Economics of medicine

Recently I was reading an article in Aeon Magazine about the challenges faced by the medicine industry – commonly referred to as Big Pharma or Big Pharma written in one of those fonts with blood dripping from it and a syringe being stabbed into a baby. One of the big changes in medicine development discussed was the patent period that allowed monopolies on new drugs, which in turn saw orphan drugs – not drugs for Oliver “please sir, can I have some more” Twist, but drugs for rarer conditions and illnesses – become more popular/profitable to develop.

It’s an interesting issue and the article is worth reading. But it got me to thinking about something a little tangential. No, not whether Oliver Twist needs a remake set in south-east Asian sweatshops. I wondered how much money is actually spent on things.

Take for example this:


Drug development appears to take a backseat to marketing. But this depends on what section of the market, how big the company is, and other factors. Clearly, medicine development is still a big expense, but how much is spent on research and development overall?

Worldwide pharma R&D $
Total global pharmaceutical research and development spending from 2008 to 2022 (in billions of U.S. dollars) Source.

That global pharmaceutical research spending is quite large at $165 billion. Or is it?

Rank Country Spending
($ Bn.)
% of GDP % of World share
World total 1,739 2.2
1 United States United States 610.0 3.1 35.0
2 China People’s Republic of China 228.0 1.9 13.0
3 Saudi Arabia Saudi Arabia 69.4 10 4.0
4 Russia Russia 66.3 4.3 3.8
5 India India 63.9 2.5 3.7
6 France France 57.8 2.3 3.3
7 United Kingdom United Kingdom 47.2 1.8 2.7
8 Japan Japan 45.4 0.9 2.6
9 Germany Germany 44.3 1.2 2.5
10 South Korea South Korea 39.2 2.6 2.3
11 Brazil Brazil 29.3 1.4 1.7
12 Italy Italy 29.2 1.7 1.7
13 Australia Australia 27.5 2.0 1.6
14 Canada Canada 20.6 1.3 1.2
15 Turkey Turkey 18.2 2.2 1.0  sourceoriginal

Suddenly the amount spent on medicine research and development seems rather small. The USA government alone could easily cover the expense of medicine research if it decided to change priorities, since it spends 3.7 times that much on defence.*

Would it be a good idea for governments to have a Department of Pharmaceuticals that researched, developed, and sold medicines? Would that be money better spent than stockpiling tanks in a desert? Certainly, it would address several of the issues raised in the Aeon Magazine article around how the profitability of drugs, rather than the consumer needs, drives research and development.

This sort of thinking could be applied to many industries. The reality is that there isn’t actually a shortage of money but a lack of incentive to invest money in some areas in favour of others. The solution doesn’t have to be the government taking over, nor does it have to be about private companies not being profitable. But maybe it does have to be about rethinking what we spend money on.

Richard Denniss made similar arguments in his Quarterly Essay Dead Right about the Australian economy.

So maybe it is time to stop accepting the argument “we can’t afford X” and start having the discussion about how we spend for the most good. Or not, I’m not your boss.

*To be clear, I’m not suggesting we stop all spending on something like defense, or that there aren’t reasons for spending money on things like tanks. But as Richard’s video suggests, we are making value judgments and assumptions without really questioning them.


Book Reviews: Bad Science by Ben Goldacre

Bad ScienceBad Science by Ben Goldacre
My rating: 5 of 5 stars

It has been a while since I’ve blogged one of my book reviews. I guess that is part of the parenting manual that I didn’t read: hobbies are no longer priorities. There have been plenty of good books pass before my eyes since my last review, but I felt content just to let a short sentence, a star rating and an update to my Twitter feed to promote a good read.

This is slightly different. Ben’s book made me annoyed.

I’m a science nerd. I prefer to read the original research papers rather than the media coverage of them, as it is always terrible, usually based on a half-arsed press release and never links to the actual research. I am constantly amazed that in our modern age of computers, internet, vaccines, satellites and zero calorie drinks that people still believe in stuff that wasn’t plausible 200 years ago. And that’s why Ben’s book annoyed me. He made it painfully obvious how deliberate some of the misinformation campaigns have been.

I knew homoeopathy was rubbish (magic water droplets on sugar pills, or as I prefer to call it, a placebo), I knew that complimentary medicine is the term for stuff that hasn’t ever been proven to work, I knew anti-vaccine campaigners clearly didn’t remember that my dad’s generation had polio victims everywhere, I knew that “Big Pharma” are a mixed bag of good and bad science. So if I knew all of this already, why am I annoyed? Because I didn’t realise just how culpable the news media were and how media liaison and PR companies are straight up lying to people.

You see, I always thought, and this is still mostly true, that most media get science wrong because they don’t understand it and it isn’t easy to do the background research to check a press release on a study. I see this as not having the specialist science reporters doing the science journalism (imagine if a science journalist reported on climate change from the beginning, we’d have emissions at zero by now). But with Ben’s section on the MMR “controversy” and the “nutritionists” in the media, he paints a very clear picture of culpability that the media needs to address, or as Ben points out, people will just go to science blogs written by actual scientists in that field.

Excellent book and a must read for anyone who still reads newspapers or watches the TV news.

View all my reviews

PS: Yes, I’m also guilty of not publishing results, like most scientists I know. I make no excuses, I’m a terrible person.