Big pharmaceutical companies invest billions into research and development, and spend almost double that on sales and marketing.
Case in point: Johnson & Johnson, the epitome of corporate concern for the public good, last year spent 8.2 billion for R&D and 17.5 billion on marketing and sales, i.e. drug pushing. (According to Global Data)
That’s a healthy chunk of money on business costs. Then again, Johnson 2-Xs’, revenue was 71.3 billion for that period. With adjustments for scale, similar returns are shared with other successful pharmaceutical companies.
Without question, big pharma’s business model is enviable.
On the other hand, suspected dealings between drug companies, health professionals and government officials, reeks of extortion, cover-ups and unscrupulous villainy.
And, that’s the thing: the general public is becoming increasingly
pissed-off incensed over the lack of transparency behind prescription drug prices.
Because drug companies products are intended to prevent, cure and treat human sufferings, drug costs and affordability are can become emotionally charged for people who have to struggle to buy their medicine.
Not understanding why a loved one can no longer afford needed meds because of price hikes, gets personal, real fast!
The fear & anger caused by the drug pricing ‘mystery’, is fueled when pharmaceutical execs and employees, get caught breaking rather strict laws governing how they’re allowed to conduct business.
Case in point: Insys Therapeutics…
Insys Therapeutics executives suffered multiple arrests for bribing doctors to prescribe its fentanyl-based pain medication while funding anti-weed campaigns and developing its own lab-made THC drug…”
Stories like this make the public assume pharma drug reps routinely get doctors to prescribe their particular brands with methods like sponsored trips (free vacations), outright gifts, no/low interest loans and fees for speeches that doctors supposedly made over comped dinners, etc.
Legislated rules, both federal and state, forbid use of these sort of marketing methods. Enforcement, in the U.S., by the Food and Drug Administration (FDA), does a decent job, but surveillance is more focused upon safety and compliance of drugs before they’re allowed to hit the street.
Just how widespread brides and similar marketing tactics are used by drug companies, is anyone’s guess.
It’s uncharitable though, to tarnish reputations of individual medical professionals, without tangible proof. Side Hustles Your Doctor Hides From You
On the same time, money is a powerful motivator.
And, when it comes to pharmaceutical company revenues, we’re talking about serious money.
Here’s a list of 2016’s top 10 grossing pharmaceuticals:
- Johnson & Johnson: 70 billion
- Bayer: 51.4 billion
- Novartis: 49.4 billion
- Pfizer: 48.9 billion
- Roche: 48.1 billion
- Merck: 39.5 billion
- Sanofi Genzyme: 34.5 billion
- Gilead: 32.6 billion
- AstraZeneca: 24.7 billion
- GlaxoSmithKline: 23.92 billion
With this kinda money on the table, commonsense suggests that drug company honchos wouldn’t take the risk of sanctioning forbidden gambits to push their drugs. Nor, would their board of directors go along with such policies…
Yet, when a new drug is approved by the FDA, the best place to get a market toehold is ground zero, the people who do the prescribing.
Direct sales material, however slick or sophisticated, is no match for a sales call from an actual person.
Having some experience with face to face selling, I know direct sales is often an emotional business. While long-term success is best achieved when a salesperson established themselves as a trusted consultant, it usually requires some element of emotional connection between both parties.
I suspect that during that process, is when FDA rules are most in jeopardy. Generally speaking though, and despite the Insys Therapeutics scandal, I don’t think drug makers routinely encourage unscrupulous behavior from their sales staff.
Yet, there’s a history of drug company officials deciding to circumvent FDA marketing rules because they’ve correctly figured violation fines are well worth the resultant profits.
Plus, some elected government official whose election campaign had benefited from pharmaceutical company donations, can help negotiate a favorable settlement.
At this point in our narrative, I wanna ask you:
If a drug meets quality control standards, works as advertised, does more good than harm and is priced in accordance to the expectations of the company’s board of directors and within legislative pricing guidelines…
“Doesn’t this sound a lot like the reality of running a successful business?”
When I started researching this post, I expected to discover amoral and machiavellian behavior behind high drug costs and within ‘Big Pharma’s’ business practices.
And, I did discover some.
Overwhelmingly though, that isn’t what I found…
Most drug manufacturers do make a lot of money, even without price gouging, which does go on, but I’ve found it’s a small reason for the overall high costs.
Because of the money they spread around, and their endless lobbying, they do enjoy governmental favoritism.
In the U.S., this cosy relationship allows them to legally get higher drug prices in America than the rest of the world pays. (Watch this space for more about this dishonorable arrangement)
They also risk a lot of money on development, testing and getting FDA marketing approval.
And, they do aggressively market their products…
Yet, except for ‘some’ baldfaced price gouging and legislative help to maintain artificial price levels, pharmaceutical companies doing business in America are pretty much doing what any successful business must.
That’s why I should’ve titled this post: “Pharmaceutical Companies Just Wanna Have Fun”
Pharmaceutical Companies Just Wanna Have Fun And Dance On Your Grave
P.S. Up next, Who & What Are Behind High Drug Costs…Stay tuned.