SUMMARY: Large-cap pharma companies are trading higher in the morning hours after White House unveiled a framework for a deal on President Biden’s social spending package on Thursday leaving out a key provision that allowed Medicare to negotiate lower prescription drug prices. In 2019, Medicare Part D covered more than 3,500 prescription drug products, with total spending of $183 billion, not accounting for rebates. The plan to allow the government to negotiate drug prices for Medicare is dead due to big pharma buying politicians.
The pharmaceutical industry had one agenda: Heading off Medicare drug price negotiation, which it considers an existential threat to its business model. The siren call to contain rising drug costs helped catapult Democrats to power, and the idea is popular among voters regardless of their politics. Yet granting Medicare broad authority to intervene in setting prices has nonetheless divided the party.
Pharmaceutical companies and their lobbying groups gave roughly $1.6 million to lawmakers during the first six months of 2021, with Republicans accepting $785,000 and Democrats $776,200, the Pharma Cash to Congress database shows. Since the 2008 cycle, the industry has generally favored Republicans. The exception was 2009-10, the last time Democrats controlled both chambers of Congress and the White House.khn.org · by Victoria Knight, Rachana Pradhan, Elizabeth Lucas
Most people in pharma lie to themselves. They rationalize that prescription drug spending is only 12% of every healthcare dollar spent. While retail prescription drug spending was estimated to account for nearly 12% of total personal health care service spending in the United States in 2019 (up from about 7% in the 1990s). A separate report by the IQVIA Institute for Human Data Science found that patients paid a whopping record of $67 billion out of pocket for prescriptions filled in retail pharmacies in 2019.
A KFF Tracking Poll found that large majorities support allowing the federal government to negotiate and this support holds steady even after the public is provided the arguments being presented by parties on both sides of the legislative debate (83% total, 95% of Democrats, 82% of independents, and 71% of Republicans).
Drug companies tend to say they are unique in needing to spend a higher proportion of their capital on research than almost any other industry. But of all the companies in the world, the one that invests the most in research and development is not a drug company. It’s Amazon
Most adults – across partisans – don’t believe high drug prices are needed for drug companies to invest in new research instead agreeing that “even if U.S. prices were lower, drug companies would still make enough money to invest in the research needed to develop new drugs.
According to the Center for Responsive Politics, the pharmaceutical and health products industry spent $309 million on lobbying in 2020, placing it at No. 1 among industry groups — with double the spending of the No. 2 group. The same year, the industry spent $89 million on well-focused campaign contributions. That trend has continued, with $171 million in lobbying expenditures so far this year and generous campaign donations targeting key members of Congress. Peters alone received checks written by drug industry CEOs and lobbyists totaling $19,600 within two days of his opposing a price negotiation plan in May.
While industry plays an important role in drug innovation, a growing body of research shows that public and nonprofit funding and research are the ultimate sources of many of the most transformative drugs we have for cancer, heart disease, and other conditions. This taxpayer support comes during the riskiest and most pivotal points in early drug discovery, whereas private funding often comes in later to support the development and regulatory approval.
The most telling data on a disconnect between drug prices and research costs has received almost no public attention. Peter Bach, a researcher at Memorial Sloan Kettering, and his colleagues compared prices of the top 20 best-selling drugs in the United States to the prices in Europe and Canada. They found that the cumulative revenue from the price difference on just these 20 drugs more than covers all the drug research and development costs conducted by the 15 drug companies that make those drugs—and then some.
Where cuts are made is up to drug companies. Their claims of lower R&D costs appear designed to generate fear, but as some former executives themselves have acknowledged, there is no necessary link between a decline in drug prices and a decline in R&D. Drug companies could make other choices that maximally improve the health of all Americans.
In short big pharma screwed over taxpayers while CEOs continue to rake in tens of millions of dollars in compensation. Most employees of the big pharma companies don’t care. They just want to protect their paychecks.
Congratulations big pharma. You bought some politicians which will ensure Americans will continue to pay the highest prices in the world for prescription drugs.