Monday, November 23, 2015

Why are drug prices so damn high?

Answer: Because the drug companies spend to damn much on marketing.    The biggies all have armies of salesmen, with sample kits, company cars, and expense accounts.  The salesmen visit every doctor in the land at least once a month.  They take the doctor out to lunch, and they buy pizza for his staff.   At lunch they push their company's line of pills. 
   This is the most expensive way to market a product imaginable.  It works, and if everyone in the industry does it, everyone has to keep up.   Paying all those salesmen takes a big pot of money, and the drug company has to get the money from somewhere.  Guess where it comes from?
   Economical marketing is to merely offer the product on the Web and get some articles placed in the medical trade journals.  A step up from that is to open brick and mortar stores.  The special sales call is as expense as it gets. 
   Not sure what we can do about it, other than taxing it.  Right now, sales expenses are a legitimate business expense and can be deducted from income.   Not sure if I like the idea of the IRS telling companies how much they can spend on various business activities.  Maybe some public interest group could lookup and publicize how much the drug companies spend pushing drugs to doctors.

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