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Negotiation Spent Billions More on Buybacks, Dividends and Executive Compensation than R&D
WASHINGTON - While the pharmaceutical industry says that the drug price negotiation provisions under the Inflation Reduction Act will harm research and development, a new report by Public Citizen and Protect our Care reveals that the manufacturers of the first 10 drugs selected for Medicare price negotiation spent $10 billion more on stock buybacks, dividends to shareholders, and executive compensation than they spent on research and development in 2022. According to the report, which analyzes SEC filings and company annual reports, manufacturers spent $107 billion on these activities compared to $97 billion on R&D in 2022. What’s more, executive compensation for these companies was approximately half a billion dollars in 2022.
“The industry tells us that Medicare price negotiations will make it hard to research and develop new drugs. What they leave out is that many are already spending far more to make their executives and shareholders rich than on R&D,” said Peter Maybarduk, Access to Medicines program director at Public Citizen. “When these corporations complain about the impact of price negotiations on innovation, we should be deeply skeptical.”
Additionally, the report notes that researchers and the Congressional Budget Office conclude there is no connection between a drug’s research and development cost and its future price, and that the current price of drugs reflects what companies believe the market will bear in response to their monopolistic pricing power. Additionally, the United States is an outlier that does little to protect its residents from the unfair pricing power of drug companies – and bringing American policy into alignment with those of other countries, including its high-income peers, would not destroy the incentive to innovate new medicines.
“These findings undermine industry claims that reducing corporate profits in Medicare price negotiation will impact capacity to invest in research and developing new drugs,” said Jishian Ravinthiran, researcher with Public Citizen and lead author of the report. “These companies are not strapped for resources, as they spend massive amounts of money on self-enriching activities.”
The report also reveals that manufacturers of the 10 drugs with the highest annual expenditures by payers in Maryland spent $9 billion more on stock buybacks, dividends, and executive compensation than on research and development expenses in 2022. Seven states, starting with Maryland in 2019, have established Prescription Drug Affordability Boards charged with analyzing the excessive costs of prescription drugs and identifying solutions to medicine inaccessibility. As other states consider creating their own Boards with the authority to limit the price of drug transactions, or consider expanding these Boards’ authority to deliver relief to more residents, they can rely on this report’s finding that industry has ample resources to invest in drug innovation.
At a press conference today, Maryland Healthcare for all will kick off a campaign to pass major legislation in 2024 to expand the authority of the Maryland Prescription Drug Affordability Board and continue the work of bringing down high costs for medications.
WASHINGTON - While the pharmaceutical industry says that the drug price negotiation provisions under the Inflation Reduction Act will harm research and development, a new report by Public Citizen and Protect our Care reveals that the manufacturers of the first 10 drugs selected for Medicare price negotiation spent $10 billion more on stock buybacks, dividends to shareholders, and executive compensation than they spent on research and development in 2022. According to the report, which analyzes SEC filings and company annual reports, manufacturers spent $107 billion on these activities compared to $97 billion on R&D in 2022. What’s more, executive compensation for these companies was approximately half a billion dollars in 2022.
“The industry tells us that Medicare price negotiations will make it hard to research and develop new drugs. What they leave out is that many are already spending far more to make their executives and shareholders rich than on R&D,” said Peter Maybarduk, Access to Medicines program director at Public Citizen. “When these corporations complain about the impact of price negotiations on innovation, we should be deeply skeptical.”
Additionally, the report notes that researchers and the Congressional Budget Office conclude there is no connection between a drug’s research and development cost and its future price, and that the current price of drugs reflects what companies believe the market will bear in response to their monopolistic pricing power. Additionally, the United States is an outlier that does little to protect its residents from the unfair pricing power of drug companies – and bringing American policy into alignment with those of other countries, including its high-income peers, would not destroy the incentive to innovate new medicines.
“These findings undermine industry claims that reducing corporate profits in Medicare price negotiation will impact capacity to invest in research and developing new drugs,” said Jishian Ravinthiran, researcher with Public Citizen and lead author of the report. “These companies are not strapped for resources, as they spend massive amounts of money on self-enriching activities.”
The report also reveals that manufacturers of the 10 drugs with the highest annual expenditures by payers in Maryland spent $9 billion more on stock buybacks, dividends, and executive compensation than on research and development expenses in 2022. Seven states, starting with Maryland in 2019, have established Prescription Drug Affordability Boards charged with analyzing the excessive costs of prescription drugs and identifying solutions to medicine inaccessibility. As other states consider creating their own Boards with the authority to limit the price of drug transactions, or consider expanding these Boards’ authority to deliver relief to more residents, they can rely on this report’s finding that industry has ample resources to invest in drug innovation.
At a press conference today, Maryland Healthcare for all will kick off a campaign to pass major legislation in 2024 to expand the authority of the Maryland Prescription Drug Affordability Board and continue the work of bringing down high costs for medications.
Senator Sanders’ HELP Committee Subpoenas Merck, Johnson & Johnson CEOs
“Time’s Up” For Big Pharma Abuses, Says Public Citizen
WASHINGTON - Today, the U.S. Senate Committee on Health, Education, Labor and Pensions subpoenaed the CEOs of Merck and Johnson & Johnson to testify before a committee hearing on “outrageously high drug prices”. The companies are among the 10 manufacturers of drugs chosen for Medicare price negotiations under the provisions of the Inflation Reduction Act.
While the pharmaceutical industry claims that negotiating with Medicare will harm research and development, a new report by Public Citizen and Protect our Care reveals that the manufacturers of the drugs selected for Medicare price negotiation spent $10 billion more on stock buybacks, dividends to shareholders, and executive compensation than they spent on research and development in 2022.
In response, Robert Weissman, president of Public Citizen, released the following statement.
“Time’s up for the prescription drug price gougers.
“For too long, Big Pharma executives have behaved as if they are immune from accountability. They take publicly funded research; skyrocket prices to the moon, forcing patients to ration or skip medications they need; and then laugh as the very government that paid for the original research accepts without negotiation their outrageous prices, paying multiples of what other countries pay.
“Merck charges 30 times more for a diabetes drug in the United States than it does in France. Johnson & Johnson charges almost five times more for a blood cancer drug in the United States than it does in Germany.
“Meanwhile, Johnson & Johnson is paying out more in stock buybacks, dividends and executive compensation than they are spending on research and development, even though R&D is the only claimed rationale for high prices.
“The pharma profiteers know exactly what they are doing. They know how they are forcing rationing. They know they are ripping off the government and taxpayers. And they know they are getting rich.
“What’s different now is that they can no longer escape public accountability. The Merck and Johnson & Johnson CEOs thought they could simply ignore the Senate health committee demand that they testify and justify their practices. Think again.
“The hearings at which they will be forced to testify are another key marker in the process of rationalizing prescription drug pricing policy in the United States. The price negotiation provisions of the Inflation Reduction Act were a start. The Biden administration’s announcement of a framework to use its authority to override patent monopolies is another. It’s a new day, Big Pharma. Get used to it.”
Chairman Sanders Announces HELP Committee Votes on Subpoenas for Johnson & Johnson and Merck CEOs
WASHINGTON - At a time when the United States pays, by far, the highest prices in the world for prescription drugs, Sen. Bernie Sanders (I-Vt.), Chairman of the Senate Committee on Health, Education, Labor, and Pensions (HELP), announced today that the committee will, on Wednesday, January 31, hold votes to issue subpoenas for Johnson & Johnson CEO Joaquin Duato and Merck CEO Robert Davis to provide testimony about why their companies charge substantially higher prices for medicne in the U.S. compared to other countries. If authorized, these would be the first subpoenas issued by the HELP Committee since 1981.
Sanders was pleased that Chris Boerner, the CEO of Bristol Myers Squibb, has agreed to testify in the HELP Committee alongside at least one of the other pharmaceutical CEOs.
This follows a majority of senators on the HELP Committee, on November 21, 2023, inviting all three of the pharmaceutical CEOs to a committee hearing to explain why it is that one out of four Americans cannot afford to take the medicine their doctors prescribe while prescription drug companies make billions in profits and pay their CEOs exorbitant compensation packages.
Sanders said: “It is absolutely unacceptable that the CEOs of Johnson & Johnson and Merck have refused an invitation by a majority of members on the HELP Committee to appear before Congress about the outrageously high price of prescription drugs. These CEOs may make tens of millions of dollars in compensation. The pharmaceutical companies they run may make billions in profits. But that does not give them a right to evade congressional oversight. It is time to hold these pharmaceutical companies accountable for charging the American people the highest prices in the world for the medicine they need. As the HELP Committee considers legislation to lower prescription drug prices, it is critical that these CEOs explain how they determine the price of medicine in the United States.”
Johnson & Johnson, Merck, and Bristol Myers Squibb sell some of the most expensive and widely prescribed drugs in the U.S. relative to the price of those drugs in other countries. For example:Merck sells Januvia, a drug for diabetes, for $6,000 in the U.S. compared to just $900 in Canada and $200 in France. Merck also sells Keytruda, a cancer treatment, for $191,000 in the U.S., but just $89,000 in Germany.
WASHINGTON - At a time when the United States pays, by far, the highest prices in the world for prescription drugs, Sen. Bernie Sanders (I-Vt.), Chairman of the Senate Committee on Health, Education, Labor, and Pensions (HELP), announced today that the committee will, on Wednesday, January 31, hold votes to issue subpoenas for Johnson & Johnson CEO Joaquin Duato and Merck CEO Robert Davis to provide testimony about why their companies charge substantially higher prices for medicne in the U.S. compared to other countries. If authorized, these would be the first subpoenas issued by the HELP Committee since 1981.
Sanders was pleased that Chris Boerner, the CEO of Bristol Myers Squibb, has agreed to testify in the HELP Committee alongside at least one of the other pharmaceutical CEOs.
This follows a majority of senators on the HELP Committee, on November 21, 2023, inviting all three of the pharmaceutical CEOs to a committee hearing to explain why it is that one out of four Americans cannot afford to take the medicine their doctors prescribe while prescription drug companies make billions in profits and pay their CEOs exorbitant compensation packages.
Sanders said: “It is absolutely unacceptable that the CEOs of Johnson & Johnson and Merck have refused an invitation by a majority of members on the HELP Committee to appear before Congress about the outrageously high price of prescription drugs. These CEOs may make tens of millions of dollars in compensation. The pharmaceutical companies they run may make billions in profits. But that does not give them a right to evade congressional oversight. It is time to hold these pharmaceutical companies accountable for charging the American people the highest prices in the world for the medicine they need. As the HELP Committee considers legislation to lower prescription drug prices, it is critical that these CEOs explain how they determine the price of medicine in the United States.”
Johnson & Johnson, Merck, and Bristol Myers Squibb sell some of the most expensive and widely prescribed drugs in the U.S. relative to the price of those drugs in other countries. For example:Merck sells Januvia, a drug for diabetes, for $6,000 in the U.S. compared to just $900 in Canada and $200 in France. Merck also sells Keytruda, a cancer treatment, for $191,000 in the U.S., but just $89,000 in Germany.
Johnson & Johnson sells Imbruvica, a drug for blood cancer, for $204,000 in the U.S. compared to just $46,000 in the U.K. and $43,000 in Germany. Johnson & Johnson also sells Symtuza, an HIV drug, for $56,000 in the U.S. but just $14,000 in Canada.
Bristol Myers Squibb sells Eliquis, a blood thinner, for $6,700 in the U.S. compared to just $900 in Canada and $650 in France.In 2022, Johnson & Johnson made $17.9 billion in profit and its CEO, Joaquin Duato, received $27.6 million in compensation. That same year, Merck made $14.5 billion in profit and its CEO, Robert Davis, made $52.5 million in compensation; while Bristol Myers Squibb made $6.3 billion in profits and its former CEO, Giovanni Caforio, made $41.4 million in compensation.
This Congress, five CEOs have agreed to voluntarily testify in the HELP Committee. Four out of the five were pharmaceutical CEOs including the CEOs of Moderna, Eli Lilly, Novo Nordisk, and Sanofi. Last year, the CEO of Moderna committed to Chairman Sanders during a HELP Committee hearing that Moderna would set up a patient assistance program so that no one in America would have to pay for their vaccine out of pocket. In a separate HELP Committee hearing last year, the CEO of Eli Lilly committed to Chairman Sanders that his company would not raise prices on existing insulin products.
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