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'Big Pharma': What is it, Exactly?


Big Pharma: What is it, Exactly?

Big Pharma. Two small words with one big stigma.

As this stigma snowballs from years of FDA reports and NIH findings, picking up new connotations and judgements, the actual meaning of the term "Big Pharma" becomes more blurred with each revolution.

So, let's start over and answer these questions:

What is Big Pharma?

Who is Big Pharma?

What is this industry supposed to be doing?

How did the industry grow into what it is today?

What is Big Pharma

The term, "Big Pharma" refers to the global pharmaceutical industry; the world's largest publicly traded drug and medical device manufacturing companies. It also includes the Pharmaceutical Research and Manufacturers of America, otherwise known as 'PhRMA'.

The pharmaceutical manufacturing industry is one of the largest and most lucrative in the world, raking in a global revenue of $1.41 trillion in 2021 alone. While this figure is certainly nothing to sneeze at, pun very much so intended, the pharmaceutical industry takes the idea of 'spending money to make money' letter for letter.

With one of the largest advertising budgets across all US industries, it is estimated that for every $1 major drug manufacturing companies spend on basic research, they spend $19 on advertising. This includes budgeting for the thousands of paid lobbyists advocating for Big Pharma companies, amounting to $3.5 billion spent between 1998 to 2016. This is mountingly more than any other global industry spent on lobbying.

So, now that we know what Big Pharma is and why the industry is so widely talked about, let's introduce the major players in the game.

Who is Big Pharma

There are 10 major pharmaceutical and medical device manufacturing companies, and while only 28% of American's have fair opinions of Big Pharma, 6 of the 10 are within the United States.


​Company

Popular Medications

Pfizer

Eliquis, EpiPen, Viagra, Lyrica

Johnson & Johnson

Tylenol, Fentanyl, Lexapro

Merck & Co.

Gardasil, NuvaRing, Singulair

Gilead Sciences

Tamiflu, Descovy

AbbVie

Humira

Amgen

Otezla, Repatha, Prolia

There are also four leading companies outside of the United States.

Company

Location

Popular Medications

GSK

United Kingdom

Advair, Flonase, Valtrex

Novartis

Switzerland

Cosentyx, Ritalin, Xolair

Sanofi

France

Ambien, Dupixent, Zantac

Roche

Switzerland

Valium

These companies own the rights to the highest profiting medications and medical devices around the globe, but another question that must be answered is, "Who owns Big Pharma?"

The short answer is: The FDA.

The long answer is; the FDA regulates all pharmaceutical and medical device manufacturing. However, with the number of new drug applications surging each year, true regulation is becoming more difficult by the minute. Just this past year, the FDA was tasked with sifting through 1,500 investigational drug applications.

This statistic aside, drug manufacturing companies are responsible for following current good manufacturing practices (CGMPs), and the FDA is responsible for enforcing them.

What Regulations are Supposed to be Followed

Current good manufacturing practices are set by the FDA, and are in place to guarantee that the drug creation process is designed properly.

Regulations are held over both the processes and facilities used to manufacture medications and devices, and are used to control certain aspects of drug design such as quality and purity.

According to the FDA, CGMPs are in place to oversee the following:

  • Quality management systems

  • The obtaining of quality raw materials

  • Full-bodied operating procedures

  • Product quality deviations

  • Formidable testing labs


It is the belief of the FDA that these directives mitigate the occurrence of contamination, deviations or drug failures, and there are consequences associated with failure to comply.

If a pharmaceutical company does not comply with the CGMPs, any drug linked to that company is labeled as, "Adulterated". While this does not mean the drug is harmful or ineffective, it does mean the quality of the drug is currently compromised until proven otherwise.

If a drug is found by the FDA to be unsafe or ineffective, the company can recall the drug or the FDA can request the drug to be recalled. Should the company refuse to recall the medication, the FDA can warn the public and seize the drug. While the FDA cannot force a company to recall a product, it can take the medication off pharmacy shelves until further notice.

How Did the Industry Grow Into What it is Today?

At this point you may be wondering, "With all these regulations, expenses and competition, how did Big Pharma get to where it is now?"

The answer is research and design.

Over the past two decades, the pharmaceutical industry has become saturated with the introduction of new drugs. In 2019, the industry spent $83 billion on research and design alone, 10x more than the design budgets in the 1980s.

Moreover, throughout the 2000s, the number of new drugs approved swelled by 60%. When 59 drugs were approved in 2018 alone, the industry peaked. This past year, only 37 new drugs were approved, however, research and design budgets have remained steady due to the increasing of profit expectations of individual drugs.

Altogether, Big Pharma is a cluster of the world's most profitable businesses, all of which are regulated by the FDA. From advertising to manufacturing, these companies spend more to make the most and have become some of the most well-known entities to date.

Interested in learning more about the pharmaceutical industry? Check out some of our other blogs here.



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