https://www.washingtonpost.com/news/wonk/wp/2015/02/11/big-p...

https://www.sciencedaily.com/releases/2008/01/080105140107.h...

First off, that's not sales and marketing expense. It's what accountants called "sales and general administration" which yes, marketing falls into, but so do a number of other items. It's not 100% marketing.

Second, the only reason why a company would spend money on promotion is if the return is >100%. So, if drug companies were to stop all promotion, their profit would actually fall, not go up. So it's not going to reduce the cost of drugs.

Third, I've talked to a number of physicians would appreciate the marketing that drug companies do. They don't have time to keep up on the latest, so a 15 minute chat with a drug rep might save them a lot of time. Of course, they know the marketing is biased, but it at least gives them a sense as to what's out there.

Not necessarily. Advertising is often a negative-sum game. To give a simplified, quasi-hypothetical example, if neither Coke nor Pepsi advertised, they would still have very similar market shares and revenues. But then Pepsi realizes they can spend $1MM advertising to swing $1.25MM of revenue from Coke, and Coke spends $1MM to swing $1.25MM revenue back, and now both companies are $1MM in the hole for no gain. In this case, everyone—Coke, Pepsi, and the consumer—is better off if the government just banned soda advertising. Well, maybe not the ad agencies, TV networks, and celebrity sponsors, but there’s still a net economic loss to society.

Lots of drug advertising is of this useless, competitive type. If no one advertised erection drugs, people would just go to the doctor and take whatever was prescribed to them. But if Cialis blankets the airwaves, they can swing market share from Viagra.

* Correction, by U.S. government (through law).

> Those drugs cost a fortune to make and the companies make their money in USA.

Yes R&D is expensive, but pharma is extremely profitable. Here in the U.S. and abroad.

The blockbuster hepatitis C drug will cost about $900 (around Rs 54,000) in India for a 12-week course of treatment. That would be a fraction of the $84,000 (over Rs 50 lakh) price tag for the same treatment in US.

I'm sure that they wouldn't be that profitable if USA paid $900 for that drug, especially the first few years.

https://www.nytimes.com/2015/02/04/business/sales-of-sovaldi... 140,000 patients in USA and going to 250,000

But the answer is still, yes, there is profitability. Just not as much as with the hyper inflated prices in the US.

In short: Does the extreme cost for drugs in the US cause groundbreaking research to benefit the whole world?

No, same results could be had with way less profit. Money to fund moonshot research is still important though.

Reagents are getting cheaper and better as well.

Yesteryears low hanging fruit costs the same as today's low hanging fruit. They are harder to solve though.

And no, I'm not saying everyone single biotech startup is like this or every single researcher does this. And yes many fail, but that's the cost of doing business and it's something that makes things progress.

That's survivorship bias. Yes, the successful pharma companies are quite profitable, but there are 10 failed companies for every successful one.

I remember reading a paper that said the overall returns for the industry are either single digit or negative.

The big ones buy up the small generic producers and single new drug companies and get slightly bigger.

The ones who can't pass trials fail. That's business, especially in R&D.