The criticism is more that instead of increasing sales by developing more drugs, they focus their resources on marketing instead. This makes more money for them but is bad for society.
> The criticism is more that instead of increasing sales by developing more drugs, they focus their resources on marketing instead. This makes more money for them but is bad for society.
The original point was that advertising increases their resources by more than its cost. If they spend $X to get $X+ then the "+" is additional resources that both increase the incentive to do R&D and provide more resources to do it with.
Moreover, the only way advertising makes them money is by more people using the drug. Presumably the additional people taking the drug derive some value from it (or why take it?), so that isn't inherently a loss to society. If the value of taking the drug is worth more than what they're paying then it's a benefit.
The biggest problem here is probably when you have insurance paying most of the price of something, so then the patient sees an ad for a drug which is 2% better and costs 2000% more, but the fact that the benefit isn't worth the money is removed from the patient's calculation when the insurance is paying for it, and then that causes everyone's premiums/taxes to go up. But the problem in that case isn't the advertising -- that's just the mechanism -- the problem is the misalignment of incentives caused by widespread low deductible insurance.
To play devil's advocate, imagine a drug that costs $1b to develop and would only break even in costs - obviously drug companies wouldn't pursue the drug. But suppose spending $1b to develop and then $2b to market the drug does better than break even - possibly way better, with the right advertising agency. Then the drug company would pursue the drug. So advertising can lead to more drugs being developed overall, since it can do so much to improve the cash flows that accrue to any given drug.
I still don't understand why it's bad for society? It seems like this is a common point that implies something, but I can't figure out what that thing is.
well in the context of developing drugs that cure disease (esp rare ones), pharma says its so expensive to do, it costs billions to develop a drug. but if in fact it "costs" billions to "market" a drug then is that the same thing? i dont have a strong opinion on this
I'm not super familiar with the numbers, but I believe the "billions to develop" number is a development number, if a little juiced. I think they take the total amount of R&D spend and divide it by the number of drug launches for a given period of time. So it's a good idea of how much money you have to spend to get a new launch, but it is higher than the cost of a single project, the majority of which are terminated before launch (many well before clinical trials).
After you spend a couple billion per launch to make a new drug, then you spend another couple billion on marketing. Again, I could be mistaken, but I'm pretty sure that's the position of pharma.
