Big Pharma raises prices because it can

Kathleen Stoll
June 13,2022

I recently ran across ads on social media that oppose congressional action to lower prescription drug prices for West Virginians. Posting under “Alliance for Patient Access,” the ads claim that “Washington is considering walls that would hurt innovation.”

Don’t be fooled. Check out their website. Go to the very bottom of the “About” section and click on “Financial support of AfPA and IfPA is acknowledged here” to learn that the alliance is funded by an impressive line-up of — surprise — pharmaceutical companies.

And the scary innovation-blocking policy in question? Congress giving Medicare the power to negotiate lower drug prices for patients.

The American Medical Association (the largest physician association) does support Medicare price negotiation. West Virginia groups that represent health care consumers support federal prescription drug price reform, including West Virginians for Affordable Health Care and Citizen Action Group. AARP members from across the state visited Sen. Joe Manchin, D- W.Va., to ask him to support this policy. And the policy is supported by more than 7 in 10 West Virginia voters — Republicans and Democrats — according to Public Policy Polling.

High drug prices force West Virginia families to make impossible choices between lifesaving prescription drugs or food on the table or paying rent. From the soaring cost of insulin to six- figure cancer treatments, West Virginians can’t seem to catch a break from highly profitable, greedy pharmaceutical companies.

Every year, drugmakers hike the price of thousands of medications — while they continue to enjoy record-breaking profits. Americans pay an average of 2.5 times more for prescription drugs than people in 32 other countries. Research shows that drug companies could lose $1trillion in sales, continue current research investments and still be the most profitable industry among all sectors.Pharmaceutical companies have successfully blocked any legislation that would lower prices for patients.

The bottom line is that drugs don’t help people if they can’t afford them. I would bet that every West Virginian can tell you a story of unaffordable prescription drugs. My story is about special eye drops that I simply can’t afford at $600 a month. A good friend struggles to afford her seizure medication. A colleague delayed buying her child’s ear infection meds until pay day.

Here are some facts that the “Alliance for Patient Access” fail to share with you.

Higher profits do not yield new treatments. Instead of using profits to make meaningful investments in research and development, drug companies keep rewarding their executives and shareholders. A 2021 analysis by the House Committee on Oversight and Reform found that, between 2016 and 2020, 14 major drug companies spent $577 billion on stock buybacks and dividends — $56 billion more than what they spent on research and development.

Price hikes rarely correspond with increased clinical value. Time and again, drug companies hike the prices of drugs without any added benefit to patients. From 2008 to 2021, launch prices for “new drugs” increased by 20% per year. A recent report from the Brookings Institution found that more than half of “new drug” launches consist of minor changes to existing drugs, including “new indications to labels, developing new formulations, changing dosage strengths and new combinations of existing drugs.”

Drug companies also hike the price of existing medications without changes at all. For example, the cost of insulin has tripled over the past decade.

West Virginia taxpayers subsidize the creation of new drugs. Americans are being charged twice for high drug costs: first, as taxpayers funding research and development, and then again at the pharmacy counter. The government spent $100 billion funding research that helped produce all 210 new drugs approved for use in the United States between 2010 and 2016.

Pharmaceutical companies also receive billions in tax credits for research. At the same time, major drug companies often outsource the discovery and development of new drugs to third parties, such as universities and academic centers. Even the development of COVID-19 vaccines was largely funded by taxpayers, not pharmaceutical companies.

Manchin has stated that he supports regulating prescription drug prices. Giving Medicare the power to negotiate for lower drug prices and use price caps will end the broken system that allows pharmaceutical companies to set unfettered sky-high prices.

West Virginians need to demand that Congress acts this year.

Kathleen Stoll is policy director for West Virginians for Affordable Health Care (wvahc.org) and operates a policy and economic consulting business, Kat Consulting.

 


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