E-DRUG: The Real Cost of Drug R&D
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[crossposted from Pharm-Policy with thanks; NN]
July 23, 2001
New Report Debunks Drug Industry Claims About the Cost of New Drug
Research and Development
Second Report Documents Industry's Intense Lobby and Political
Contribution Campaign to Keep Prices and Profits High
WASHINGTON, D.C. - The pharmaceutical industry spends about one-fifth of
what it says it spends on the research and development (R&D) of new drugs,
destroying the chief argument it uses against making prescription drugs
affordable to middle and low-income seniors, a Public Citizen
investigation has found.
The findings are contained in a Public Citizen report, Rx R&D
Myths: The Case Against the Drug Industry's R&D Scare Card.
The report reveals how major U.S. drug companies and their Washington
lobby group, the Pharmaceutical Research and Manufacturers of America
(PhRMA), have carried out a misleading campaign to scare policymakers and
the public. PhRMA's central claim is that the industry needs extraordinary
profits to fund "risky" and innovative research and development to
discover new drugs. In fact, taxpayers are footing a significant portion
of the R&D bill, which is much lower than the companies claim.
"This R&D scare card is built on myths and falsehoods that are maintained
by the drug industry to block Medicare drug coverage and measures that
would rein in skyrocketing drug costs," said Frank Clemente, director of
Public Citizen's Congress Watch.
Public Citizen based the study on an extensive review of government and
industry data and a report obtained through the Freedom of Information Act
from the National Institutes of Health (NIH). Among the report's key
findings:
� The actual after-tax cash outlay - what drug companies really spend on
R&D for each new drug (including failures) - is approximately $110 million
(in year 2000 dollars.) This is in marked contrast with the $500 million
figure PhRMA frequently touts.
� The NIH document shows how crucial taxpayer-funded research is to the
development of top-selling drugs. According to the NIH, U.S.
taxpayer-funded scientists conducted at least 55 percent of the research
projects that led to the discovery and development of the five top-selling
drugs in 1995.
� Public Citizen found that, at most, about 22 percent of the new drugs
brought to market in the past two decades were innovative drugs that
represented important therapeutic advances. Most new drugs were "me-too"
or copycat drugs that have little or no therapeutic gain over existing
drugs, undercutting the industry's claim that R&D expenses are used to
discover new treatments for serious and life-threatening illnesses.
A second report issued today by Public Citizen, The Other Drug War: Big
Pharma's 625 Washington Lobbyists, examines how the U.S. drug industry
spent an unprecedented $262 million on political influence in the
1999-2000 election cycle. That includes $177 million on lobbying, $65
million on issue ads and $20 million on campaign contributions. The
report shows that:
� The drug industry hired 625 different lobbyists last year - or more than
one lobbyist for every member of Congress - to coax, cajole and coerce
lawmakers. The one-year bill for this team of lobbyists was $92.3
million, a $7.2 million increase over what the industry spent for
lobbyists in 1999.
� Drug companies took advantage of the revolving door between Congress,
the executive branch and the industry itself. Of the 625 lobbyists
employed in 2000, more than half were either former members of Congress
(21) or worked in Congress or other federal agencies (295).
� The industry's $20 million in campaign contributions and millions more
in issue ads attacking candidates opposed by the industry aided its army
of lobbyists in gaining access to congressional representatives.
"The drug industry is stealing from us twice," Clemente said. "First it
claims that it needs huge profits to develop new drugs, even while drug
companies get hefty taxpayer subsidies. Second, the companies gouge
taxpayers while spending millions from their profits to buy access to
lawmakers and defeat pro-consumer prescription drug legislation."
Rep. Pete Stark (D-Calif.), the ranking Democrat on the House Ways and
Means Health Subcommittee, added, "Not surprisingly, pharmaceutical
companies have been deceiving Congress and the American public for years.
I commend Public Citizen for exposing the industry's long-standing attempt
to hide the truth about R&D spending."
Sen. Paul Wellstone (D-Minn.), said, "This well-documented Public Citizen
report shows just how much the pharmaceutical industry exaggerates its
commitment to research and development and focuses instead on the bottom
line."
Added Rep. Tom Allen (D-Maine), "Millions of our seniors have paid taxes
for decades and contributed to the development of new drugs. Now in their
retirement, they pay the highest prices in the world for these drugs. . .
. The public deserves better."
Public Citizen calls on Congress to pass a Medicare-run prescription drug
benefit program with strong cost containment that guarantees affordable
prices for middle and low-income seniors. Copies of the reports can be
found at http://www.citizen.org/congress/drugs/R&Dscarecard.html and
http://www.citizen.org/congress/drugs/pharmadrugwar.html ### Public
Citizen is a nonprofit consumer advocacy organization based in Washington,
D.C. For more information, visit www.citizen.org