Change is coming to drug pricing, whether it’s painful or not

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  • Some pharma companies have seemingly defied the emphasis on drug costs by raising drug prices.
  • Change is coming to prescription drug pricing, whether it’s painful or not for pharmaceutical companies,” Health and Human Services (HHS) Secretary Alex Azar said in a speech Monday at a health policy conference.
  • “The drug companies that recently increased prices will be remembered for creating a tipping point in U.S. drug pricing policy,” Azar said.
  • Drug prices were raised because Wall Street is their primary customer, not patients.

Drug manufacturers accounted for 88 percent of the cost of branded drugs, PBMs account for just 4 percent of the cost and yet the drug industry would have us believe that PBM’s are the villain. It’s not working.

It’s all about Maximizing Shareholder Value

• From 2006 through 2015, the 18 drug companies in the Standard & Poor’s 500 index spent a combined $516 billion on buybacks and dividends.

• This exceeded by 11 percent the companies’ research and development spending of $465 billion during these years.

• Two examples are Gilead Sciences, which spent $27 billion on buybacks versus $17 billion on research, and Biogen Idec, which repurchased $14.6 billion in stock and spent $13.8 billion on research and development.

• The key cause of high drug prices, restricted access to medicines and stifled innovation, is a social disease called ‘maximizing shareholder value, ’”

• Pharma CEO’s have made Wall Street their number one customer at the expense of patients.

Among the biggest offenders is Pfizer whose CEO took home almost $30 million in 2017. It’s a move that essentially says “we don’t care about patients’ costs, we need to keep Wall Street investors happy”.

Change is coming is an understatement. It’s the worst kind of change, the kind that is forced on companies rather than having CEO’s who understand the threats of the current environment. It’s going to be painful, especially for pharma employees who are going to pay with these bad decisions with their jobs.

Originally published at on July 10, 2018.

Marketing contrarian with over 15 years of developing leading edge and award winning digital marketing initiatives.

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