New 2001 Data Show Big Drug Companies Spent Almost Two-and-a-Half Times as Much on Marketing, Advertising and Administration as They Spent on Research and Development

Drug Company Profits Exceeded R&D Spending by 60 Percent; Executive Compensation and Deferred Stock Options Were Huge

WASHINGTON--U.S. drug companies that market the 50 most often prescribed drugs to seniors spent almost two-and-one-half times as much on marketing, advertising, and administration as they spent on research and development (R&D) in 2001, according to an analysis released today. The report debunks President Bush's recent assertion, and drug companies' claims, that high and fast-rising drug prices are needed to support R&D.

The report was released as the United States Senate debates legislation that could add prescription drug coverage for America's seniors and could stimulate faster market entry of cheaper generic drugs.

According to the report, compiled by the consumer health organization Families USA, the nine U.S. publicly traded companies that market many of the most popular drugs to seniors spent a total of $45.4 billion on marketing, advertising, and administration and only $19.1 billion on R&D last year. Eight of the nine companies spent more than twice as much on marketing, advertising, and administration as they did on R&D.

"At the same time that drug prices are skyrocketing, pharmaceutical companies are focusing more and more on marketing the most expensive drugs," said Ron Pollack, Families USA's executive director. "The result is a sky rocketing cost spiral that is making drugs increasingly unaffordable for America's seniors."

The Families USA report also demonstrated that drug companies pocketed much more in profits than they spent on R&D. The nine companies generated $30.6 billion in profits last year-more than 60 percent higher than their expenditures on R&D. Merck's profits, for example, were nearly three times the amount it spent on R&D in 2001. Bristol-Myers Squibb's profits were more than twice the amount it spent on R&D.

Drug company executives also received high compensation packages and held huge amounts of unexercised stock options, according to the Families USA report. The five highest-paid drug company executives received over $183 million in compensation, not including unexercised stock options. In 2001, the five highest-paid drug executives at the nine companies were:

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Families USA is the national organization for health care consumers. It is nonprofit and nonpartisan and advocates for high-quality, affordable health care for all Americans.

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