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US Taxpayers Subsidize Wealthy Drug Companies
Drug companies are some of the wealthiest and profitable companies in
the world. Yet these multi-billion dollar corporations use taxpayer
money to develop more products to sell and increase their profits. A
story from the July 24,2001 Associated Press exposes the fact that some of
the richest companies in the world receive large amounts of taxpayer
money.
According to the Associated Press story, more than half
the money needed to create top-selling prescription drugs came from U.S.
taxpayers and not industry investment. Best sellers like the
ulcer-curing Zantac or Zovirax, which treats herpes simplex, were
developed and tested chiefly through grants from the National Institutes
of Health. The study was performed by the National Institutes of
Health and showed that out of 131 studies, clinical trials and other tests
on five best sellers from 1995, only one industry study was key to a
drug's development for use and sale.
The drug companies claim to need this money and large product markups
for research to develop new drugs. Yet according to a report by the
Families USA, a consumer group based in Washington, DC. and reported in
Reuters Health July 10, 2001, drug firms spent more than twice as much
last year on advertising, marketing and administration as they did on
research and development. The report, based on companies' financial
disclosures to the Securities and Exchange Commission, also points out
that a number of the largest drug makers continue to lavish their top
executives with compensation packages worth tens of millions of dollars
per year.
According to the report by Families USA, Pfizer last year spent 39% of
its nearly $30 billion in revenue on advertising, marketing, and
administration. Only fifteen percent of revenue went to new drug
development, while 13% went to profits. The company paid Chairman William
C. Steere over $40 million in salary, bonuses, stock options and other
compensation in 2000, the report states.
"The drug industry is stealing from us twice," said Frank
Clemente, director of Public Citizens Congress Watch. "First it
claims that it needs huge profits to develop new drugs, even while drug
companies get hefty taxpayer subsidies. Second, the companies gouge
taxpayers while spending millions from their profits to buy access to
lawmakers and defeat pro-consumer prescription drug legislation."
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