BIO and the Pharmaceutical Research and Manufacturers of America continue to push their big lie that having the government negotiate prices for medicare will continue to hurt investment even though 83% of the public say they favor allowing the federal government to negotiate with drug companies to lower drug prices on behalf of people enrolled in Medicare. It’s part of PhRMA’s big lie used to buy politicians.
When asked specifically about each argument, most (84%) of the public, including three-quarters (78%) of Republicans, say the argument in favor – “this is needed because Americans pay higher prices than people in other countries, many can’t afford their prescriptions, and drug company profits are too high” – is convincing.
So let’s look at their arguments:
Question How do the profits of large pharmaceutical companies compare with those of other companies from the S&P 500 Index?
Findings In this cross-sectional study that compared the profits of 35 large pharmaceutical companies with those of 357 large, nonpharmaceutical companies from 2000 to 2018, the median net income (earnings) expressed as a fraction of revenue was significantly greater for pharmaceutical companies compared with nonpharmaceutical companies (13.8% vs 7.7%).
Meaning Large pharma companies were more profitable than other large companies, although the difference was smaller when controlling for differences in company size, research and development expense, and time trends.
Claim: Pharma Says Drug Prices Reflect R&D Cost
Findings In this cross-sectional study of 60 new therapeutic agents approved by the US Food and Drug Administration from 2009 to 2018, there was no association between estimated research and development investments and treatment costs based on list prices at the launch of the product or based on net prices a year after launch.
Meaning Findings of this study suggest that research and development investments could not explain variation in drug prices; drug companies should make further data available if they want to use this argument to justify high prices.
Claim: Letting the government negotiate drug prices will hurt innovation
Reality: 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. In the same year, the industry spent $89 million on well-focused campaign contributions. That trend has continued, with $171 million in lobbying expenditures this year and generous campaign donations targeting key members of Congress.
While industry plays an essential 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.
High drug prices preferentially benefit the largest drug manufacturers, who spend only about 10 to 20 percent of their revenue on research and development — far less than they spend on marketing, administration, stock buybacks, and dividends. Despite the dire warnings of drug company lobbyists, as long as funding for the National Institutes of Health remains strong, the next generation of therapeutics will emerge, just as previous generations have.
Drug companies, in reality, could care less about patients. To them, it’s about shareholders and profits. PhRMA continues to spend a lot of money to buy politicians and go against the opinions of the public. It’s time to stop their bullshit.