DOSE OF REALITY: SENATE COMMERCE HEARING OPPORTUNITY FOR LAWMAKERS TO HOLD BIG PHARMA ACCOUNTABLE

Lawmakers Should Focus Attention on Brand Name Drug Companies’ Egregious Practices, Recommit to Market-Based Solutions to Lower Drug Prices

On Thursday, May 5, the U.S. Senate Committee on Commerce, Science and Transportation’s Subcommittee on Consumer Protection, Product Safety, and Data Security is set to hold a hearing on “Ensuring Fairness and Transparency in the Market for Prescription Drugs.” Lawmakers on the committee should use the hearing as an opportunity to focus attention on Big Pharma’s egregious pricing practices as the root cause of the crisis of affordability in America — and reestablish momentum behind market-based solutions to hold brand name drug companies accountable.

Pharmaceutical companies are the sole entity responsible for setting and hiking prescription drug list prices — and game the system to extend product exclusivity on their products, undermine competition from more affordable alternatives in the market and keep prescription drug prices high.

Get some of the latest facts on the Big Pharma’s egregious behavior below.

PANDEMIC PRICE HIKES

In January of this year alone, Big Pharma hiked prices on 791 brand name medications, including treatments for serious conditions like cancer and HIV. Big Pharma companies among those hiking prices to start the year included:

• Pfizer hiked prices on more than 100 drugs, including a whopping 16.8 percent price increase on its popular drug Solu-Cortef which treats various conditions such as arthritis, blood diseases, and certain cancers.
• GlaxoSmithKline raised prices on more than 30 drugs, with cancer drug Zejula and seizure drug Lamictal topping the list with seven percent price increases each.
• Bristol Myers Squibb raised prices on more than a dozen of their drugs.
• Gilead Sciences raised prices 5.6 percent on HIV drugs Biktarvy and Descovy.

This marks the fourth major round of price hikes Big Pharma has launched since the start of the pandemic.

• In July of 2020, despite calls to suspend traditional mid-year price hikes at the height of the pandemic, Big Pharma hiked prescription drug prices on more than 65 brand name drugs — more than the previous year.
• In January 2021, Big Pharma raised the list price of 822 brand name prescription drugs by an average of 4.6 percent.
• Then, in June and July 2021, Big Pharma hiked prices on 67 brand name prescription drugs by an average of 3.5 percent.

Learn more about Big Pharma’s Pandemic Price Hikes HERE and HERE.

TARGETING CRITICAL CONDITIONS

Big Pharma’s non-stop price hikes on critical medications, including anti-cancer drugs and blood-thinning treatments, impact some of the country’s most vulnerable patients. The root causes of this affordability crisis are the egregious pricing practices of brand name drug companies, including setting sky-high launch prices on new medications being introduced to the market and repeatedly hiking prices on existing treatments.

Prices On 54 Cancer Drugs Increased 40 Percent Over Eight Years: “The affordability problem is worsened by soaring list prices for many specialty drugs used to treat cancer and other serious diseases… For instance, prices for 54 orally administered cancer drugs shot up 40 percent from 2010 to 2018, averaging $167,904 for one year of treatment, according to a 2019 JAMA study. Bristol Myers Squibb, the manufacturer of Clark’s drug, Pomalyst, has raised the price 75 percent since it was approved in 2013, to about $237,000 a year.” (“Seniors Face Crushing Drug Costs as Congress Stalls on Capping Medicare Out-Of-Pockets,” Kaiser Health News, January 4, 2021, Harris Meyer)

List Prices for New Cancer Drugs Rose More Than 50 Percent In Five Years: “It wasn’t all that long ago that a six-figure price on a debut cancer drug was big news. Now, it would be more surprising if an oncology launch didn’t carry a price tag of $100,000 or more—and the high cost of those new rollouts is helping drive cancer treatment costs toward $100 billion annually in the U.S. alone. According to a new IQVIA report, U.S. cancer drug spending climbed to almost $50 billion last year, about twice the $24.8 billion spent in 2012. Along the way, median U.S prices for new therapies climbed above $160,000 last year, more than double the median $79,000 launch price in 2013.” (“Super-Pricey New Cancer Drugs Drive Mega Increases in Treatment Spending,” FiercePharma, May 24, 2018, Eric Sagonowsky)

Every New Cancer Drug Brought To Market In 2017 Cost $100,000 Or More: “Spending on cancer drugs has doubled over the past five years, and little wonder: Every new cancer drug brought to market last year cost $100,000 or more, according to a new report. The average cost of a new drug released in 2017 was $150,000, according to the report from The IQVIA Institute for Human Data Science, formerly IMS Health and Quintiles. Those drug costs are expected to double again by 2022, the report finds. That compares to the average $79,000 cost of new cancer drugs that hit the market in 2013.” (“Cancer Drug Spending Doubled In Last 5 Years, Report Says,” NBC News, May 24, 2018, Maggie Fox)

Prices for Two Blockbuster Blood Thinning Medications More Than Doubled In Ten Years: “In 2011, a new category of anticoagulants entered the market. These novel products were revolutionary for patients because they were less risky and did not require routine lab tests. The first products, Eliquis and Xarelto, were priced at over $200 for a month’s supply — major sticker shock at a time when a month’s supply of warfarin cost less than $10. The sticker shock did not stop there. The prices of both drugs have risen every year, far outpacing the rate of inflation. As of January 2022, the prices of a month’s supply of Eliquis and Xarelto are $529 and $516, respectively.” (“Eliquis and Xarelto: Lockstep Price Hikes and Patent Gaming Exploit Patients and Taxpayers,” Patients for Affordable Drugs, April 5, 2022)

Big Pharma Hiked Prices Faster Than Inflation On 23 Of The Top 25 Most Popular Medicare Part D Drugs: “Among the 25 drugs covered by Medicare Part D with the highest total gross spending, 23 had price increases greater than inflation in 2020. This includes the top 3 drugs by total gross spending in 2020: Eliquis, a blood thinner used by 2.6 million beneficiaries in 2020, with a 5.9% price increase; Revlimid, a treatment for multiple myeloma used by nearly 44,000 beneficiaries in 2020, with a 6.5% price increase; and Xarelto, a blood thinner used by 1.2 million beneficiaries in 2020, with a 4.1% price increase.” (“Prices Increased Faster Than Inflation for Half of all Drugs Covered by Medicare in 2020,” Kaiser Family Foundation, February 25, 2022)

ANTI-COMPETITIVE TACTICS COST TAXPAYERS BIG

Big Pharma’s anti-competitive behavior, including tactics like product hopping and patent-thicketing, delay more affordable alternatives from coming to market and cost patients and our health care system billions of dollars. The American public faces unsustainable costs because of this anti-competitive behavior.

• A 2021 report from AARP found that total Medicare Part D spending on 50 top brand-name drugs was $38 billion higher between 2015 and 2019 than it would have been if drug manufacturers had not increased their prices faster than the corresponding rate of inflation.
• A May 2021 report found delayed alternatives to AbbVie’s blockbuster drug Humira will cost the U.S. health care system an estimated $19 billion by 2023.
• A July 2020 report estimates patent gaming around Imbruvica will cost the U.S. health care system $41 billion.
• And a September 2020 study found Big Pharma’s biologic patent abuse will cost patients an additional $25 billion by 2029.

As a recent New York Times editorial pointed out, Big Pharma games the patent system to maximize “market share” and “extend product monopolies for decades.”

PRICE HIKES UNCONNECTED TO CLINICAL IMPROVEMENTS

For far too long Big Pharma has used the excuse that research and development (R&D) costs justify out-of-control prescription drug prices and that solutions to lower prices threaten innovation into new breakthroughs. These tired arguments simply don’t hold up to scrutiny.

Multiple studies have found Big Pharma’s price hikes have little to no connection to the cost of its development or improvements in drugs’ efficacy. In other words, brand name drug companies set launch prices and hike prices to maximize profits — not because there is any connection to innovation.

• “A Drug’s Sunk R&D Costs Do Not Influence Its Price.” A 2021 report from the Congressional Budget Office (CBO) found that pharmaceutical R&D costs do not have a relationship to the prices drug companies set on their products. The report concluded, “Importantly, when drug companies set the prices of a new drug, they do so to maximize future revenues net of manufacturing and distribution costs. A drug’s sunk R&D costs—that is, the costs already incurred in developing that drug—do not influence its price.” (“Research And Development In The Pharmaceutical Industry,” Congressional Budget Office, April 2021)
• Big Pharma’s Unjustified Price Hikes On Just Seven Popular Drugs Cost American Taxpayers $1.2 Billion In Increased Costs. An analysis conducted by the Institute for Clinical and Economic Review (ICER) found that drug companies hiked prices on seven popular drugs in 2019 with no evidence that the drugs had been improved. These price hikes included AbbVie, which increased the price of its best-selling rheumatoid arthritis drug Humira by 6.2 percent, Johnson & Johnson, which increased the price of schizophrenia medication Invega Sustenna by 10.7 percent, and Bristol-Myers Squibb, which increased the price of rheumatoid arthritis drug Orencia by 7.4 percent. (“Unsupported Price Increase Report,” ICER, January 12, 2021)
• Price Hikes On AbbVie’s Blockbuster Drug Humira Were Not Supported By Clinical Evidence And Led To A More Than $1.8 Billion Increase In Unnecessary U.S. Drug Spending. Price hikes on AbbVie’s Humira were not supported by new clinical evidence and accounted for an unnecessary increase in U.S. drug spending of more than $1.8 billion from 2017-2018 according to ICER. (“AbbVie’s Humira, Roche’s Rituxan top ICER’s list of worst price-hike offenders,” FierceHealthcare, October 8, 2019)
• Just Six Percent of Drug Patents in Infringement Suits Were for Active Ingredients or New Molecules. An analysis conducted in Nature Biotechnology examined 21 patent infringement lawsuits pursued by pharmaceutical companies on biologic drugs under the Biologics Price Competition and Innovation Act (BPCIA), covering a total of 179 patents. Of the patent filings examined in the study, just six percent were for active ingredients or new molecules. The vast majority were for secondary uses – oftentimes for much less critical changes to the drugs or their manufacturing process, with little to no innovation involved that might improve clinical value for patients. (“The Characteristics of Patents Impacting Availability of Biosimilars,” Nature Biotechnology, January 18, 2022)

BIG PHARMA INVESTS BOLDLY IN ADVERTISING AND PROFITS — NOT R&D

In addition, contrary to the industry’s insistence that out-of-control prices support costly investments in R&D, the facts show that brand name drug companies invest more boldly in advertising, profits and overhead than innovation and R&D.

• $56 Billion: A 2021 report from the House Oversight Committee found that over the last five years, the top 14 drug companies spent almost $577 billion on stock buybacks and dividends – $56 billion more than on research and development during that same time span. (“Drug Pricing Investigation: Industry Spending on Buybacks, Dividends, and Executive Compensation,” S. House Committee On Oversight and Reform Staff Report, 7/8/21)
• $3.9 Billion: Big Pharma companies spent $3.9 billion on TV ads in 2021, according to ad tracker iSpot.tv. (Beth Snyder Bulik, “Pharma Brands Spent $$3.9B on TV Ads In 2021,” Endpoints News, 1/11/22) 
• 2X: A 2019 study from CSRxP and GlobalData found Big Pharma invests more than twice as much in advertising, profits and corporate overhead than R&D. (“Big Pharma: Investing Boldly In Advertising And Profits, Not R&D,” The Campaign for Sustainable Rx Pricing, May 15, 2019)

Lawmakers should capitalize on the growing momentum surrounding prescription drug prices and support market-based, bipartisan solutions to deliver on their repeated promises to lower prescription drug prices and hold Big Pharma accountable.

Read more about why Big Pharma’s bogus rhetoric on innovation doesn’t add up HERE.

Read more about how Big Pharma targets critical medications like anti-cancer drugs for price hikes HERE.

Read more about Big Pharma’s patent abuse HERE.

Learn more about market-based solutions to hold Big Pharma accountable HERE.