Wednesday, July 11, 2001

Drug companies target of study

Consumers pay for profits, group says

By Tim Bonfield
The Cincinnati Enquirer

        A consumer group claims that drug companies spend far less on research and development than they collect in profits or spend on marketing and administration.

        Of nine U.S. drug companies that market 50 drugs most commonly used by the elderly, eight spent more than twice as much on marketing, advertising and administration than they did on R&D, according to a study issued Tuesday by Families USA.

        Six of the nine companies also reported collecting more in profits than they spent on R&D.

        The findings angered members of Working in Neighborhoods Senior Action Coalition, a Tristate consumer group affiliated with Families USA. The WINSAC group contends that seniors on fixed incomes are struggling more than ever to pay for the rising costs of medications.

        To them, the report contradicts frequent claims from the pharmaceutical industry that rising drug prices are needed to sustain research and development.

        “The pharmaceutical industry is one of the most profitable industries of all the Fortune 500 companies. It looks to us like they are making more than enough profit,” said WINSAC director Dave Scharfenberger.

        For example, Bristol-Myers Squibb Co. reported a 26-percent profit on $18.2 billion in revenue in 2000. About 30 percent of its total revenue was spent on marketing, advertising and administrative expenses. That compares to 11 percent of revenue devoted to researching improved medications.

        Tuesday's report was based on company reports filed with the U.S. Securities and Exchange Commission.

        One change WINSAC would like to see is Medicare coverage for prescription drugs. That would make it easier for seniors to afford medications and provide the government with the same type of negotiating clout with drug makers that private insurers and large pharmacy chains already enjoy, Mr. Scharfenberger said.

        “The government has got to step in and do something,” said WINSAC member Dorothy Abt.

        The Families USA study drew criticism from the pharmaceutical industry.

        “(It) condemns the pharmaceutical industry for being a success at developing medicines upon which millions of patients depend,” said Jackie Cotrell, spokeswoman for the Pharmaceutical Research and Manufacturers of America.

        “... Because the pharmaceutical industry is profitable, Americans have the best chance in the world of getting the cure for Alzheimer's, cancer, diabetes or AIDS.”


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