Searching for smart, safe news you can TRUST?

Support safe, smart, REAL journalism. Sign up for our Axios AM & PM newsletters and get smarter, faster.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Searching for smart, safe news you can TRUST?

Support safe, smart, REAL journalism. Sign up for our Axios AM & PM newsletters and get smarter, faster.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Denver news in your inbox

Catch up on the most important stories affecting your hometown with Axios Denver

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Des Moines news in your inbox

Catch up on the most important stories affecting your hometown with Axios Des Moines

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Minneapolis-St. Paul news in your inbox

Catch up on the most important stories affecting your hometown with Axios Minneapolis-St. Paul

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Tampa-St. Petersburg news in your inbox

Catch up on the most important stories affecting your hometown with Axios Tampa-St. Petersburg

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

The pharmaceutical industry has long argued that U.S. drug prices are high to help pay for the risky business of inventing and developing new medicines. A glance at research and development expenses for eight of the largest drug companies shows their research budgets depend on the sales of drugs — and drug companies aren't afraid to take a hatchet to R&D if sales disappoint.

The takeaway: Developing drugs is an expensive process that costs billions of dollars and frequently ends in failure. But after drugs get federal approval, their prices often far exceed R&D costs, taking almost all of the risk out of the process.

Expand chart

What we looked at: The research and development expenses for eight big pharmaceutical firms: Amgen, Eli Lilly, Gilead Sciences, GlaxoSmithKline, Merck, Novartis, Pfizer and Roche. A few trends popped out:

  • R&D expenses for most companies hovered at or below 20% of their revenue since 2010. That's consistent with the historical trend.
  • Pfizer and GlaxoSmithKline routinely had low R&D spending. Neither saw research costs tip above 17% of their revenue over the past seven years.
  • R&D expenses fell to 9.2% of Gilead's revenue in 2015, the same year the company's revenue exploded from its new hepatitis C drugs, Sovaldi and Harvoni.
  • It was common for net profits and marketing budgets to surpass drug company R&D spending.

R&D gray areas: How a company defines "research and development" also can be murky. For example, in 2012, Gilead counted more than $100 million of stock-based compensation toward its R&D expenses — not exactly the clinical trial or research lab work that comes to mind. That payout money was tied to its acquisition of Pharmasset, the company that actually developed the blockbuster hepatitis C drugs.

Go deeper

Updated 2 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Health: Ipsos poll: COVID trick-or-treat — Study: Trump campaign rallies likely led to over 700 COVID-related deaths.
  2. World: Boris Johnson announces month-long COVID-19 lockdown in England — Greece tightens coronavirus restrictions as Europe cases spike — Austria reimposes coronavirus lockdowns amid surge of infections.
  3. Economy: Conference Board predicts economy won’t fully recover until late 2021.
  4. Technology: Fully at-home rapid COVID test to move forward.
  5. States: New York rolls out new testing requirements for visitors.
3 hours ago - Health

Boris Johnson announces month-long COVID-19 lockdown in England

Prime Minsiter Boris Johnson. Photo: NurPhoto / Getty Images

A new national lockdown will be imposed in England, Prime Minister Boris Johnson announced Saturday, as the number of COVID-19 cases in the country topped 1 million.

Details: Starting Thursday, people in England must stay at home, and bars and restaurants will close, except for takeout and deliveries. All non-essential retail will also be shuttered. Different households will be banned from mixing indoors. International travel, unless for business purposes, will be banned. The new measures will last through at least December 2.

Updated 4 hours ago - Politics & Policy

The massive early vote

Illustration: Sarah Grillo/Axios

Early voting in the 2020 election across the U.S. on Saturday had already reached 65.5% of 2016's total turnout, according to state data compiled by the U.S. Elections Project.

Why it matters: The coronavirus pandemic and its resultant social-distancing measures prompted a massive uptick in both mail-in ballots and early voting nationwide, setting up an unprecedented and potentially tumultuous count in the hours and days after the polls close on Nov. 3.