Money and Medicine

Money and Medicine

Davenport University

ECON 625

Dr. Timothy Schilling

August 14, 2013

Abstract

The purpose of this research is to show how the funding for drug research, not-for profits and pharmaceutical companies is distributed. Funding to be investigated includes governmental, donations and grants. This research will also address the effects of drug company supported research on clinical trials and having physicians on their payroll. Through graphs and data provided by various sources, the data will be analyzed and explained. Finally, the research will show that there is a correlation between drug company funded research and their financial interests.

Introduction

Pharmaceutical companies and nonprofit organizations such as MD Anderson have one thing in common and that is research. Medical research is a vital aspect of human life that finds cures, develops new drugs, and generally promotes longer, healthier lives. In order for this research to happen there is one underlying component that drives the entire process and that is money. Funding for research comes from a variety of sources such as: private, government, businesses and pharmaceutical companies themselves.

The National Institutes of Health is a major contributor of medical research and plays a huge role in providing funding for over 300,000 research personnel at over 2,500 universities and research institutions (National Institutes of Health, 2013). In addition to being the largest source of funding for medical research in the world, the National Institutes of Health has its own scientists and laboratory with over 6,000 researchers. As part of the Unites States Department of Health and Human Services, the National Institutes of Health is a major contributor to extending the life span of Americans and creating healthier lives. Additionally, the successes of their contributions can be measured by the disabilities in people over age sixty-five having dropped dramatically and deaths from cancers having fallen considerably.

In addition to the funding of research by various organizations and individuals, donations are a vital aspect of increasing research budgets. It is hard to avoid solicitations for money with cell phones, Internet, television, mail and countless other ways to approach people. No matter where you go there is usually someone asking for a donation. Whether it is for homeless animals, cancer research, or the local homeless shelter, these organizations want your money. While some people are wary of giving their money to the person on the street with a collection jar, donations are a crucial component of successful research and development for medications and curing diseases. However, it is important to be cognizant of what type of organization a person donates to as well as how that money is distributed.

The allocation of funds is the main source of interest as these funds could be used for any area from administrative salaries, actual program expenses, or fundraising expenses. According to Charitywatch.org, a non-profit that evaluates charities' audits and tax filings and scores them for the advantage of donors, the gold standard for a non-profit organization is to use more than seventy-five percent of donations for program activities. This is a guideline that can be used by private donors, large corporations, or anyone that donates money when analyzing organizations in which to donate.

Drug Research

Drug research is vital for the ongoing quest to manage and cure disease. In order for the research to continue there needs to be continuous funding. As an example, the United States biomedical research currently amounts to approximately $100 billion annually, as of 2010 (Dorsey et al., 2010, pp. 137-143). Almost sixty percent of the funding comes from industry with the federal government providing approximately thirty-three percent. These findings all come from a study published by the Journal of the American Medical Association who was attempting to put a figure on the exact dollar amount of research in the particular field. The remaining funds, or approximately seven percent, came from individual donors, foundations, and advocacy organizations. Biomedical research is appreciated as a source of fresh and more successful treatments for ordinary or devastating diseases. This example alone proves the necessity for research and development but additionally begs the question of how is the money allocated. The days of drug representatives taking doctors out to lunch and giving gifts are now gone. The drug research has taken a turn towards paying doctors to speak about their product to other physicians.

While the government continues to make brand-name drugs more affordable to the public, patents on these drugs stand in the way for any hope of generics. The overall problem is that these brand name drugs are where these companies make their profit. From one-quarter to one-half of a big pharmaceuticals revenue is derived from brand name products (Noah, 2011). Having so much wealth allows the pharmaceutical companies to have more power to block governmental regulation on patent time limits or even the possibility of volume discounts on these drugs for Medicare. The argument is that these profits are necessary to maintain research and development because the overall costs are so high.

In the past few years there has been significant debate of the possible impact of drug companies financial support on medical research. To elaborate, an example is pharmaceutical industry funding of psychiatric research. This research has risen dramatically in recent years, which raises the question of is there a relationship between the funding of clinical psychiatric studies by pharmaceutical companies and the positive outcomes of those studies. The following table illustrates the drugs studied and the favorable outcomes based on which organization supported the research.

The data in the table indicates an association between pharmaceutical industry funding of clinical studies and the positive outcomes of the studies (Kelly et al., 2006). This example could be interpreted as a conflict of interest and therefore not beneficial to anyone other than the pharmaceutical company's bottom line.

In a letter to the American Psychiatry Association, Senator Chuck Grassley, ranking member of the Finance Committee, asked