Take a Look at the Report That has Sparked a Debate Around Pricing of Pharmaceuticals
Senator Bernie Sanders' recent report exposing a glaring contrast in the prices of three major drugs between the United States and several other countries, has once again turned the spotlight toward the pharmaceutical industry. It has reignited a debate around the affordability of healthcare.
It sheds light on cases such as that of Bristol Myers Squibb’s Eliquis, a blood thinner reducing stroke risk, which has an annual list price of $7,100, but is priced at $940 in Japan, $900 in Canada, $770 in Germany, $760 in the UK, and $650 in France.
Moreover, Johnson & Johnson’s arthritis drug Stelara listed at $79,000 annually in the US, is priced at $30,000 in Germany; $20,000 in Canada; $16,000 in the UK; $14,000 in Japan; and $12,000 in France.
These disparities have fueled outrage, prompting Sanders to convene a hearing with the CEOs of the implicated drugmakers before the Senate Committee on Health, Education, Labor, and Pensions, which he chairs. This move, intended to hold the pharmaceutical giants accountable, highlights the urgency of addressing the issue. For the first time, Medicare is engaging in direct negotiations with drug manufacturers, targeting ten expensive medications, including Eliquis and Stelara.
Sanders is also hinting at the possibility of issuing the committee's first subpoenas in over 40 years to compel Johnson & Johnson and Merck executives to testify.
While the negotiation process doesn't factor in prices paid in other countries, it symbolizes a potential shift towards fairer pricing practices within the US.
The Biden administration, along with Sanders and other advocates, has long decried the gaping disparity between drug prices in the US and those in other developed nations. Former President Donald Trump also attempted to address this issue by advocating for a "most-favored-nation price" policy, aligning Medicare payments with those of other countries. However, such initiatives have faced opposition and challenges along the way.
Furthermore, list prices, which often dictate insurance premiums and out-of-pocket expenses, pose a significant financial burden, particularly for those without adequate coverage.
Drug makers fear that price negotiations could stifle innovation by undercutting profits. They contend that reduced revenue streams could hamper investment in research and development, potentially impeding the discovery of new life-saving medications. However, the Senator's report highlighted that in 2022, Johnson & Johnson and Bristol Myers Squibb allocated $17.8 billion and $12.7 billion, respectively, towards stock buybacks, dividends, and executive compensation.
In contrast, their investments in research and development amounted to $14.6 billion and $9.5 billion. However, Merck demonstrated a different approach by investing nearly double the amount in research and development compared to dividends and executive compensation. Critics counter this by adding that exorbitant profits, coupled with substantial spending on stock buybacks and executive compensation, suggest a prioritization of financial gain over genuine societal concerns.
The staggering profits amassed by pharmaceutical companies, primarily in the US market, also raise questions about the ethics of prioritizing profit margins over patient access to essential medications. The contrasting difference in pricing further underscores the need for systemic reforms to ensure equitable access to healthcare for all.