RESEARCHERS TAKE DOWN BIG PHARMA’S R&D ARGUMENT

Updated: Oct 31


This week, Health Affairs published a new study that disproves Big Pharma’s long-standing position that high drug prices in the U.S. are necessary for supporting research and development for the next generation of innovative medicines.

Researchers studied prices and sales for 15 drug companies that produce the top 20 best selling drugs and then analyzed the data based on the relationship between the premiums these companies earned compared to how much they devoted to R&D.

Among the findings:

  • Sales in the U.S. amounted to $116 billion in premiums paid to drug companies.

  • These companies spent $76 billion, which is approximately 66 percent of the total amount of premiums received, on research and development.

  • While there were variations among the companies studied, researchers found that U.S. revenues represented approximately 163 percent of the total amount spent on research and development globally.

Since Big Pharma often uses the innovation argument to defend high drug prices, this study is significant because it exposes the reality of spending on research and development. Premiums received from drug sales far exceed what is spent on innovation for the next generation of treatments and cures.

The full study can be accessed here.

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