When large pharmaceutical firms are confronted over their exorbitant pricing of pharmaceuticals within the US, they usually retreat to 2 well-worn arguments: One, that the excessive drug costs cowl prices of researching and creating new medication, a dangerous and costly endeavor, and two, that center managers—pharmacy profit managers (PBMs), to be particular—are literally those value gouging Individuals.
Each of those arguments confronted substantial blows in a listening to Thursday held by the Senate Committee on Well being, Training, Labor and Pensions, chaired by Sen. Bernie Sanders (I-Vt.). The truth is, pharmaceutical firms are spending billions of {dollars} extra on lavish government compensation, dividends, and inventory buyouts than they spend on analysis and growth (R&D) for brand spanking new medication, Sanders identified. “In different phrases, these firms are spending extra to counterpoint their very own stockholders and CEOs than they’re find new cures and new therapies,” he mentioned.
And, whereas PBMs definitely contribute to America’s uniquely astronomical drug pricing, their profiteering accounts for a small fraction of the large drug market, Sanders and an professional panelist famous. PBMs work as shadowy center managers between drugmakers, insurers, and pharmacies, setting drug formularies and shopper costs, and negotiating rebates and reductions behind the scenes. Although PBMs practices contribute to total prices, they pale in comparison with pharmaceutical earnings.
Quite, the center of the issue, in line 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’re conscious of the various essential lifesaving medication that your firms have produced, and that is terribly essential,” Sanders mentioned earlier than questioning the CEOs. “However, I believe, as all of you understand, these medication imply nothing to anyone who can not afford it.”
America’s uniquely excessive costs
Sanders known as drug pricing within the US “outrageous,” noting that Individuals spend by far essentially the most for pharmaceuticals on the planet. A report this month by the US Division of Well being and Human Companies discovered that in 2022, US costs throughout all brand-name and generic medication had been almost thrice as excessive as costs in 33 different rich international locations. That signifies that for each greenback paid in different international locations for pharmaceuticals, Individuals paid $2.78. And that hole is widening over time.
Specializing in medication 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 medication coming into the US market have skyrocketed over the previous 20 years. The evaluation discovered that from 2004 to 2008, the median launch value of modern pharmaceuticals bought by J&J, Merck, and Bristol Myers Squibb was over $14,000. However, over the previous 5 years, the median launch value was over $238,000. These numbers account for inflation.
The report centered on high-profit medication 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 checklist value of Eliquis in the US to the value 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 methods.”
The highly effective pharmaceutical commerce group PhRMA, printed a weblog publish earlier than the listening to saying that evaluating US drug costs to costs in different international locations “hurts sufferers.” The group argued that Individuals have broader, quicker entry to medication than folks in different international locations.
