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Rx R&D Myths:

The Case Against The Drug Industry’s R&D "Scare Card" 

Public Citizen 23jul01

Executive Summary

This new Public Citizen report reveals how major U.S. drug companies and their Washington, D.C. lobby group, the Pharmaceutical Research and Manufacturers of America (PhRMA), have carried out a misleading campaign to scare policy makers and the public. PhRMA’s central claim is that the industry needs extraordinary profits to fund expensive, risky and innovative research and development (R&D) for new drugs. If anything is done to moderate prices or profits, R&D will suffer, and, as PhRMA’s president recently claimed, "it’s going to harm millions of Americans who have life-threatening conditions." But this R&D scare card – or canard – is built on myths, falsehoods and misunderstandings, all of which are made possible by the drug industry’s staunch refusal to open its R&D records to congressional investigators or other independent auditors.

Using government studies, company filings with the U.S. Securities and Exchange Commission and documents obtained via the Freedom of Information Act, Public Citizen’s report exposes the industry’s R&D claims:


Major U.S. drug companies and their trade association, the Pharmaceutical Research and Manufacturers of America (PhRMA), have carried out a campaign to scare policy makers and the public. The central claim of PhRMA’s campaign is ominous: if anything is done to restrain high U.S. prescription drug prices, then research and development (R&D) to find new drugs for life-threatening diseases will suffer.

Alan Holmer, president of PhRMA, recently played this “R&D scare card” while on National Public Radio’s “Talk of the Nation” program. “Believe me,” Holmer warned, “if we impose price controls on the pharmaceutical industry, and if you reduce the R&D that this industry is able to provide, it’s going to harm my kids and it’s going to harm those millions of other Americans who have life-threatening conditions.”1

Later in the program, to reinforce his argument, Holmer made the claim that research costs “$500 million just to get one medicine to market.”

The drug industry’s “R&D scare card” is built on the premise that drug companies need extraordinary profits – about three times those of the average Fortune 500 company – in order to conduct expensive and risky research on innovative new drugs. But evidence shows the research isn’t as expensive, risky or innovative as the industry claims.

Instead, the evidence shows that such research may cost far less than $500 million for every new drug – and may be less than $100 million for every new drug (including failed drugs). The evidence also shows that the drug industry isn’t all that innovative, as it produces far more “metoo” or copycat drugs of little medical importance than life-saving medicines.2 And, the evidence suggests that drug industry research isn’t all that risky because the industry is awash in profits while lightly taxed and heavily subsidized. In fact, an internal National Institutes of Health (NIH) study obtained by Public Citizen shows that taxpayer-funded scientists and foreign universities conducted 85 percent of the published research studies, tests and trials leading to the discovery and development of five blockbuster drugs.3 It’s no wonder the drug industry fought all the way to the Supreme Court to keep its R&D records hidden from congressional investigators.

In all, the evidence shows that the drug industry’s R&D scare card is, in reality, an R&D “canard” – that is “an unfounded or false, deliberately misleading story.”

Report PDF format 176Kb
Appendix A-Office of Technology Assessment Study

Appendix C-National Institutes of Health Report

source: http://www.citizen.org/congress/drugs/R&Dscarecard.html 24jul01

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