Today, CEOS of big drug companies are slated to go before Congress and explain why they are ripping off the American people. In the hearing led by HELP Committee Chairman Bernie Sanders (I-VT), the CEOs of Bristol Myers Squibb, Johnson & Johnson, and Merck will have to defend their sky-high drug prices as millions of Americans struggle to afford their prescription drugs. During recent earnings calls, Bristol Myers Squibb, Johnson & Johnson, and Merck touted billions in profit in 2023, which comes as they are fighting to take away Medicare’s power to negotiate lower drug costs.
Big drug companies charge Americans up to four times more than people in other countries, causing patients to skip or cut doses of critical life-saving medications. One in five adults report that they have not filled a prescription because of the cost, while one in ten say they have cut or skipped doses of medicine in the last year. Higher drug costs also disproportionately impact low-income families, rural Americans, and people with disabilities.
The hearing comes as the Biden administration is implementing the Inflation Reduction Act’s Medicare Price Negotiation Program and lowering drug costs for seniors. The program is projected to save seniors and taxpayers tens of billions of dollars. Bristol Myers Squibb, Johnson & Johnson, and Merck all have drugs up for negotiation, so they are spending millions of dollars on lobbying and filing meritless lawsuits to block the Negotiation Program. Republicans are also working alongside drug companies by introducing legislation to repeal all of the Inflation Reduction Act’s measures to lower drug prices for the American people.
In response, Protect Our Care Chair Leslie Dach issued the following statement:
“These CEOs will be putting their relentless greed on full display as they attempt to explain why Americans are charged far more than people in other countries. Big drug companies have been ripping Americans off for years and we are sick and tired of it. It is outrageous that people have to skip doses and not fill prescriptions while the CEOs and shareholders line their pockets with cash. Even worse, these drug companies are fighting to rip away savings from seniors by banning Medicare from negotiating for lower prices. Their massive profits are made on the backs of American consumers and they want us to continue to pay the price for their greed.”
Here’s What You Need to Know About the State of Drug Prices in 2024
Drug Prices Are Too High
80 Percent Of Adults Say The Cost Of Prescription Drugs Is Too High. With six in ten adults taking at least one prescription drug, and over one in four needing more than four medications, 82 percent of adults agree that the cost of prescription drugs is unreasonable. 30 percent of adults have not taken medication as prescribed due to cost in the past year. One in five adults have not filled prescriptions and 12 percent have cut pills in half or skipped doses completely due to cost. Young adults between 18-29 years old, Hispanic adults, people taking four or more prescription drugs, and those living in households with incomes less than $40,000 per year are most vulnerable when it comes to the affordability of medication.
Prices For Prescription Drugs Increased More Than Other Household Goods. In 2020, the average annual cost for prescription drugs used to treat chronic illnesses was more than $26,000 per drug. This is more than one-third of the median household income of $69,639. If drug price increases had been limited to the rate of inflation, as is now required by the Inflation Reduction Act, prices would be more than $14,000 lower. The average annual cost of generic drugs was nearly $6,000 cheaper than name brands.
Americans Believe That Profits For Pharmaceutical Companies Are A Major Factor For Drug Prices. Eight in ten adults regardless of political party affiliation believe that profits for drug companies are a major contributor to the price of prescriptions. 75 percent believe there should be more regulation to reign in the price of prescription drugs, including majorities across partisanship.
Drug Companies Continue To Rake In Massive Profits. While the pharmaceutical industry is crying wolf to the courts to try to ban Medicare from negotiating lower prices, they’re not sounding the same alarms to Wall Street investors. Some of the most expensive drugs have made as much as $90.9 billion in revenue – making drug makers among the most profitable companies in the world. Rather than pricing their drugs reasonably so they’re affordable and accessible to people, big drug companies spend hundreds of billions on stock buybacks for their investors and reward their executives with massive salaries and bonuses. While drug companies rake in billions, U.S. drug prices are up to four times higher than prices in other high-income countries, leading patients in America to cut pills and skip doses to make ends meet.
Drug Company Arguments That Innovation Will Suffer Are False. Big pharma insists to lawmakers that the new Medicare Drug Price Negotiation Program will undermine American biopharmaceutical leadership and discourage the development of new medications. Meanwhile, many drug companies announced increases in research and development following the passage of the Inflation Reduction Act, suggesting that they believe they will be able to recoup additional investments in drug development. For example, J&J reported a 21 percent increase in R&D spending in 2022, Merck & Co reported a 10.6 percent increase in 2022, and Moderna reported a 65 percent increase in 2022 and projected further increases in 2023.
President Biden Has Lowered Drug Prices, While Republicans Continue To Defend Big Pharma
How the Inflation Reduction Act Lowers Drug Prices:
- 4 million Americans on Medicare who use insulin are now charged no more than $35 per month for an insulin prescription.
- 50.5 million of America’s seniors are able to receive the shingles vaccination and other recommended vaccinations free of cost.
- Seniors on Medicare will be protected from drug company price hikes thanks to increased inflation rebates.
- Nearly 9 million people take the first ten drugs that were selected for Medicare negotiation. These drugs account for 20 percent of the annual Medicare Part D spending. Negotiated prices will take effect in 2026.
- 400,000 low-income seniors will receive more help affording prescription drugs through the Medicare Part D Low-Income Subsidy Program.
- Medicaid and CHIP beneficiaries have access to recommended vaccinations free of cost.
- Seniors with the highest brand-name drug costs will see relief because their coinsurance is phased out, effectively capping their out-of-pocket costs at $3,250 for the year.
- In 2025, out-of-pocket costs in Medicare Part D will be capped at $2,000, saving nearly 19 million Americans an average of $400 each year.
Big Pharma Is Working To Keep Drug Prices High. Drug company giants including Merck, Bristol Myers Squibb, Johnson & Johnson-owned Janssen Pharmaceuticals, Boehringer Ingelheim, AstraZeneca, Novartis, and Novo Nordisk as well as mega lobbying groups PhRMA (of which Amgen, Johnson & Johnson and others are members) and the US Chamber of Commerce (which represents AbbVie as a member), have filed meritless lawsuits against the federal government in an effort to stop Medicare from negotiating for lower prescription drug prices — the most popular provision of the Inflation Reduction Act. These lawsuits seek to end Medicare’s new ability to negotiate lower prescription drug prices for Medicare beneficiaries. If the big drug companies get their way, patients will pay more so the drug companies can make more money:
- GONE: Medicare’s power to negotiate lower prices for the most popular and expensive prescription drugs. Under the Inflation Reduction Act, Medicare is set to begin negotiating prices for 10 of the top 50 most expensive Part D drugs in 2026, adding another 15 drugs in 2027 and 2028, and another 20 in 2029 and subsequent years.
- GONE: $98.6 billion in Medicare savings over the next decade from the drug negotiation program, which translates into savings for patients and taxpayers.
- GONE: Lower Part D premiums and lower out-of-pocket drug costs for certain Medicare beneficiaries who rely on qualifying drugs.
Republicans Voted Against Lowering Drug Prices. Every single Republican in the House and Senate voted against the Inflation Reduction Act — keeping drug prices high and money in the pockets of big pharma. Republicans gave into big drug companies’ lobbying campaign, turning their backs on the American people despite the law’s vast support from voters of all parties. Big Pharma’s GOP allies in Congress have repeatedly introduced legislation to repeal the Inflation Reduction Act’s prescription drug provisions, which would increase drug costs for millions of seniors. In 2023, Senator Mike Lee reintroduced legislation that would not only repeal Medicare’s new ability to negotiate lower drug prices but would also repeal the new penalties on drug companies that increase prices faster than inflation, and roll back the new $2,000 out-of-pocket spending cap on drug costs for those on Medicare. The Republican Study Committee also released a budget proposal that repeals the Inflation Reduction Act’s Medicare negotiation program entirely.
Americans Support The Inflation Reduction Act. Overall, 73 percent of Americans support the Inflation Reduction Act, including 95 percent of Democrats, 73 percent of independents, and 52 percent of Republicans. The health care and drug pricing provisions are among the most popular parts of the Inflation Reduction Act. An overwhelming 88 percent of Americans, including 87 percent of Republicans, support Congress taking action to cap the price of insulin copays for those with private insurance and Medicare at $35 per month. 83 percent of Americans from all political backgrounds strongly back Medicare drug price negotiation.