Big Pharma corporations are killing and bankrupting Americans for profit. They charge us outrageous prices for life-saving and sustaining medications, far more than in other wealthy countries. Even worse? These medications were developed with our public taxpayer dollars! That was one opening in a recent story online about the pharma industry. While information like this tends to be extreme, people think what THEY want to think.
Cancer patients—the majority of whom are on Medicare—can face annual out-of-pocket costs of more than $16,500. But cancer patients will benefit substantially from the IRA’s $2,000 cap on annual out-of-pocket medicine spending for Medicare Part D enrollees—a limit set to take effect in 2025.
But big pharma seems intent on making as much money as they can while they can.
“Between 2017 and 2021, the average initial price of a new Part D cancer drug rose by more than 25% to over $235,000 yearly when adjusted for inflation,” Patients for Affordable Drugs noted in its new report, citing a recent investigation by Rep. Katie Porter’s (D-Calif.) office. “Pharmaceutical companies then raise the prices on these drugs yearly.”
Pfizer has hiked the price of Ibrance, a breast cancer medication, every year since it came to market in 2015. Today, the list price is “more than $15,000 per bottle,” Patients for Affordable Drugs observed.
“Celgene/BMS has almost tripled the price of Revlimid—a drug to treat multiple myeloma—since it came to market in 2006,” the group added. “Despite being on the market for more than 15 years, the drug remains one of the best-selling products in the world. Much of these sales are paid for by taxpayers, with Medicare Part D spending over $5.8 billion on the drug in 2021 for 45,601 beneficiaries.”
A recent American Cancer Society Cancer Action Network survey of 1,218 cancer patients and survivors found that “more than 70% of respondents said they made significant lifestyle changes to afford care, including delaying major purchases (36%), depleting most or all of their savings (28%), going into more credit card debt (28%), and borrowing money from relatives and friends (20%).”
So hoe does pharma react?
Eli Lilly CEO David Ricks said Medicare price negotiations, which aim to cut costs for older Americans, could potentially harm drug development. However, high drug prices are not justified by the industry’s spending on research and development (R&D), argued experts in The BMJ.
Publicly available financial reports from 1999 to 2018 show that the 15 largest biopharmaceutical companies had total revenues of $7.7tr. Over this period, they spent $2.2tr on costs related to selling, general, and administrative activities and $1.4tr on R&D. Most of the same companies also spent more buying their stocks, a practice known as share buybacks than on R&D during this period, note the authors, which raises questions about commitments to truly valuable and risky biopharmaceutical research.
Since the 1930s, the National Institutes of Health has invested close to $900 billion in the basic and applied research that formed both the pharmaceutical and biotechnology sectors, with private companies only getting seriously into the biotech game in the 1980s.
Big Pharma, while, of course, contributing to innovation, has increasingly decommitted itself from the high-risk side of research and development, often letting small biotech companies and the NIH do most of the hard work. Indeed, roughly 75% of so-called new molecular entities with priority ratings (the most innovative drugs) trace their existence to NIH funding. At the same time, companies spend more on “me too” drugs (slight variations of existing ones.)
In September 2022, a study was published in JAMA that examined the correlation of R&D spending with new drugs. The study looked at the 60 medications approved by the US Food and Drug Administration (FDA) between 2009 and 2018, for which there was publicly available information about R&D spending and pricing. And then, they matched up the figures. “Essentially, it was like investigative journalism—check all the receipts, trace back in time on what they spend,” he says. If it were the case that R&D spending was the reason behind high drug prices, you’d expect to see a high correlation between the two. Instead, they found no correlation.
No matter the metric, drug prices in the United States are extreme. Many drugs cost more than $120,000 a year. A few are even closing in on $1 million. The Department of Health and Human Services estimates that Americans spent more than $460 billion on drugs—16.7 percent of total health-care spending—in 2016, the last year for which there are definitive data. On average, citizens of other wealthy countries spend 56 percent of what Americans spend on the same drug.
Most pharma companies have zero credibility in justifying prices. Prices are based on only one goal: maximizing profit for the company and shareholders.