I only now noticed this odd interview by Ezra Klein, which Megan McCardle has dealt with. But I wanted to point out the underlined sentence below. Apparently, drug companies are bad because they have administrative costs and such. Unlike their chief competitors, universit . . . Oh. Wait. (see p. 33 for the punch line).
"You occasionally hear that a national health-care system would have a devastating impact on medical innovation -- and particularly on drug research. As the thinking goes, the system would save money, but in saving money, it would reduce profits for drug manufacturers, which would reduce the incentives for innovation. Is this worth worrying about?
No, it isn't. . . . There are a couple reasons that this is a specious argument. One is that according to their filings with the SEC, the drug companies only spend about 15 cents of every dollar on research and development. That's compared to more than 30 cents in administration and marketing and more than 20 cents on shareholder equity. As an investment in R&D, I think any venture capitalist would say a company spending 15 percent on research is not a robust innovation engine".
8/05/2009
Subscribe to:
Post Comments (Atom)
4 comments:
I agree with McArdle's basic point, but I don't understand your comparison to Harvard, at least w/ regard to the graphs on p.33 of the 2006 Fact Book.
Unlike pharmaceutical companies, universities have a stated mission that goes beyond research. Indeed, a university that spent more on research than on instruction, academic support and student services, is not a university I'd want to attend for undergraduate studies nor graduate work in a field that doesn't involve doing much research, e.g. law or business. Given Harvard's responsibilities to TEACH and be a repository of existing knowledge (libraries) as well as enabling our alleged meritocracy (scholarships and fellowships), the fact that almost a quarter of their budget goes to research is actually quite impressive. Are there pharma companies that have those responsibilities as well? If not, this is beyond apples to oranges.
What, no commentary on the Times' choice of food critic???
Sarah - I am literally on a flight, thanks to the wonders of in air wifi, so I haven't really had a chance to read his stuff. What I have seen seems to be quite good. The other thing to note, I suppose, is that the by times anonymity norm seems to have been dismissed, as sifton Is quit well known.
Very interesting blog and very nice article thanks for the posting........ keep moving ahead.........
___________________
Smarry
Online Marketing of your brand
Post a Comment