Pharma is “big business” that uses excuses to keep prices high

SUMMARY: Americans spend twice as much per capita on drugs as residents of other wealthy nations, because ours is the only country that lets drugmakers set any price they want for their products. Seventy-nine percent of Americans think the price of prescription drugs is “unreasonable,” according to a 2019 Kaiser Family Foundation poll, and about 9 in 10 say they support the idea of the government negotiating prices.

Via Axios “The 10 highest-selling drugs in the U.S. last year gave away more than $23 billion in rebates to insurance intermediaries, but still netted $50 billion in sales. The U.S. drug pricing system is filled with confusing numbers, and many entities profit off the flow of drugs, but pharmaceutical companies retain a vast majority of the proceeds”.

Big pharma IS big business. Big Pharma’s chokehold around the U.S. political system surpasses that of practically any other industry. Its immense power relative to most of the other stakeholders in the $3.5 trillion health care sector stems from many factors, but it begins from what it does. Unlike, say, health insurance, the pharmaceutical industry performs a socially necessary function with no public competition: While officials were ultimately willing to regulate insurers’ most egregious practices and expand Medicaid to plug some holes in private coverage, there’s no public drug manufacturing to offset the pharmaceutical industry’s constant warnings that targeting its business model could undermine innovation.

While industry plays an important 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 development and regulatory approval. (With that late-stage investment comes control of the lucrative patents on these products.) High drug prices preferentially benefit the largest drug manufacturers, which spend only about 10 to 20 percent of their revenue on research and development — far less than they spend on marketing, administration, and 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.

Washington Post

According to Public Citizen:

  • AbbVie’s autoimmune disease drug Humira, which had U.S. sales revenue four times greater than the rest of the world; and
  • Eli Lily’s type 2 diabetes drug Trulicity, Roche’s multiple sclerosis drug Ocrevus and Amgen and Pfizer’s autoimmune disease drug Enbrel, all three of which had U.S. sales revenue more than triple the rest of the world.

So what’s your point?

Pharma is using half-truths to justify spending tens of millions of dollars on lobbying to keep the Government from negotiating prices. Their excuses aren’t valid. Yes, people need the drugs the industry produces but when CEOs are making tens of millions and taxpayers are paying the lions share of the costs something is wrong.

Change is coming because of the simple fact that both voters and politicians want change. Pharma must prepare for the new reality of marketing drugs with leaner organizations and are cost effective ways to develop drugs.

Originally published at on October 5, 2021.



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