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The Cost of Pushing Pills: a New Estimate of Pharmaceutical Promotion Expenditures in the United States Marc-André Gagnon*, Joel Lexchin

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The Cost of Pushing Pills: a New Estimate of Pharmaceutical Promotion Expenditures in the United States Marc-André Gagnon*, Joel Lexchin View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by PubMed Central Policy Forum The Cost of Pushing Pills: A New Estimate of Pharmaceutical Promotion Expenditures in the United States Marc-André Gagnon*, Joel Lexchin n the late 1950s, the late and the critics’ portrayal of an The number of promotional meetings Democratic Senator Estes industry based on marketing-driven has increased dramatically in recent IKefauver, Chairman of the profiteering. years, going from 120,000 in 1998 to United States Senate’s Anti-Trust IMS, a firm specializing in 371,000 in 2004 [6]. In 2000, the top and Monopoly Subcommittee, put pharmaceutical market intelligence, ten pharmaceutical companies were together the first extensive indictment is usually considered to be the spending just under US$1.9 billion on against the business workings of the authority for assessing pharmaceutical 314,000 such events [7]. Third, IMS pharmaceutical industry. He laid three promotion expenditures. The US does not include the amount spent charges at the door of the industry: General Accounting Office, for on phase IV “seeding” trials, trials (1) Patents sustained predatory prices example, refers to IMS numbers in designed to promote the prescription and excessive margins; (2) Costs and concluding that “pharmaceutical of new drugs rather than to generate prices were extravagantly increased by companies spend more on research scientific data. In 2004, 13.2% (US$4.9 large expenditures in marketing; and and development initiatives than on billion) of R&D expenditures by (3) Most of the industry’s new products all drug promotional activities” [3]. American pharmaceutical firms was were no more effective than established Based on the data provided by IMS spent on phase IV trials [5]. Almost drugs on the market [1]. Kefauver’s [4], the Pharmaceutical Research and 75% of these trials are managed solely indictment against a marketing-driven Manufacturers of America (PhRMA), by the commercial, as opposed to the industry created a representation of the an American industrial lobby group clinical, division of biopharmaceutical pharmaceutical industry far different for research-based pharmaceutical companies, strongly suggesting that the than the one offered by the industry companies, also contends that vast majority of these trials are done itself. As Froud and colleagues put it, pharmaceutical firms spend more on just for their promotional value [8]. the image of life-saving “researchers in research and development (R&D) than Finally, IMS data seem inconsistent white coats” was now contested by the on marketing: US$29.6 billion on R&D with estimates based on the one of greedy “reps in cars” [2]. The in 2004 in the US [5] as compared to information in the annual reports outcome of the struggle over the image US$27.7 billion for all promotional of pharmaceutical companies. For of the industry is crucial because of its activities.[4] example, in an accounting study based potential to influence the regulatory In this paper, we make the case environment in which the industry for the need for a new estimate of operates. promotional expenditures. We then Funding: The authors received no specific funding Fifty years later, the debate still explain how we used proprietary for this article. continues between these two depictions databases to construct a revised Competing Interests: The authors have declared of the industry. The absence of reliable estimate and finally, we compare our that no competing interests exist. data on the industry’s cost structures results with those from other data Citation: Gagnon MA, Lexchin J (2008) The cost of allows partisans on both sides of the sources to argue in favor of changing pushing pills: A new estimate of pharmaceutical debate to cite figures favorable to their the priorities of the industry. promotion expenditures in the united states. PLoS own positions. The amount of money Med 5(1): e1. doi:10.1371/journal.pmed.0050001 spent by pharmaceutical companies on The Case for a New Estimate of Copyright: © 2008 Gagnon and Lexchin. This is an promotion compared to the amount Pharmaceutical Promotion open-access article distributed under the terms of the Creative Commons Attribution License, spent on research and development is There are many concerns about which permits unrestricted use, distribution, at the heart of the debate, especially in the accuracy of the IMS data. First, and reproduction in any medium, provided the the United States. A reliable estimate IMS compiles its information original author and source are credited. of the former is needed to bridge the through surveys of firms, creating Abbreviations: AWP, average wholesale price; divide between the industry’s vision the possibility that companies may PhRMA, Pharmaceutical Research and Manufacturers of America; R&D, research and development of research-driven, innovative, and systematically underestimate some of life-saving pharmaceutical companies their promotional costs to enhance Marc-André Gagnon is with the Département their public image. Second, IMS does de Sociologie,Université du Québec à Montréal, Montreal, Quebec, Canada. Joel Lexchin is with the not include the cost of meetings and School of Health Policy and Management, York The Policy Forum allows health policy makers around talks sponsored by pharmaceutical University, Toronto, Ontario, Canada the world to discuss challenges and opportunities for companies featuring either doctors improving health care in their societies. * To whom correspondence should be addressed. or sales representatives as speakers. E-mail: [email protected] PLoS Medicine | www.plosmedicine.org 0029 January 2008 | Volume 5 | Issue 1 | e1 in selected locations in the US. From Table 1. Pharmaceutical Marketing Expenditures in the United States in 2004: CAM’s newsletter [10], we obtained Data from IMS, CAM, and Our New Estimate access to data from CAM for the same Type of Promotion IMS (US$ CAM (US$ New Estimate Percent of Total promotion categories as from IMS. In Billions) Billions) (US$ Billions) of New Estimate addition, CAM provided figures for Samples 15.9 6.3 15.9 (IMS) 27.7 the amount of spending on company- Detailing 7.3 20.4 20.4 (CAM) 35.5 sponsored meetings, e-promotion, DTCA (Data provided by CMR) 4 4 4 (CMR) 7 mailings, and clinical trials. Meetings nd 2 2 (CAM) 3.5 We used 2004 as the comparison E-promotion, mailing, clinical trials nd 0.3 0.3 (CAM) 0.5 Journal advertising 0.5 0.5 0.5 (CAM/IMS) 0.9 year because it was the latest year for Unmonitored promotion (estimatea) nd 14.4 14.4 (CAM) 25 which information was available from Total 27.7 47.9 57.5 100 both organizations. We focused on the US because it is the only country for aIncludes incomplete disclosure and omissions by surveyed physicians, promotion to unaudited physician categories, which information is available for all promotion in unmonitored journals, and could possibly include unethical forms of promotion funded out of the firms’ marketing budget. See text for details about this category. important promotional categories. The DTCA, direct-to-consumer advertising; nd, no data US is also, by far, the largest market doi:10.1371/journal.pmed.0050001.t001 for pharmaceuticals in the world, on the annual reports of ten of the promotion expenditures by surveying representing around 43% of global largest global pharmaceutical firms, doctors instead of firms. (In July 2005, sales [11,12] and global promotion Lauzon and Hasbani showed that CAM was merged into the Cegedim expenditures [10,13]. between 1996 and 2005, these firms Group, another market research We asked both CAM and IMS globally spent a total of US$739 billion company.) We chose to compare about the procedures that they used on “marketing and administration.” IMS data to those produced by CAM to collect information on different In comparison, these same firms spent in order to provide a more accurate aspects of promotion. Based on the US$699 billion in manufacturing costs, estimate of promotional spending in answers we received, we determined US$288 billion in R&D, and had a net the US. Other proprietary sources of the relevant figures for expenditures investment in property and equipment data do not break down promotional for samples and detailing. Each of US$43 billion, while receiving expenditures into different categories author independently decided on US$558 billion in profits [9]. and therefore were not used in our which values should be used, based Annual reports, however, have their comparison. on an understanding of the methods own limitations. First, pharmaceutical that the companies used to collect firms are multinational and diversified; Methods the information and the limitations their annual reports provide no According to its Web site (http:// of those methods. Differences were information on how much they spend www.imshealth.com/), IMS resolved by consensus. on pharmaceutical marketing, as provides business intelligence and We queried CAM and IMS about compared to the marketing of their strategic consulting services for the the estimated value of unmonitored non-pharmaceutical products, and they pharmaceutical and health care promotional expenditures. IMS did do not provide information about how industries. It is a global company not provide an answer to this question. much is spent on marketing specifically established in more than 100 countries. In order to validate its estimates, CAM in the US. Second, annual reports IMS gathers data from 29,000 data relies on a validation committee that merge the categories of “marketing” suppliers at 225,000 supplier sites includes representatives from various and “administration,” without worldwide. It monitors 75% of pharmaceutical firms, including delineating the relative importance prescription drug sales in over 100 Merck, Pfizer, Bristol-Myers Squibb, of each. Finally, “marketing” is a countries, and 90% of US prescription Eli Lilly, Aventis, Sanofi-Synthelabo, category that includes more than just drug sales.
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