you've still got it wrong. the public pays for r&d using tax dollars to research universities and then we turn it over to the parma's, (for free?).

Once again I wish I had the perfect memory so I could cite sources flawlessly, but of course I don't. On the other hand, I probably read most of what's formed my opinions on Salon.com, so I bet it's all pretty easy to find.

But, yes, Big Pharma -- and other industries, too -- do take research funded by our tax dollars, patent it, and make money from it. I also recall an article which discussed how many actual new drugs the pharmaceutical companies develop; turns out it's really small. Most of their money goes towards copycat drugs, chemicals very similar to already-profitable chemicals made by other companies.

That's socialism for the rich! I wish I could go get some free stuff from the government and use it to make millions. Maybe if our taxes paid Garry Trudeau to make comic strips, then I could grab them and copyright them and sell them to newspapers! Sounds good to me. Write your congresscritter.

what am I missing here?

second paragraph: second line: "benefits from research paid for by the public sector"

the point of this post was not to dispute that Big Pharma exploits research paid for the public sector; that's a given. the point was to try to get some clarity on what the actual numbers are.

I don't know how long you researched this, but I wish you had taken longer and come up with some real conclusions. As it is, you seem to be hoping that one of your readers will look at this and run with it, do their own research, and publish a more substantial story with real facts and conclusions. All this does is illustrate the limitations of journalism being squeezed into a blog.

Disclosure: I work for a company that provides services to the pharmaceutical and biotech industry.

First off, having a large quantity of capital tied up IS a substantial expense (and risk). There's nothing "funny" about that, although obviously it can only be an estimate. (Since no drug is ever guaranteed to work at the outset of research, all these costs are little more than gross estimates - the vast majority of treatments fail testing in one way or another.)

Second, "overhead" can't really be entirely separated from research; it's a necessary cost of doing business that simply doesn't fit into nice little cubbyholes.

Third, marketing expenses are just as "copied" as the drug's formula when a generic takes up the position. They piggyback on the information and recognition the original developer paid to provide.

Fourth, a significant amount of the profits are re-invested in the companies in question, who live their existences constantly in the shadow of knowing that their current product line is going to disintegrate (not might, but will) with absolutely no guarantees of a replacement. Their profits often swing wildly from year to year.

Fifth, if they're so amazingly profitable why isn't everyone dumping their money into them, buying up their publicly traded stocks for the awesome dividends they must be paying out?

Frankly, I resent the constant implication that those of us who work to better the health of mankind (and domesticated animals as well) are evil because we cannot do it for free. There are no quick, easy, cheap, short-term answers. In the long run, every drug is going to be nearly as cheap as it is to produce per widget.

First: good points, Pyrian, thanks for bringing them to the table. But are you saying that you think that the $802 million dollar figure is a valid one? And as for the marketing "copying" -- I'm not sure that's all that relevant with respect to Brazil's National AIDS Plan, which is where this particular thread started. Brazil's spending on the particular AIDS drugs that its Ministry of Health chose for treatment was based on their efficacy in treating HIV, not on their popularity as a result of successful marketing.

Second: But what I really want to address at this point is Mark Pritchard's brutal smackdown. I'll admit, right off, it's a fair critique. I've been a working reporter for most of the past 15 years, and I'll be the first to admit that the blog format does not allow for the same kind of journalism and reporting that goes into a long, carefully researched feature.

However, what I'm trying to do here, will, I hope, ultimately end up in ploughing some new ground, through the accumulation of posts that inexorably build on each other, piece by piece, Lego block by Lego block. And the litmus test for me that determines whether something is worth posting is not necessarily that it informs all the readers of How The World Works something that they don't know (although obviously that would be ideal) but to learn something that _I_ don't know, post it, and move on to the next thing.

There's some aspects of globalization that I'm better informed on than others -- I believe that my background covering China and free software allows to me to cut more quickly to journalistically interesting things in those areas. My expertise in Big Pharma and intellectual property: not so much. This morning, the goal was to gather some data on R&D numbers -- next week, we'll go a little further.

It will be interesting to see how far the format can be pushed.

I always suspected their numbers were bogus, but that is more than I'd imagined. ridiculous.

" But are you saying that you think that the $802 million dollar figure is a valid one?"

Regardless of whether it's correct, I don't think it's a meaningful number. So many factors can change the cost of developing any given drug, and so many drugs fail, that it's not possible to, for instance, give me a billion dollars and a disease and be guaranteed of a cure (or even a treatment). At best you can average what has been spent versus what has been accomplished, to get a sort of mean efficiency figure.

The important points, I think, are that it's not done by entities without massive amounts of capital to throw at often dubious prospects.

" And as for the marketing "copying" -- I'm not sure that's all that relevant with respect to Brazil's National AIDS Plan, which is where this particular thread started."

Well, that begs some interesting questions. For one, did Abbott spend a lot of money to market it in the first place? And did that marketing affect Brazil's choice of that particular cocktail?

Honestly, I'm more than a little dubious about the marketing of prescription drugs. It's one thing for lifestyle drugs a la E.D. treatments, but really, most people simply take the drugs their doctor gives them. Too much of our doctors' information on drugs comes from marketing rather than education - I'm not saying that marketing doesn't educate (the FDA regulates what they must and are allowed to say, and does so much more heavily on the information packets that must be given to doctors), but the fundamental goal is different and that fact ultimately squeezes itself into play whenever possible.

That being said, the fundamental issue is still one of profit - in the worst case scenario, a full cure never comes to light due to research being allocated to areas where companies can make more money. If Big Pharma were so badly misallocating resources to marketing as these conversations suggest, I think they'd be crushed by now.

I also want to touch briefly on government and academic "subsidies" of pharmaceutical research. I'm going to start by separating basic research from specific drug research.

The former, the study of general genetics, proteomics, etc., clearly needs to be in the public domain. Yes, pharmaceutical companies benefit far more than they pay for it, yet it would be incredibly inefficient for each company to have to, say, decipher our genes independently. The federal government has been involved in supporting pure research in virtually every field, to the benefit of virtually every technology company in every field.

The latter - the not-uncommon case of an academic researcher passing a promising drug candidate on to a pharmaceutical with the capital to bring it to market - may very well be undervalued. It's worth noting that this sort of thing happens all the time, and not just from academia; many small companies have started from investment capital, come up with a promising drug candidate, but, unable to muster the millions necessary to test that candidate, sold it to a bigger fish. In fact, the "bigger fish" are increasingly getting their best products through such buyouts. From what I've seen, the academia products don't get nearly as much on their investment as the small biotech startups do; in many cases, this is simply because they don't drive a bargain.

Basically, you've got some guy working on a government grant who wants to help mankind, but reaches a point where he simply does not have the resources to go it alone anymore. This professor is generally not a driven negotiator... Which, if he were, on the one hand, might well drive up the cost of the end product, but also might give the most effective minds more capital to work with.

Okay, I think I'm just rambling now.