ABSTRACT
There is critical public and political attention to high drug prices and large promotional budgets. Table 8.1 is a summary of big Pharma’s profitability in 2004. Research (Schondelmeyer and Wrobel, 2004) indicates that US drug expenditures increased from approximately 7 billion USD (before rebates) in 1992 to 22 billion USD in 2002, a triple increase. Meanwhile, Hu and colleagues (Hu et al., 2007) reported that PhRM Research and Development spending increased from 12 billion to 36 billion in the same period, also a triple increase, whereas the number of FDA approvals remained flat from 1994 to 2004 (Figure 1.13 in Chapter 1). Since investment in Research and Development is expected to have a delayed reward, the comparison has different periods for Research and Development (1992-2002) and for FDA approvals (1994-2004). For this reason, the increase in prescription drug prices, more or less reflects an increase in Research and Development and commercial costs.
