Pharmaguy's Insights Into Drug Industry News

John La Mattina worked at Pfizer for thirty years, eventually becoming their head of R&D in 2004. He held that position for four years and then started cashing in, the way most senior executives do when they run out the string in the C-suite. In La Mattina's case this has included becoming a partner in a venture capital firm, a board member at small pharmas and a columnist for Forbes, the self-described "capitalist tool." If Malcolm and Steve Forbes truly considered their publication a tool instead of a propaganda sheet before selling it to an Asian investment group, then La Mattina would be their thumb screw. 

Last week one of his columns pooh-poohed the steady drumbeat of layoffs and site closures in pharma during the past four or five years. After acknowledging that job losses cause major stress to the affected families and often disrupt the industry's development of new medications, La Mattina struck an optimistic tone in the manner of Dr. Pangloss. Despite the grief for families and the delays to medical research, La Mattina feels the layoffs and closings, on balance, aren't so bad.  Considering the bigger picture, he believes they just represent a reallocation of people and resources from big pharmas to a changing group of smaller ones.

Of course, the layoffs and other sorrows of capitalism don't seem so bad if one can leave a $200 billion pharma company after pissing away $1 billion on a failed HDL cholesterol enhancer and still get a $22.6 million exit package. In that case it's understandable how someone can argue that in the long run, capitalism effectively sorts things out. The rest of us might agree with the rejoinder by economist J. M. Keynes, that everyone who gets screwed now will be dead in the long run. 

So perhaps Dr. La Mattina can understand why the average John or Jane doesn't look at the situation with the same composure when her lab closes and she has to pull the kids out of school to move across the country.

Bad Pharma: A Cherry Picked NON Evidence-based Critique of Pharma Marketing?

For example, when Goldacre states unequivocally that "tens of billions of pounds are spent each year, $60 billion in the US alone, on medicines marketing," he might have referred to my post that disputed this number ("Promotion vs. R&Deja vu all over again!"; also, see my analysis below).

How much money the drug industry spends on marketing vs. research and development is a contentious issue, as Goldacre points out. "Marketing spend is a contested area, as the industry is keen to play it down," says Goldacre in the Notes section of the book where he could have referenced my post above, but did not. Nevertheless, he summarizes the issue this way:

"A quarter of the pharmaceutical industry's revenue is spent on marketing, twice as much as it spends on research and development, and this all comes from your money, for your drugs. We pay 25% more than we need to, an enormous mark-ip in price, so that tens of billions of pounds con be spent every year producing material that actively confuses doctors and undermines evidence-based medicine." 

"This is a very odd state of affairs," says Goldacre.

It's also "odd" that Goldacre's math does not add up. The value of the global pharmaceutical market was estimated to be US$880 billion in 2011 according to IMS Health (see "Pharmerging Markets to Continue Strong Growth"). One quarter of that would be over US$200 billion. All of this, of course, is not spent in US marketing, which Goldacre pegged as US$60 billion. However, I cannot imagine that the difference (US$140 billion) is spent in other countries. US marketing spend must be about 75% of the total in line with the overall size of the US market compared to the rest of the world. Even if it's only 50% that would mean US$100 billion spent on pharma marketing in the US, which is quite a bit more than the US$60 billion that Goldacre cited a few pages earlier in his book.

OK, that's a math error. But Goldacre also cites conflicting numbers for pharma marketing spending in the US. While he cites US$60 billion on page 246, on page 317 he says "we know that $30-40 billion is spent by the industry on drug marketing in the America" (aka "US").

I don't want to nitpick, but which is it: $60, $100, or $30 billion? Obviously, whatever the number, it's big. But is it twice as big as the R&D spend?