- Eight in ten adults (83%) say they either “strongly favor” or “somewhat favor” allowing the federal government to negotiate with drug companies as do 84% of older adults (65 and older).
- When the public are presented with the main arguments being made by advocates on both sides of the debate, the shift in opinion is modest and support for negotiation remains high.
- High drug prices threaten patient access, resulting in seniors and people with disabilities having to choose between paying for groceries and rent or filling their prescriptions.
- Pharma bosses are bracing for price cuts of between 25% and 95% in drugs chosen for price negotiation.
The United States routinely pays two to four times the prices of other large, wealthy countries for prescription drugs. In 2020, U.S. sales of the 20 top-selling drugs worldwide totaled $101.1 billion, while sales to the rest of the world totaled nearly $57 billion. In other words, the United States spent almost double what the rest of the world combined on these top 20 drugs.
The backlash on price negotiations from the pharma industry has been fierce. “This is not ‘negotiation.’ It is tantamount to extortion,” protested Merck, an American drugmaker, in a lawsuit against the government. Many pharma giants—Astellas, Boehringer Ingelheim, Bristol Myers Squibb, and Johnson & Johnson—have joined the legal bandwagon, challenging price-setting provisions in the IRA. Pharma bosses are bracing for price cuts of between 25% and 95% in drugs chosen for price negotiation. Since the law’s passage, over 50 companies have blamed the IRA in earnings calls for clouding their prospects.
Undoubtedly, the pharma industry is hoping to get their cases heard by the Supreme Court, but the fact remains that voters want lower drug prices. In the meantime, as usual, pharma raised prices on over 100 of the top-selling brand-name drugs in July.
About those tax cuts under Trump…The report said that pharmaceutical companies report 75% of their taxable income overseas. The pharmaceutical industry paid an average tax rate of about 20% from 2014 to 2016, the years before the law passed. Top drugmakers channeled most of their savings to investors, not R&D or price cuts. Four pharma companies—Johnson & Johnson, Merck, Pfizer, and Abbott Laboratories—reaped a combined $7 billion in savings from two provisions in the tax bill, according to a recent Oxfam report (PDF), and they plowed that money into stock buybacks and dividends.
Low corporate tax rates are just the tip of the iceberg regarding some corporations’ tax giveaways. Prescription drug companies, for instance, get a steady stream of tax money to fuel their business model, including significant funding through the National Institutes for Health (NIH) for research and development of new medicines. On the COVID-19 vaccine alone, companies like Moderna, Pfizer, and Johnson & Johnson received over $16 billion to speed up research and manufacturing of vaccines and therapeutics.
Medicare, as the biggest buyer of prescription drugs, should be able to negotiate with pharma companies on prescription drugs. The voters want it and our healthcare system can’t afford these high prices.