What Is Big Pharma, and How Does It Make So Much Money?


Unless you’ve been living under a rock, you’ve probably heard the term “big pharma.” Big pharma is the nickname for the world’s pharmaceutical industry. It also may refer to the trade group Pharmaceutical Research and Manufacturers of America (PhRMA). Some of the largest big pharma companies include Pfizer, Johnson & Johnson, and Roche.

Big pharma is one of the most powerful industries globally, and along with medical companies device companies, it brings in billions of dollars each year. How does big pharma make so much money? Read on to find out.

  1. Chasing Profits

Since big pharma mainly focuses on making medicine, you’d think their main priority would be to help people. However, rarely is this the case.

While most pharmaceutical companies receive substantial assistance from the government through tax breaks and publicly funded research, they charge exorbitant prices for medications. For example, in the US, over 1 million people suffer from Type 1 diabetes, a condition where the body doesn’t produce enough insulin.

To stay healthy, people with diabetes need to take insulin shots. Sadly, among those with diabetes, 1 in 4 have admittedto insulin rationing- a process in which you use less insulin than needed to make the dose last longer. This is a direct result of the skyrocketing price of the drug.

While insulin rationing can lead to a fatal condition called diabetic ketoacidosis, many Americans have no other choice but to do this.

  1. American Tax Payers Fund Research

Another reason big pharma companies are able to make so much money is because American taxpayers fund a lot of their research.

Billions of taxpayers’ dollars go toward the creation and marketing of new drugs. In fact, the LA Times reported that since the 1930s, the National Institue of Health has invested almost $900 billion into the research that formed both the biotechnology and pharmaceutical sectors.

Even though taxpayers play a crucial role in the progress of pharmaceutical research, they’re paying increasingly more money for their prescription drugs.

  1. Patenting Everything

A patent is a type of license that guarantees the rights to a new product. In the case of big pharma, it’s medicine. This means that when a big pharma company patents a new medicine, no one else is allowed to produce the drug without the company’s permission for the life of the patent, which is usually about 20 years.

In other words, a patent means that a big pharma company can gain a legal monopoly over a particular drug. If they’re the only company producing a certain drug, then they don’t have any competition. This means they can set the prices as high as they want and people who need the drugs have no other choice but to buy.

You can check out this video by Roivant Sciences to learn how big pharma can be stopped.

Big Pharma: Time to Act

As you can see, there are many questionable ways that big pharma makes money. While people have started to wake up to the corruption of big pharma, there’s a long way to go before any big changes happen.

For more updates on big pharma, check back in with our blog.

Rachel Crib
Rachel Crib
Rachel has lived in Lancaster her whole life. Trish has worked as a journalist for nearly a decade having contributed to several large publications including the Yahoo News and the Lancaster Post. As a journalist for The Tiger News, Cristina covers national and international developments.

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