QUICK READ: Pfizer has already announced a price increase to the EU for their Covid Vaccine. With a CEO who earns more than $20 million annually and the potential for billions in profit Pfizer is reminding us that Wall Street is once again their primary customer.
Bulgarian Prime Minister Bokyo Borissov this morning said the US pharmaceutical giant has increased the cost of future orders sold to the EU from €12 per dose to €19.50. The company announced last month that it expects to make $15bn (£10.9bn) off its coronavirus vaccine this year based on current deals.
This comes at a time when industry fart sniffing publications like Fierce Pharma report “pharma continues to shine under the pandemic spotlight. The Global RepTrak 100 is the latest to mark the industry’s image improvements—noted as the poll’s biggest year-over-year gain among all its industry categories. Pharma earned a solid No. 8 spot ahead of industries such as retail, transportation, and media, and entertainment.
Quoting the movie Wall Street “how much is enough?”. Pfizer’s announcement comes on the heels of BMS announcing that their CAR-T therapy will cost over $400,000. BMS believes they price our medicines based on the value they deliver,” but physicians say the price is too high.
FOLLOW PROFIT, NOT NEED
One of the biggest problems with a system that directs medical research towards profits rather than needs is that R&D funding is channelled to those products that can make pharma companies the most money. The best prospects are drugs targeted at patients who are high-value and who will use the drugs long term. Best of all are patients in the US, where prices are highest, and with chronic conditions requiring repeat prescriptions. Or, as in the case of opioids like Oxycontin, where the drugs are highly addictive. On the other hand, one-shot vaccines for epidemics that mainly affect poorer countries are the classic example of a bad business prospect. Thus vaccine research was relatively neglected until last year – when COVID-19 suddenly became a rich country issue, and state funding poured in.
How do pharma industry supporters justify a system that denies affordable drugs to billions of people? The argument is that this is the only way to cover research and development (R&D) cost for new drugs. The main US industry lobby group Pharmaceutical Research and Manufacturers of America (PhRMA) says: “On average, it takes 10-15 years and costs $2.6 billion to develop one new medicine, including the cost of the many failures.” Without patents, they say, rivals could just copy their recipes and no one would ever bother to develop new medicines.
Drug companies on average spend about 20% of all their sales revenue on R&D.ii This is indeed high compared to other industries: only the aviation and space industry is more R&D intensive. But even so, sales cover costs many times over. Once drugs are on the production line, the actual manufacturing costs are tiny compared to often sky-high prices (unlike spacecraft, which are quite expensive to produce). Which explains that 20% profit margin.
The pharma industry is powerful, with a lot of friends in high places. In the US, the country with the world’s highest drug prices, pharma spends more than any other industry on lobbying. Over 22 years pharma companies and industry groups have spent $4.45 billion on lobbying US politicians – almost twice the amount of the next highest-spending industry, insurance.
I’ll never understand how a CEO could make so much money while so many people have trouble paying for drugs. The number of rank and file which will earn what a pharm CEO earns in one year is non-existent. I know some people care working in the industry, but their voices are muted.