ICYMI: NEW STUDY FINDS BIG PHARMA SPENT MORE ON SALES AND MARKETING THAN R&D DURING PANDEMIC

Oct 27, 2021

AHIP Study Finds Top Drug Companies’ Sales and Marketing Budgets Swamp R&D Budgets

In case you missed it, America’s Health Insurance Plans (AHIP) released a new study Wednesday that found Big Pharma continued to spend more advertising and selling its products than investing in research and development (R&D) even amid unprecedented focus on the development of new treatments as a result of the COVID-19 pandemic.

The study found that “Of the 10 drug manufacturers examined, 7 of them spent more on selling and marketing expenses than they did on research and development. For this group of 10 companies alone, selling and marketing expenses exceeded R&D spending by $36 billion, or 37%.” AHIP emphasized that, “this use of dollars occurred during a year dedicated to the development of new treatments and vaccines to overcome the COVID-19 crisis.”

The study shows that brand name drug manufacturers including AbbVie, Pfizer, Novartis, GlaxoSmithKline, Sanofi, Bayer and Johnson & Johnson all spent more on marketing and selling their products in 2020 than they did on developing new treatments:

AbbVie spent $11 billion on sales and marketing in 2020, compared to $8 billion on R&D.
Pfizer spent $12 billion on sales and marketing, compared to $9 billion on R&D.
Novartis spent $14 billion on sales and marketing, compared to $9 billion on R&D.
GlaxoSmithKline spent $15 billion on sales and marketing, compared to $7 billion on R&D.
Sanofi spent $11 billion on sales and marketing, compared to $6 billion on R&D.
Bayer spent $18 billion on sales and marketing, compared to $8 billion on R&D.
Johnson & Johnson spent $22 billion on sales and marketing, compared to $12 billion on R&D.

“Big Pharma’s practices clearly show that their growth strategy is based on selling a greater volume of drugs to patients – not on creating groundbreaking new therapies and delivering more value to patients,” AHIP wrote, concluding that, “With thoughtful solutions that encourage private-market competition and end pharma’s gaming of the system, we can have both.”

Numerous other reports and studies have also debunked Big Pharma’s false rhetoric that solutions to lower prescription drug prices would undercut innovation into new cures.

Big Pharma Spent More on Stock Buybacks and Dividends than R&D: A July report from the U.S. House Committee on Oversight & Reform found that 14 of the largest drug makers spent $57 billion more on stock buybacks and dividends than R&D, between 2016 and 2020.
Overhead Advertising and Corporate Overhead Outweigh R&D: A 2019 study from the Campaign for Sustainable Rx Pricing (CSRxP) found Big Pharma spends more than twice as much on corporate overhead and advertising as it does on R&D.
Profits Over Patients: Drug makers used a windfall from the Tax Cuts and Jobs Act of 2017 to boost profits for shareholders instead of investing in R&D. In fact, the increase in payouts to Wall Street and board members was 17 times larger than the increased investment in R&D that year.

Read AHIP’s full study “In the Midst of COVID-19 Crisis, 7 out of 10 Big Pharma Companies Spent More on Sales and Marketing than R&D” HERE.

Read more on why Big Pharma’s bogus innovation rhetoric doesn’t add up HERE.

Learn more on market-based solutions to hold Big Pharma accountable and lower prescription drug prices HERE.