Pharma TV Ads And R&D Funding

Few media occasions generate the excessive TV viewership as does the Academy Awards. Whereas the numbers have been dropping over time, final Sunday’s occasion drew 13.7 million viewers and supplied a terrific platform for corporations to promote their merchandise – together with the biopharmaceutical trade. Heavyweights Pfizer, Novartis, and Lilly had advertisements, as did the smaller biopharma, Incyte. These advertisements weren’t low cost. Thirty second spots ran anywhere from $1.7 – $2.2 million. And whereas these advertisements supplied nice publicity, within the case of drug corporations in addition they supplied a goal for criticism. At a time when drug costs are underneath intense scrutiny, individuals puzzled whether or not the cash spent on these advertisements couldn’t be put to higher use.

This difficulty of spending on TV advertisements moderately than investing in R&D was expressed in a response to my current publish: “What’s Actually Driving Drug Prices”. This was apparently from a supporter of the biopharmaceutical trade.

“The large expenditure on DTC advertisements for pharmaceuticals creates the impression – and maybe it’s a actuality – that Pharma is extra targeted on their gross sales and market share than R&D. I’d wish to see Pharma channel their monumental DTC expenditures into significant R&D and/or price reductions.”

That’s not a singular opinion. However what are the details? Let’s look first on R&D spend. Most drug corporations make investments 15 – 25% of their revenues into R&D – a unprecedented quantity. Particularly, in 2021, Roche invested $16.1 billion (22.5% of revenues), J&J invested $14.7 billion (16%), Pfizer $13.8 billion (17%), Merck $12.2 billion (25%) and BMS $11.3 billion (24%). In actual fact, simply bearing in mind the highest ten Pharma corporations, a complete of $107.2 billion was devoted to R&D last year. In distinction, the funds for the complete Nationwide Institutes of Well being for 2022 is $45 billion. Moreover, the Pharma R&D funding exceeds all different industries with respect to the share of prime line revenues it pours into R&D. Comparability with large tech is revealing. Amazon spent $56.1 billion on R&D in 2021, however that was primarily based on gross sales of $469.8 billion (11.9%). Google spent $31.6 billion on R&D with gross sales of $257.6 billion (12%) and Apple got here in with $23.1 billion in R&D with $378.3 billion in income (6.1%). R&D is essential to the success of the biopharma trade and these knowledge present how severely that is taken.

In comparison with what it spends on R&D, Pharma’s spend on TV ads is pretty minor – a complete of $3.9 billion in 2021. The leaders have been Sanofi/Regeneron for Dupixent ($287.6 million); Novo Nordisk’s Rybelsus ($225.2 million); and AbbVie’s Humira ($176.5 million). One may argue that if you happen to dropped the TV advertisements, you’d have one other $3.9 billion to put money into R&D. However, it’s actually not that easy. Corporations clearly put money into R&D to drive gross sales. They’ve clear knowledge that point out that this gross sales technique works. However, an additional billion in drug gross sales means that there’s one other $200 million to put money into R&D. Paradoxically, TV advertisements immediately profit R&D.

There are different advantages of those TV advertisements. They supply sufferers with details about new medicines and coverings for illnesses that have been beforehand untreatable. That was the case when new medicine emerged to deal with fibromyalgia, an especially painful situation. The advertisements heralding these medicine have been welcomed by those that suffered from this situation. TV advertisements additionally encourage sufferers to open a dialogue with their medical doctors about medical circumstances and diseases – communication which may not have beforehand existed.

TV advertisements got here underneath super criticism throughout the reign of erectile dysfunction medicine, Viagra and Cialis. Nevertheless, these medicine are now not marketed on TV as their patents have expired and this seems to have dampened down criticism. However, the notion stays that extraordinary quantities of cash are spent on TV advertisements on the expense of R&D. The information present that this isn’t the case.