- The amount of money people spend on prescription drugs has nearly doubled since the 1990s.
- According to the GAO “pharmaceutical and biotechnology sales revenue increased from $534 billion to $775 billion between 2006 and 2015. Additionally, 67% of drug companies increased their annual profit margins during the same period—with margins up to 20 percent for some companies in certain years”.
- Pharmaceutical companies have some of the highest profit margins in the world, a distinction that has earned the industry criticism from both politicians and consumers, who often complain about the high prices of prescription drugs
- PhRMA launched a PR campaign to blame PBM’s for high drug prices and it seems to be working.
The GAO analysis of industry profits pointed out that revenues and profit margins in the pharma industry are on the rise. “We looked into changes in the drug industry and found that pharmaceutical and biotechnology sales revenue increased from $534 billion to $775 billion between 2006 and 2015,” the GAO reported. “Additionally,[inlinetweet prefix=”” tweeter=”” suffix=””] 67 percent of drug companies increased their annual profit margins during the same period—with margins up to 20 percent for some companies in certain years[/inlinetweet].” Spending on research and development increased as well, to $89 billion in 2014, from $82 billion in 2008.
Pharmaceutical Research and Manufacturers of America (PhRMA) argues that focusing on list prices “misrepresents” reality. The industry trade group maintained that wholesale prices generally do not correspond to net prices — what companies, unions, and government agencies pay — because drug makers offer rebates. This is pure corporation spin bullshit.
[inlinetweet prefix=”” tweeter=”” suffix=””]Ninety-nine of the largest publicly traded health care companies cumulatively collected $33 billion of profit and $577 billion of revenue worldwide in the third quarter this year, according to earnings reports[/inlinetweet]. Pharma companies collected more than 60% of those profits, but only 22% of the revenue.
Reality is a dish best served cold
Those of us in the industry know that pharma is making record profits, but we also understand that the pricing of prescription drugs is broken. Yes PBM’s are making obscene profits at the patient’s expense, but two hands in wallet don’t make it easier for patients to afford medications.
PhRMA would have us believe that it’s all the fault of PBM’s but that’s just a PR talking point and is not based in reality. PhRMA spent over $15.7 million on lobbying through the end of June, and equaling that amount over the second half of the year would eclipse the $27.4 million the organization spent in 2009. PhRMA’s total for the year so far puts it third among all entities.
[inlinetweet prefix=”” tweeter=”” suffix=””]Until the secret transactions between PBM’s and pharma are more transparent the only way we can follow the money trail is through profits and right now pharma is raking it in.[/inlinetweet]