> But to be fair, the US pharma sector spends roughly as much on marketing as it does on R&D.
Spending money on marketing lowers prices by increasing volumes.
If you spend a billion dollars on R&D and then spend nothing on marketing and sell to 200,000 customers, they would each have to pay $5000 to fund the R&D. If you spend a billion dollars on R&D and two billion dollars on marketing and sell to a million customers, they would each have to pay $3000 to fund both the R&D and the marketing.
And it also does something useful, assuming the new drug is actually beneficial, by making people aware of the existence of something that would make their lives better. It helps no one to invent a great new thing that then nobody uses because nobody knows it exists.
> And a huge chunk of that R&D budget goes into analogue drugs to either sidestep patents from rivals or maintain profit margins when their own patents expire (they can then use that huge marketing budget to get the newly patented drug to take over for the old one with the nearly-expired patent, despite small or non-existent benefits from a medical perspective).
It doesn't actually cost that much to do that because you already know what you're looking for in that case. It's the real R&D that costs money.
> So long story short, there's a pretty good case to be made that public research with somewhere between 1/10th and 1/5th the budget of big pharma is all it takes to match or overtake them in innovation, as measured by actual benefit to the patients.
The biggest problem with public research funding is how to allocate it.
With a profit motive and market competition, the people who allocate research funding inefficiently go out of business and the people who allocate it well make a lot of money, and then have more money to fund more research.
Without that, research funding turns into defense contracting and then we waste trillions of dollars and have nothing to show for it. Or worse, politicians say we'll only need 1/10th of the budget even though the incentives aren't actually there to improve efficiency, and then we get 1/10th of the research.
> Spending money on marketing lowers prices by increasing volumes.
That explains why they do it, but not why it's useful to the public. Marketing isn't necessarily a zero sum game, but it in the case of direct-to-consumer drug advertisments, it's pretty close.
> Spending money on marketing lowers prices by increasing volumes.
Do you have any proof of this - had you said it increases profits - I'd have readily agreed with you.
> If you spend a billion dollars on R&D and then spend nothing on marketing and sell to 200,000 customers, they would each have to pay $5000 to fund the R&D. If you spend a billion dollars on R&D and two billion dollars on marketing and sell to a million customers, they would each have to pay $3000 to fund both the R&D and the marketing.
Or, in line with their "fiduciary duty to shareholders", the company still sells at $5000 to a million customers: see Martin Shkreli, Epipens, or dozens of other real-life examples that prove your lower-price hypothesis wrong. Without competition, drug manufacturers have no incentive to lower prices when they can make more profits instead.
Spending money on marketing MIGHT lower prices when looking at a single company.
For a market like pharmaceuticals where patients are prescribed by Dr's and are going to be subscribed one thing or another regardless, the lack of any marketing wouldn't really reduce the amount of volume in the industry as a whole, might just switch around which drugs/companies it goes to.
Spending money on marketing lowers prices by increasing volumes.
If you spend a billion dollars on R&D and then spend nothing on marketing and sell to 200,000 customers, they would each have to pay $5000 to fund the R&D. If you spend a billion dollars on R&D and two billion dollars on marketing and sell to a million customers, they would each have to pay $3000 to fund both the R&D and the marketing.
And it also does something useful, assuming the new drug is actually beneficial, by making people aware of the existence of something that would make their lives better. It helps no one to invent a great new thing that then nobody uses because nobody knows it exists.
> And a huge chunk of that R&D budget goes into analogue drugs to either sidestep patents from rivals or maintain profit margins when their own patents expire (they can then use that huge marketing budget to get the newly patented drug to take over for the old one with the nearly-expired patent, despite small or non-existent benefits from a medical perspective).
It doesn't actually cost that much to do that because you already know what you're looking for in that case. It's the real R&D that costs money.
> So long story short, there's a pretty good case to be made that public research with somewhere between 1/10th and 1/5th the budget of big pharma is all it takes to match or overtake them in innovation, as measured by actual benefit to the patients.
The biggest problem with public research funding is how to allocate it.
With a profit motive and market competition, the people who allocate research funding inefficiently go out of business and the people who allocate it well make a lot of money, and then have more money to fund more research.
Without that, research funding turns into defense contracting and then we waste trillions of dollars and have nothing to show for it. Or worse, politicians say we'll only need 1/10th of the budget even though the incentives aren't actually there to improve efficiency, and then we get 1/10th of the research.