Marketing and Pharmaceutical Development

Abstract

New pharmaceuticals are developed in response to therapeutic need, scientific feasibility, and market demand. As research and development (R&D) decision processes becomes more sophisticated, marketing input plays a greater role in these decisions.

Industry-financed R&D is dependent on basic research financed by government. The political decisions which determine government-financed research are significant determinants of the scientific feasibility of a new drug.

Many new drugs offer only minor advantages over existing therapies. The cumulative effect of these minor improvements are significant. In addition, new drugs often increase competition in a market.

The Orphan Drug Act has contributed to the marketing of drugs where sufficient market demand may not otherwise exist. While some portion of R&D funds are spent on imitative drugs, the incentive for this use of R&D funds decreases as buyers become more sophisticated and as the cost of marketing a new drug increases.

Get full access to this article

View all access options for this article.

References

Bloom

B.M.

1981 Commentary. In Drugs and Health: Economic Issues and Policy Objectives, Helms

R. B.

(ed.). Washington, D. C.: American Enterprise Institute for Public Policy Research.

Buchanan

1989 Health-care delivery and resource allocation. In Medical Ethics, Veatch

R.M.

(ed.). Boston, Massachusettes: Jones and Bartlett Publishers.

Concar

1990 Budget division disputed. Nature 344(April 26):803.

DiMasi

J.A.

Hansen

R.W.

Grabowski

H.G.

Lasagna

1991 Cost of innovation in the pharmaceutical industry. Journal of Health Economics 10:107–142.

Grabowski

Vernon

1990 A new look at the returns and risks to pharmaceutical R&D. Management Science 36 (7):804–821.

Hansen

R.W.

1979 The pharmaceutical development process: Estimates of development costs and times and the effects of proposed regulatory changes. In Issues in Pharmaceutical Economics, Chien

R. I.

(ed.). Lexington, Massachusetts: Lexington Books.

Grossman

D.B.

1984 The Orphan Drug Act: Adoption or foster care. Food, Drug and Cosmetic Law Journal 39:128–151.

Hubbard

W. N.

1983 Therapeutic need as a criterion for setting priorities for pharmaceutical research and development. In Decision Making in Drug Research, Gross

(ed.). New York: Raven Press.

Joglekar

Paterson

M.L.

1986 A closer look at the returns and risks of pharmaceutical R&D. Journal of Health Economics 5:153–177.

10.

Kenney

P.J.

1988

The Orphan Drug Act — Is it a barrier to innovation? Does it create unintended windfalls?

Food Drug Cosmetic Law Journal 43:667–79.

11.

Legrain

1983 New drug superiority. In Decision Making in Drug Research, Gross

(ed.). New York: Raven Press.

12.

Levy

R.A.

1990 Pharmaceutical Research: Therapeutic and Economic Value of Incremental Improvements. Reston, Virginia: National Pharmaceutical Council.

13.

Mahoney

1959 The Merchants of Life. New York: Harper and Brothers.

14.

McCarthy

E. J.

Perreault

W.D.

Jr.

1990 Basic Marketing. 10th ed. Homewood, Illinois: Irwin.

15.

Meyer

F.H.

Mika

T.R.

1981 R&D management in the pharmaceutical firm. Drug and Cosmetic Industry 128 (April):46 et seq.

16.

Murphy

T.F.

1991 No time for an AIDS backlash. Hastings Center Report 21 (March-April):7–11.

17.

Myers

M.J.

in press The interrelationship of pharmaceutical R&D and profit. Journal of Research in Pharmaceutical Economics 4(Summer). Pharmaceutical Manufacturers Association 1987 Annual Survey Report, PMA 1985–1986. Washington, D. C.: Pharmaceutical Manufacturers Association.

18.

Rudnitsky

1991

An industry top?

Forbes 147(April 15):48–49, 52.

19.

Simmons

G.H.

1908 The Abbott Alkaloidal Company — High finance and methods of working the medical profession. Journal of the American Medical Association 50 (March 14):897.

20.

Smith

1991 Pharmacy ethics I: Rationale and perpetuation. In Pharmacy Ethics, Smith

Strauss

Baldwin

H. John

Alberts

K.T.

(eds.). New York: Pharmaceutical Products Press.

21.

Spilker

1987 Guide to Planning and Managing Multiple Clinical Studies. New York: Raven Press.

22.

Strandberg

L.R.

1991 The Oregon health care plan: An attempt to restructure a broken system. Pharmacy Business 2(October): 10–12, 16.

23.

U. S. Congress. House. Committee on Energy and Commerce, Subcommittee on Health and the Environment 1987 Price Increases for Prescription Drugs and Related Information 2nd 100th Cong., 1st Sess.

24.

U. S. Congress. Senate. Special Committee on Aging 1991 The Drug Manufacturing Industry: A Prescription for Profits. 102nd Cong., 1st Sess.

25.

Virts

J.R.

Weston

J.F.

1980 Returns to research and development in the U.S. pharmaceutical industry. Managerial and Decision Economics 1(3):103–111.

26.

Wiggins

S.N.

1987 The Cost of Developing a New Drug. Washington, D. C: Pharmaceutical Manufacturers Association.

27.

Wiggins

S.N.

1981 The pharmaceutical research and development decision process. In Drugs and Health: Economic Issues and Policy Objectives, Helms

R. B.

(ed.). Washington, D. C.: American Enterprise Institute for Public Policy Research.