Earlier this month, the U.S. House Committee on Oversight and Reform released a comprehensive report detailing Big Pharma’s egregious pricing and anti-competitive practices. The report is the culmination of a nearly three-year investigation during which the committee reviewed more than 1.5 million pages of internal documents from pharmaceutical companies.
The committee’s findings lend new urgency to the need for Congress to advance market-based solutions to hold Big Pharma accountable and lower prescription drug prices — and have added to the already unprecedented momentum for action in Washington by debunking the pharmaceutical industry’s false rhetoric on innovation and showcasing how the branded drug industry puts profits over people.
Upon reviewing price histories of 12 of the best-selling drugs in Medicare, the committee found prices were raised more than 250 times by Big Pharma companies using strategies that game the system and suppress competition to maintain product monopolies. These tactics include “product hopping” and “shadow pricing” — techniques deliberately used to shield profits from generic competition — and employing price hikes in concert with other drug manufacturers. The committee found that these 12 drugs “are now priced at a median of almost 500 percent higher than when they were brought to market.”
The committee also found that the companies responsible for these 12 drugs obtained more than 600 patents for these medications, effectively blocking competition from more affordable alternatives for decades. In fact, the committee report states that the patents already secured for these 12 drugs “could potentially extend their monopoly periods to a combined total of nearly 300 years.”
As Chairwoman Carol B. Maloney (D-N.Y.) said in announcing the committee’s findings, Big Pharma’s pricing practices in the U.S. are “unsustainable, unjustifiable and unfair.”
Big Pharma often justifies these practices by claiming they are justified by the need to fund research and development (R&D) into new cures. The Oversight Committee report also undermines this repeatedly debunked rhetoric around innovation. The report finds that the top 14 drug companies spent almost $577 billion on stock buybacks and dividends over the last five years — a whopping $56 billion more than research and development.
The committee’s investigation also found that a significant portion of brand name drug companies’ research budgets are dedicated to finding ways to extend patent protection to undermine competition instead of investing in true innovations. In other words, even the R&D numbers used by the branded drug industry to highlight investments in innovation are inflated by research into anti-competitive strategies that boost Big Pharma profits and contribute to higher drug prices for the American people.
Just one week before the Oversight Committee’s analysis further undermined Big Pharma’s bogus innovation rhetoric and highlighted how branded drug companies’ egregious practices drive higher drug prices, the pharmaceutical industry was hard at work doubling down on another of its favored, and repeatedly disproven, rhetorical strategies: blaming others in the supply chain to deflect accountability.
In a new ad campaign, Big Pharma’s principal trade association, the Pharmaceutical Researchers and Manufacturers of America (PhRMA), attempts to shift the attention of policymakers onto others in the drug supply chain.
The ad campaign uses misleading rhetoric to draw attention away from brand name drug companies pricing and anti-competitive practices and instead pushes lawmakers to reverse course and implement, rather than repeal, misguided policy targeting negotiating tools used by pharmacy benefit managers (PBMs). Implementation of such a policy targeting PBM rebates would eliminate the only real check on the pharmaceutical industry’s unilateral control over prices, do nothing to lower drug prices, hike premiums on America’s seniors and boost Big Pharma profits.
Lawmakers must cut through Big Pharma’s blame game rhetoric and remain focused on market-based solutions to lower prescription drug prices by holding brand name drug companies accountable.
Members of the House took an important first step in November, advancing prescription drug pricing solutions as part of the Build Back Better Act that would begin to hold Big Pharma accountable and deliver relief from out-of-control prices for the American people. The package advanced by the House included solutions to cap out-of-pocket costs for seniors, keep drug companies price hikes below the rate of inflation and reform the Medicare Part D program to discourage price-gouging.
Following the House passage of these important first steps, President BidenJoe BidenSunday shows preview: Democrats' struggle for voting rights bill comes to a head David Weil: Wrong man, wrong place, wrong time Biden's voting rights gamble prompts second-guessing MORE highlighted the urgency for Congress to pass into law solutions to hold Big Pharma accountable.
“We're going to end the days when drug companies could increase their prices with no oversight and no accountability,” President Biden said in a speech delivered earlier this month. “Going forward, drug companies that increase their prices faster than inflation are going to face a steep excise tax. In other words, we're saying to drug companies ‘you're finally going to be held accountable when your prices to the American people go up.’”
As the Senate works toward finalizing this legislation, lawmakers must capitalize on the unprecedented momentum for action and meet the moment to deliver positive progress toward lowering prescription drug prices and holding Big Pharma accountable.
American voters are watching closely to see whether policymakers in Washington will seize this historic opportunity.
Lauren Aronson is the executive director of The Campaign for Sustainable Rx Pricing (CSRxP).