Yesterday, the House Committee on Oversight and Reform released a report detailing how large pharmaceutical corporations have used skyrocketing drug prices to line the pockets of CEOs and investors, while spending billions less on research and development. Specifically, between 2016 and 2020, 14 leading drugmakers spent $577 billion on stock buybacks and dividends—$56 billion more than what was invested in research and development over the same period. One company, Amgen, spent nearly six times more on executive pay, buybacks, and dividends than it did on research and development in 2018. If allowed to continue on this trajectory, these 14 corporations are projected to spend $1.15 trillion on buybacks and dividends between 2020 and 2029 — more than twice of what H.R. 3 is projected to save over the same period.
The report also revealed that when these drugmakers did invest in research and development, many spent large portions of their budget developing methods to suppress generic and biosimilar competition that would make life saving drugs more affordable for the American people.
This Oversight Committee’s report underscores the urgent need for Congress to take action now to pass the Lower Drug Costs Now Act (H.R. 3) to give Medicare the power to negotiate for lower drug prices..
HEADLINES:
STAT News: House Democrats Say Pharma Stock Buybacks And Dividends Exceed R&D Spending. “Assuming the same rate of spending going forward, the drug makers are projected to spend $1.15 trillion on buybacks and dividends from 2020 through 2029. This would exceed by more than twice the amount that the Congressional Budget Office projected would be saved over the same period by a House bill – called H.R. 3 – that would allow Medicare to negotiate prices for certain drugs.” [STAT News, 7/8/21]
Kaiser Health News: Drugmakers’ Spending on Stock, Dividends and Executive Pay Exceeds Research, Democrats Say. “Contrary to pharmaceutical industry arguments that large profits fund extensive research and innovation, the major drug companies plow more of their billions in earnings back into their own stocks, dividends and executive compensation. And they can do it largely because Congress has imposed few restrictions on their pricing in the United States — including in the Medicare program, which is not permitted to negotiate drug prices.” [Kaiser Health News, 7/9/21]
The Hill: House Report: Drug Companies Spent More On Buybacks, Dividends Than Research. “Democrats sought to push back on the pharmaceutical industry’s argument that the bill would harm innovation, saying that drug companies could simply cut back on payouts to shareholders, rather than cutting research and development.” [The Hill, 7/8/21]
Bloomberg: Pelosi Slams Drugmaker Buybacks, Wants Price Cuts In Bill. “The House Democratic bill would allow Medicare to negotiate drug prices, and then force drug companies to lower the prices they charge private insurers or impose huge fines on the companies. Pelosi said she wants it to be part of a special budget bill.” [Bloomberg, 7/8/21]
Fierce Healthcare: House Dems’ Report Slams Drugmaker Stock Buybacks As Pelosi Presses To Give Medicare Negotiating Powers. “Democratic leadership slammed drugmakers’ most common defense that pricing reforms will lead to fewer new innovations. ‘How can pharma say with a straight face after spending $577 billion on buybacks and dividends in the last five years that lowering drug prices for Americans will have to come at the expense of research and development?’ said House Speaker Nancy Pelosi.” [Fierce Healthcare, 7/9/21]
Endpoints News: Pelosi Threatens To Slide Drug Pricing Reform Into Biden’s Budget Bill, Rejects Industry Pushback That Innovation Would Suffer. “From 2016 to 2020, the companies spent $56 billion more on stock buybacks and dividends — $577 billion — than on R&D, the report found. The projected number of spending on buybacks from 2020 to 2029 is $1.15 trillion for the same 14 companies.” [Endpoints News, 7/9/21]