PHRMA: Profile Predicts Record-Breaking Year for R&D
Pharmaceutical Research and Manufacturers of America released its 1999 industry profile last week, predicting that pharmaceutical companies will spend a "record-breaking $24 billion" in 1999 for research and development. A majority of industry spending will be funneled into efforts to develop treatments for 12 major diseases, which collectively cost the nation $645 billion annually in medical expenses and lost productivity (PhRMA release, 3/30). Pointing to the risk inherent in research and development -- only three in 10 drugs recoup their development costs -- the profile pegged the average "pre-tax cost of developing a drug" at $500 million, and the average time at 15 years. In order to support these costs, drugmakers must come up with at least a few "highly successful products," whose high prices on the market have been much maligned of late and blamed for skyrocketing drug spending. The profile asserts, however, that spending is increasing, primarily due to "non-price factors, including increased volume of prescriptions, record sales of new products and new product formulations" ("The 1999 Pharmaceutical Industry Profile," 3/30). Indeed, sales of prescription drugs rose 15.7% in 1998, but only 3.2% of that increase can be attributed to price increases, PhRMA President Alan Homer said. "Patients and their doctors are increasing their use of innovative medicines because they're so effective and cost- effective in helping and healing them," Homer said. According to PhRMA, the percentage of health care expenditures devoted to outpatient prescription drugs grew from 6% in 1996 to 7.2% in 1997 (PhRMA release, 3/30). Sales are expected to continue to climb in 1999, up 7.6% from $124.6 billion in 1998 to an expected $134.1 billion this year ("1999 Pharmaceutical Industry Profile," 3/30).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.