The Los Angeles Times on Sunday examined how the business “strategy that has made the pharmaceutical industry one of the wealthiest and most powerful on Earth” might have begun to “betray it.”
Pharmaceutical companies for 25 years have “imitated the basic business model of Hollywood” and have “focused on creating blockbusters,” which they “hope will appeal to masses” and “promote like mad,” according to the Times. Pharmaceutical companies must spend as much as $1 billion to promote new medications in their first two years on the market to make the products into a “mega-brand” with at least $1 billion in annual sales.
“Only now is it becoming clear that this business model couldn’t work forever,” as the strategy “had a flaw that executives have long ignored” — the approach “required extraordinary amounts of promotion at the expense of scientific creativity,” the Times reports. During the next several years, pharmaceutical companies will lose patent protection on a number of popular and profitable medications — such as the osteoporosis treatment Fosamax, manufactured by Merck, the antipsychotic Risperdal, manufactured by Johnson & Johnson, and the cholesterol medication Lipitor, manufactured by Pfizer — and the “industry’s scientists have hit a dry spell” and are “not discovering enough new drugs to replace the aging standbys,” the Times reports.
“It would be wrong to believe that this is the end of the industry’s wealth and power,” but, as some pharmaceutical companies “struggle, patients will bear the brunt,” with the prices of medications likely to “rise even faster,” according to the Times (Petersen, Los Angeles Times, 1/27).