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Drugmakers: Flush With Cash

Because only about 10 percent of the price of most brand-name pills goes to cover the cost of the raw chemicals and manufacturing, the pharmaceutical industry has plenty left even after paying for advertising, promotion, research and the high salaries and expensive perks of its executives. While patients and taxpayers have been left with emptied pockets, the drugmakers have been flush with cash. From 1995 to 2002, they were the nation’s most profitable industry. In 2004, the pharmaceutical companies turned nearly 16 cents of each dollar of revenue into profit, according to Fortune magazine. That compares with the median profit earned by America’s 500 largest public companies that year of a little more than 5 cents.

From Our Daily Meds by Melody Petersen, to be published by Farrar, Straus & Giroux LLC. Copyright © 2008 by Melody Petersen.