conducted in partnership with GlobalData, also found Big Pharma spending on advertising, corporate overhead and profits is more than double funding for R&D.
“Big Pharma likes to hide behind R&D as an excuse for price-gouging American patients and exploiting monopolies, but the math just doesn’t add up,” said CSRxP executive director Lauren Aronson. “Big Pharma is investing more boldly in profits, advertising and corporate overhead than in researching new cures.”
The CSRxP study analyzed revenue allocation by six categories for the ten largest U.S.-based pharmaceutical and biotech companies:
The findings demonstrate Big Pharma spends more on advertising, corporate overhead and profits (46 percent) than R&D (22 percent) by a margin of two to one.
Pfizer was the worst offender, spending just over 14 percent of revenue on R&D, nearly eight percent less than the Pharma giant spent on advertising alone and a whopping 67 percent less than the company allocated for advertising, corporate overhead and profits combined.
Three manufacturers banked more in profits than they invested in R&D, including Biogen, Gilead and Pfizer. Pfizer pocketed profits at a rate nearly three to one what the company invested in R&D.
“Big Pharma has hidden behind the R&D defense and blamed others for the crisis of rising prescription drug prices,” Aronson continued. “It’s important lawmakers and the public see through Big Pharma’s mile wide and inch deep rhetoric to hold the industry accountable with market-based solutions to increase competition and crack down on anti-competitive practices.”
The study follows a run of Big Pharma companies besting earnings forecasts in the first three months of 2019 and recent reports the industry is increasing spending on advertising.
The CSRxP and GlobalData study combined publicly available financial disclosures with market research on sales and marketing spending for the ten largest U.S.-based pharmaceutical and biotech companies for which prescription drug sales represented at least half of revenue (AbbVie, Amgen, Biogen, Bristol Myers-Squibb, Celgene, Eli Lily, Gilead, Merck, Pfizer and Regeneron). More information is available here.