Things that cost more than space exploration

Pop Quiz: What do presidential libraries, advertisements for prescription drugs, and pennies (yes, pennies!) have in common? They are all things that cost more than space exploration! (Hat tip: Tyler Cowen.)

What costs more than space exploration? Advertisements for prescription drugs. According to the Congressional Budget Office, pharmaceutical companies spent “at least $20.5 billion” promoting their drugs in 2008. The breakdown of that number is interesting: only about $4.7 billion of that money was spent on the direct-to-consumer advertising that probably came to mind when you first read the statistic, such as the television advertising where they cheerfully list of potential side effects. A much larger sum of approximately $12 billion was spent on ‘detailing’ to doctors, nurse practitioners, and physicians assistants; in this case, detailing basically means phone calls and one-on-one meetings with the health care professionals who write prescriptions to provide background information on each drug. A further $3.4 billion was spent on sponsoring professional meetings for health care professionals, with a remaining $400 million spent buying advertising in professional journals. To my surprise, this total spending on promotion was nearly half of the total amount spent on pharmaceutical R&D in the same year ($38 billion). Of course, the total profits in the same year were $189 billion. Amongst the various drugs, erectile dysfunction medication not surprisingly (at least to anyone who has ever watched TV at any point in the past decade) had the highest expenditure on direct-to-consumer advertising, but was below average amont the ten drug classes studied by the CBO in terms of detailing expenditures; Statins (used to lower cholesterol levels) were the subject of the largest detailing spend (and presumably the largest overall spend). According to the White House Office of Management and Budget, In fiscal year 2008, NASA’s total outlays (The amount actually spent by NASA, which sometimes differs from the amount appropriated by Congress) were $17.8 billion. (Photo: A GLeeMONEX art print available for purchase from the artist and the NASA logo.)

This entry was posted in Bayesian Reasoning, Economics, Questions Rarely Asked. Bookmark the permalink.

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