The issue of the cost of pharmaceutical products has been questioned for quite some time, but the industry has been unable to deliver concrete answers. Why exactly are pharmaceuticals so expensive? In the late 1950s, the same was asked by Senator Estes Kefauver, who was the first to pass an indictment against some fraudulent practices by the pharmaceutical industry. Senator Kefauver saw some inconsistencies, which are still alive: prices are extraordinarily high and profit margins excessive; prices are increased by marketing expenditures; and new products are not always more effective than those already in the market.
One main problem is that, even back in the 50s and, of course, to this day, the marketing budget is a lot higher than what is spent on research and development (known as R & D). In the US, direct marketing is legal, so pharmaceutical companies can invest on direct to the customer publicity, which results in more sales and therefore more profit to the business. It is commonly held, however, that the reason why pharmaceutical products are so expensive is that millions are spent on research. This is true, but there is also a considerable amount of money spent on marketing trying to pursued customers to buy their products and this inflates the overall costs.
A recent study by the Public Library of Science demonstrated that, actually, companies spend double on marketing campaigns than on R & D for their products.
Moreover, in global terms, about 30 percent of the money spent on marketing is not accounted for in the companies’ figures and books. This means that even more is spent on that part of the commercial process associated with marketing pharmaceutical products. In all, it is estimated that a total of $57.5 billion was spent on marketing needs on 2004, while only $31.5 billion was spent on Research and Development.
A pharmaceutical company is crucial to the economic, social, and vital growth of a country. As a leading country in pharmaceutical production, the US should set the grounds on the ethical and moral implications this has on the rest of the world. Pharmaceutical consultants have the experience and knowledge to, among other areas, be able to advise companies on what the best course of action regarding budget and expenditure is. The industry now faces times of economic turmoil and, more than ever, needs to adapt to the new times ahead.