(Axios) Second-quarter results are still pouring in, but so far, a vast majority of health care companies are reporting profits that many people assumed would not have been possible as the pandemic continued. Drug sales fell across many pharma companies but cutting administrative and research costs kept earnings at industry highs.
Nine of the ten biggest profit margins recorded as July 31 belonged to drug companies. According to our analysis, approximately two-thirds of all third-quarter profits flowed to drug companies, even though they generated less than 20% of global revenue, which does not include early-stage biotechs.
Big Pharma remains the cash king.
- Drug companies collected almost half of all health care profits despite generating less than 20% of industry revenue.
- 12 of the 16 most profitable companies in Q2 were pharmaceutical firms.
According to new independent federal data, Americans spent more than $4.1 trillion on health care in 2020, almost 10% higher than what was paid in 2019. That’s the fastest annual growth rate since 2002. Much of this was due to federal funding, but all of that federal funding didn’t just keep the system afloat. It led to historically high profits for some of the biggest companies in the industry, and that trend has continued throughout 2021.
The bottom line: The U.S. has the most expensive health care system in the world, and the pandemic made it even more expensive.Axios
Of course, the irony of this data is that it negates PhRMAs key argument against having the government negotiate prices for Medicare. Pharma CEOs also continue to take in tens of millions of dollars in compensation while people often pay close to $1000 for insulin.
How immoral is the profiteering? In the first week that the Omicron variant sparked global fears of a new wave of infections, a small handful of investors and executives with Pfizer and Moderna—currently the world’s preeminent makers of Covid-19 vaccines—saw over $10 billion in new wealth, with the Moderna’s CEO alone adding over $800 million to his fortune.
A West Health/Gallup survey finds nearly all Democrats (97%) and the majority of Republicans (61%) support empowering the federal government to negotiate lower prices of brand-name prescription drugs covered by Medicare. Overall, 8 in 10 Americans prefer significant government action to control costs over concerns about hurting innovation and competition from the pharmaceutical industry.
As long as pharma is fleecing us, the voices calling for reform on drug prices will grow louder.