E-drug: Drug companies maintain "astounding" profits
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BMJ 2002;324:1054 (4 May 2002)
Drug companies maintain "astounding" profits
Scott Gottlieb, New York
Pharmaceuticals again ranked as the most profitable sector in the
United States, topping the annual Fortune 500 ranking of America's
top industries, released this month.
The pharmaceutical industry topped all three of Fortune magazine's
measures of profitability for 2001, making this decade the third in
which the industry has been at or near the top in all the magazine's
measures of profitability.
The occasion was seized by critics of the industry as reflecting
corporate greed. Frank Clemente, director of Public Citizen's Congress
Watch, said: "During a year in which there was much talk of sacrifice
in the national interest, drug companies increased their astounding
profits by hiking prescription prices, advertising some medicines more
than Nike shoes, and successfully lobbying for lucrative monopoly
patent extensions. Sometimes what's best for shareholders and chief
executive officers isn't what's best for all Americans, particularly
senior citizens who lack insurance cover for prescription drugs."
Overall profits of Fortune 500 companies declined by 53% in 2001,
while the top 10 US drug makers increased profits by 32% from
$28bn (�20bn; 31bn) to $37bn, according to Public Citizen's analysis
of the Fortune 500 data. Together the 10 drug companies in the list
had the greatest return on revenues, reporting a profit of 18.5 cents
for every dollar of sales, eight times higher than the median for all
Fortune 500 industries, which was 2.2 cents.
The drugs industry says it needs extraordinary profits to fund risky
research and development of new drugs and to absorb the high cost of
drug failures in clinical trials. The industry's output of new drugs has
risen only modestly in the past two decades, despite a more than
sixfold increase, after adjustment for inflation, in spending on research
and developmentto more than $30bn a year. In the past few years
output has actually declined. Many industry supporters blame tougher
scrutiny by the Food and Drug Administration.
The time spent to develop a drug, not counting the months consumed
by government review, has lengthened from about nine years in the
1980s to more than 11 years, according to the Tufts Center for the
Study of Drug Development, and the cost has more than doubled, after
adjustment for inflation, to $800m. Public Citizen notes that the Tufts
Center gets money from drug companies and maintains that the
centre's figures are inflated to justify high drug costs.
Footnotes
A copy of Public Citizen's report is available at its website
(www.citizen.org).
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