The Health Care Industry

Paper Summary:

The paper examines these articles: "The Link between Gross Profitability and Pharmaceutical R&D Spending" by F.M. Scherer; "The Impact of Pipeline Drugs on Drug Spending Growth" by Mullins, Wang, Palumbo and Stuart; and "Improving the Quality of Health Care: Who Will Lead?" by Becher and Chassin. The first article explains pharmaceutical firms are not playing fair and square with the data regarding what amount of profits they are actually pouring into legitimate research and development projects. The author points out, from the second article, that the market can predict quite easily the impact of each new drug because an increase in consumer spending on these drugs can be evaluated by using the three factors of price, utilization, and product shift. The paper relates, in the third article that, today in the health care industry, there are three categories of quality problems, which harm patients, including not getting beneficial health services, undergoing treatments or procedures from which they will not benefit, and receiving the medical services they really need, but having those services provided badly, which exposes patients to an addition risk of preventable complications.

Table of Contents
Article 1: The Link between Gross Profitability and Pharmaceutical R&D Spending
Introduction
Time-Series Analysis,
The Gross Margins versus R&D
Article 2: The Impact of Pipeline Drugs on Drug Spending Growth
Article 3: Improving the Quality Of Health Care: Who Will Lead?

From the Paper:

"However, if those making executive decisions within pharmaceutical companies have the vision to see what will sell on the market two or three years down the road " as for example, Tagamet sold well in 1977, and it was an R&D launch " there are great opportunities for great new profits. That means drug companies are not just hiding profits or concealing profits on so-called R&D, to satisfy stockholders and other interested parties."

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