Perspective               

Report Says Drug Industry Inflates Research and Development Costs

A report by Public Citizen, a consumer advocacy group, says that the drug industry's claim that it costs $500 million to research and develop a new drug is misleading. According to Public Citizen, the drug industry spends closer to $110 million on research and development. Public Citizen said the drug industry's research and development numbers are flawed because they do not take into account the research and development tax deductions they are able to take or the amount of research they conduct that is supported by the government-funded National Institutes of Health.

A second Public Citizen report counted the drug industry's lobbying costs and campaign contributions and found that the drug industry spent over $260 million on lobbying, issue ads, and campaign contributions during the 1999-2000 election cycle. Frank Clemente, director of Public Citizen's Congress Watch, believes that the drug industry spends more on lobbying than any other industry.

Families USA, another consumer advocacy group, conducted a study in which they found that the drug companies spend more than twice as much on marketing, advertising, and administration than they do on research and development.

These reports challenge the drug industry's argument that lowering prescription drug prices for people with Medicare would threaten drug research and development. As Congress is getting ready to debate new Medicare legislation that could include a prescription drug benefit, advocacy groups, including Public Citizen and Families USA, are using these reports to try to convince Congress to give the Medicare program the ability to negotiate drug prices directly with the drug manufacturers.

_________________________________