BIG PHARMA EARNINGS WATCH: JOHNSON & JOHNSON & NOVARTIS

Price Hikes Fuel Sky-High Earnings For Brand Name Giants

As millions of Americans continue to grapple with the economic impact of the COVD-19 pandemic, the first earnings reports for the fourth quarter of 2020 from Big Pharma demonstrate that hiking prices on American patients continues to be a profitable practice for the industry.

Yesterday, brand name drug companies Johnson & Johnson and Novartis reported sky-high Q4 earnings after hiking prices throughout the year.

Johnson & Johnson

• Johnson & Johnson reported a revenue of $22.48 billion, compared to analyst expectations of $21.67 billion.
• Pharmaceutical sales generated $12.26 billion in revenue, a 16 percent year-over-year increase.

• Novartis reported a revenue of $12.77 billion, an increase of three percent.
• Novartis’ pharmaceutical sales rose to $10.2 billion  and were largely driven by blockbuster skin and arthritis drug Cosentyx and heart drug Entresto.

• The brand name giant rang in the New Year earlier this month by hiking prices on nearly 30 prescription drugs.
• Last year, Johnson & Johnson has hiked prices over two dozen times at an average rate more than two times the rate of inflation.
• Johnson & Johnson raised the price of its blockbuster drug Stelara by nearly five percent in 2020.
• The giant increased the price of schizophrenia medication Invega Sustenna by 10.7 percent in 2019 with no evidence that the drugs had been improved.
• The company’s blockbuster cancer drug Imbruvica costs an eye-popping $180,000 per year.
• Spending on Imbruvica is expected to exceed $41 billion from 2027-2036 thanks to an anti-competitive patent scheme which has already extended the monopoly on the cancer drug by over nine years.
• In 2018, Johnson & Johnson sought to triple the price of Imbruvica, only to ultimately back down amid fierce public blowback.

• The brand name giant rang in the 2021 New Year by hiking prices on nearly 20 prescription drugs.
• Novartis increased the price of chemotherapy treatment Jakafi this summer, during the height of the coronavirus pandemic.
• Novartis increased prices over 30 times in 2020, including seven percent hikes each on blockbuster drugs Cosentyx and Entresto.
• Novartis increased prices at least 57 times in 2019 by an average of 6.3 percent.
• Novartis hiked the prices of Cosentyx and Entresto in 2019 by a staggering 10 percent each.
• At the same time, Zolgensma, a drug used to treat spinal muscular atrophy remains the world’s most expensive drug, at $2.13 million per patient.

• “Since Launching A 400 Mg Tablet Of Gleevec In 2003, Novartis Has Raised The Price Of The Drug 22 Times.” “A yearly course of Gleevec is priced at more than $123,000 today compared to just under $25,000 in 2003, an increase of more than 395%. Novartis raised the price of Gleevec steadily—and at a steeper rate—as it approached its loss of primary patent exclusivity in early 2016. Between 2010 and 2015, Novartis raised the price of Gleevec 12 times. In 2013 alone, the price increased by 20%.” (Staff Report, “Drug Pricing Investigation: Novartis — Gleevec,” U.S. House Committee On Oversight And Reform, 10/1/20)
  • “Due To Gleevec Price Increases, From 2009 To 2019, Novartis Collected Nearly $14.8 Billion In U.S. Net Revenue For The Drug, With U.S. Net Revenue For Gleevec Increasing From $1 Billion In 2009 To More Than $2.5 Billion In 2015.” (Staff Report, “Drug Pricing Investigation: Novartis — Gleevec,” U.S. House Committee On Oversight And Reform, 10/1/20)
• “Novartis Used Several Anticompetitive Tactics To Delay Generic Competition And Maintain Its Profits.” “First, Novartis undertook regulatory steps to extend its primary base compound patent on Gleevec for 26 months, from May 2013 to July 2015. Novartis also engaged in a practice known as ‘pay for delay,’ where the company struck a deal with the first generic entrant to delay entry of the generic by six months. Although the generic company had initially announced that it would price its generic 30% below the price of Gleevec, the generic company ultimately entered the market at a price just 6.4% lower than Gleevec’s price. Novartis executives hailed this high generic price in an email: “That’s good news.” Experts estimate that these strategies—a six-month delay for generic entry and then a six-month duopoly—resulted in $700 million in excess costs to payers in the one-year period from 2015 to 2016.” (Staff Report, “Drug Pricing Investigation: Novartis — Gleevec,” U.S. House Committee On Oversight And Reform, 10/1/20)

Follow along as we continue to monitor Q4 earnings announcements from brand name drug companies.