When huge pharmaceutical firms are confronted over their exorbitant pricing of prescribed drugs within the US, they usually retreat to 2 well-worn arguments: One, that the excessive drug costs cowl prices of researching and growing new medicine, a dangerous and costly endeavor, and two, that center managers—pharmacy profit managers (PBMs), to be particular—are literally those worth gouging Americans.
Both of those arguments confronted substantial blows in a listening to Thursday held by the Senate Committee on Health, Education, Labor and Pensions, chaired by Sen. Bernie Sanders (I-Vt.). In reality, pharmaceutical firms are spending billions of {dollars} more on lavish govt compensation, dividends, and inventory buyouts than they spend on analysis and improvement (R&D) for brand spanking new medicine, Sanders identified. “In different phrases, these firms are spending more to counterpoint their very own stockholders and CEOs than they’re find new cures and new therapies,” he stated.
And, whereas PBMs actually contribute to America’s uniquely astronomical drug pricing, their profiteering accounts for a small fraction of the large drug market, Sanders and an knowledgeable panelist famous. PBMs work as shadowy center managers between drugmakers, insurers, and pharmacies, setting drug formularies and client costs, and negotiating rebates and reductions behind the scenes. Though PBMs practices contribute to total prices, they pale in comparison with pharmaceutical income.
Rather, the guts of the issue, in accordance with a Senate report launched earlier this week, is pharmaceutical greed, patent gaming that permits drug makers to stretch out monopolies, and highly effective lobbying.
On Thursday, the Senate committee gathered the CEOs of three behemoth pharmaceutical firms to query them on the drug pricing practices: Robert Davis of Merck, Joaquin Duato of Johnson & Johnson, and Chris Boerner of Bristol Myers Squibb.
“We are conscious of the various necessary lifesaving medicine that your firms have produced, and that is terribly necessary,” Sanders stated earlier than questioning the CEOs. “But, I believe, as all of you realize, these medicine imply nothing to anyone who can not afford it.”
America’s uniquely excessive costs
Sanders referred to as drug pricing within the US “outrageous,” noting that Americans spend by far essentially the most for prescribed drugs on the planet. A report this month by the US Department of Health and Human Services discovered that in 2022, US costs throughout all brand-name and generic medicine had been almost thrice as excessive as costs in 33 different rich international locations. That implies that for each greenback paid in different international locations for prescribed drugs, Americans paid $2.78. And that hole is widening over time.
Focusing on medicine from the three firms represented on the listening to (J&J, Merck, and Bristol Myers Squibb), the Senate report checked out how preliminary costs for brand spanking new medicine coming into the US market have skyrocketed over the previous twenty years. The evaluation discovered that from 2004 to 2008, the median launch worth of revolutionary prescribed drugs bought by J&J, Merck, and Bristol Myers Squibb was over $14,000. But, over the previous 5 years, the median launch worth was over $238,000. Those numbers account for inflation.
The report targeted on high-profit medicine from every of the drug makers. Merck’s Keytruda, a most cancers drug, prices $191,000 a yr within the US, however is simply $91,000 in France and $44,000 in Japan. J&J’s HIV drug, Symtuza, is $56,000 within the US, however solely $14,000 in Canada. And Bristol Myers Squibb’s Eliquis, used to forestall strokes, prices $7,100 within the US, however $760 within the UK and $900 in Canada.
Sanders requested Bristol Myers Squibb’s CEO Boerner if the corporate would “cut back the record worth of Eliquis within the United States to the worth that you just cost in Canada, the place you make a revenue?” Boerner replied that “we will’t make that dedication primarily as a result of the costs in these two international locations have very completely different programs.”
The highly effective pharmaceutical commerce group PhRMA, printed a weblog submit earlier than the listening to saying that evaluating US drug costs to costs in different international locations “hurts sufferers.” The group argued that Americans have broader, quicker entry to medicine than folks in different international locations.