DOSE OF REALITY: BIG PHARMA SETS DRUG PRICES, HIKES DRUG PRICES AND BLOCKS COMPETITION TO KEEP DRUG PRICES HIGH

Sep 10, 2024

Lawmakers Should Focus on Holding Big Pharma Accountable for Egregious Pricing and Anti-Competitive Practices That Are the Root Cause of High Drug Prices in America

On Wednesday, September 11, the U.S. House Committee on the Judiciary is scheduled to hold a hearing on prescription drug affordability. Lawmakers on the committee should use the hearing as an opportunity to focus attention on Big Pharma’s egregious pricing practices and anti-competitive tactics that are the root cause of high prescription drug prices in America — and build on recent bipartisan momentum to hold Big Pharma accountable for patent abuse that keeps drug prices high.

Pharmaceutical companies are responsible for setting and hiking prescription prices on the products they market — and they game the system to extend monopolies on their biggest money makers, block competition from more affordable alternatives and keep prescription drug prices high.

Get the latest facts on Big Pharma’s egregious pricing practices and anti-competitive tactics below.

PRICE HIKES

Big Pharma repeatedly hikes prices on existing products, at rates consistently outpacing the rate of inflation, escalating the crisis of affordability for Americans who face financial uncertainty purchasing their medications and imposing heavy costs on taxpayers. In January of this year alone, Big Pharma increased prices on more than 775 brand name prescription drugs, with the median price increase outpacing the rate of inflation at the time.

An analysis published in The Wall Street Journal found Big Pharma “raised list prices on 775 brand-name drugs,” in the first two weeks of 2024, “by a median of 4.5 percent,” outpacing “the rate of inflation, which ticked up to 3.4 percent in December.”

Big Pharma companies among those hiking prices to start the year included:

Sanofi and Regeneron increased the price of anti-inflammatory drug Dupixent by six percent.
Bristol-Myers Squibb and Pfizer increased the price of anticoagulant drug Eliquis by six percent.
AbbVie hiked the price of its psoriasis treatment Skyrizi by 5.8 percent.
Gilead raised the price of HIV treatment Biktarvy by 4.9 percent.
Eli Lilly increased the price of its diabetes drug Mounjaro by 4.5 percent.
Novo Nordisk increased the price of its diabetes drug Ozempic by 3.5 percent.

According to data from Patients for Affordable Drugs (P4AD), brand name drug companies increased prices on another 195 prescription drugs between June 30 and July 5 of this year.

Other major rounds of price hikes from Big Pharma in recent years include:

In July 2023, Big Pharma increased prices on at least 100 brand name products.
In January 2023, Big Pharma increased prices on at least 587 brand name drugs. As part of these price increases, 16 brand name drug companies implemented price hikes higher than 10 percent.
In July 2022, Big Pharma increased prices on more than 100 brand name prescription drugs.
In January 2022, Big Pharma increased prices on at least 785 brand name prescription drugs.
In July 2021, Big Pharma hiked prices on 67 brand name prescription drugs.
In January 2021, Big Pharma raised the list price of 822 brand name prescription drugs.

Read more on Big Pharma’s price hikes outpacing the rate of inflation HERE.

LAUNCH PRICES

Big Pharma set a record for out-of-control launch prices last year. According to a recent Reuters analysis, the median annual price among new drugs approved by the U.S. Food and Drug Administration (FDA) in 2023 reached $300,000. This number was 35 percent higher than the previous year. The latest analysis demonstrates that despite unprecedented scrutiny of Big Pharma’s egregious pricing and anti-competitive practices, the pharmaceutical industry remains committed to its business-as-usual approach to putting profits over people.

Several of the newly approved drugs in 2023 were priced in the millions or hundreds of thousands of dollars. In fact, of the 47 drugs Reuters analyzed, at least 20 were priced above $350,000. Some of the costliest drugs launched last year include:

Sarepta’s muscular dystrophy drug Elevidys, with an annual price tag of $3.2 million.
Bluebird Bio’s sickle cell disease drug Lygenia, priced at $3.1 million per year.
BioMarin’s treatment for Hemophilia A, Roctavian, priced at $2.9 million per year.
Vertex and CRISPR’s sickle cell disease drug Casgevy, with an annual price tag of $2.2 million.
Regeneron’s CHAPLE disease drug Veopoz, priced at almost $1.8 million per year.
Sanofi’s treatment for Hemophilia A, Altuviiio, priced at $970,000 per year.
And Novo Nordisk’s rare kidney disease drug Rivfloza, priced at over $600,000 per year.

Last January, Reuters released an analysis which found that the median annual price among drugs approved by the FDA in 2022 exceeded $220,000.

Also, last March, The Wall Street Journal released a report which found that the median monthly price for a newly approved drug nearly tripled from 2011 to 2022.

Read more on Big Pharma’s egregious pricing practices and increasing launch prices HERE.

BIG PHARMA ADVERTISING SPENDING

Big Pharma Spends Big Dollars on Advertising: The U.S. is one of only two countries in the world that allow DTC advertising for pharmaceuticals. According to a report from the U.S. Government Accountability Office, Big Pharma spends an average of $6 billion on these ads annually. In 2022, that amount surpassed $8 billion.

Price Hikes and Big Ad Spending Go Hand-in-Hand: For several of the pharmaceutical industry’s best-selling products, Big Pharma repeatedly hikes prices while pushing these drugs to consumers via DTC ads. This combination drives up spending for consumers and the entire health care system. Take Bristol-Myers Squibb and Pfizer’s blockbuster blood-thinning drug Eliquis, for example. The brand name drug makers have spent more than $1 billion in direct-to-consumer advertising on the drug since 2013. Meanwhile, the drug makers have increased the drug’s price by at least six percent per year for ten years. When Eliquis came to market in 2013, it carried a monthly price tag of $250 – but by 2022, the list price for a one-month supply of Eliquis was $529, more than double when it came to market. There are a number of other examples of Big Pharma spending serious sums to push ads while simultaneously increasing the price of those medications – sometimes more than twice a year.

Big Pharma Spends More on Advertising Than R&D: Studies have shown that Big Pharma increasingly spends more on advertising than research and development (R&D). One recent study from AHIP found that seven of 10 of the largest pharmaceutical companies by revenue spent more on sales and marketing in 2020 than R&D. This demonstrates that the industry is putting more time, effort and money into pushing their biggest blockbusters instead of investing in new, innovative treatments.

DTC Advertising Can Lead to the Overutilization of Expensive, Older Meds: As the Forbes piece acknowledges, DTC advertising can contribute to “the (over)use of higher-cost drugs over generics and less expensive alternatives,” which can lead to increased spending on prescription pharmaceuticals. In fact, one research paper the author of the Forbes piece cited in the past found that advertising spending on drugs considered having “high therapeutic value” accounts for fewer than one-third of all DTC pharmaceutical advertisements. As the paper states, “[d]irect-to-consumer advertising is associated with use of higher-cost drugs over generics and less expensive alternatives.”

Read more about how Big Pharma has spent billions of dollars on advertising its blockbuster products while simultaneously hiking prices on those products HERE.

PATENT ABUSE

Big Pharma’s anti-competitive practices, including tactics like product hopping and patent-thicketing, delay more affordable alternatives from coming to market and cost patients and the U.S. health care system billions of dollars.

Big Pharma’s Patent Thickets On Just Five Drugs Cost More Than $16 Billion In a Single Year

A January 2023 report from Matrix Global Advisors, “Patent Thickets and Lost Drug Savings,” quantified the one-year cost of lost savings on five brand name drugs around which Big Pharma has built especially egregious patent thickets. The five drugs were AbbVie’s autoimmune drug Humira and oncology drug Imbruvica, Regeneron’s ophthalmology drug Eylea, Amgen’s autoimmune drug Enbrel and Bristol Myers Squibb’s oncology drug Opdivo.

The report assesses what the savings would be for these five drugs if “a steady state of competition [existed] where generics and biosimilars have achieved price discounts and uptake currently observed in the market.” Based on these calculations, the estimated one-year cost of patent thickets on each of these brand name drugs was:

$7.6 billion for Humira
$3.1 billion for Imbruvica
$2.5 billion for Eylea
$1.9 billion for Enbrel
$1.8 billion for Opdivo

This amounts to a total of more than $16 billion.

The report calls for “tangible legislative reforms… to stop this long-standing anticompetitive practice.” In particular, the report points to “the Affordable Prescriptions for Patients Act,” which would “limit the number of patents a brand drug manufacturer can contest,” as one important solution for lawmakers to consider.

Patent Thicket Surrounding Humira Drove More Revenue for Big Pharma Giant AbbVie Than All 32 NFL Teams Combined

While AbbVie’s blockbuster autoimmune drug Humira finally faced its first competition in the U.S. in 2023, over the course of its more than two decades on the market, AbbVie applied for more than 300 patents on the brand name medication, securing more than half of them. Ninety-four percent of the patents filed on Humira came after the drug was initially approved by the U.S. Food and Drug Administration (FDA). The strategy helped block competition for years and generated almost $200 billion for AbbVie. In 2022, the drug brought in more money for the company, $21 billion, than all 32 teams in the NFL combined, $19 billion.

Keytruda: 129 Patent Applications, and More on the Way, Already Costing Americans More than $137 Billion and Counting

In December 2022, Big Pharma giant Merck announced that it will seek new patents on its blockbuster cancer drug Keytruda, which brought in over $17 billion for the company the previous year. According to reporting from Reuters, Merck is seeking “to patent a new formulation of its $20 billion cancer immunotherapy Keytruda that can be injected under the skin, allowing it to protect its best-selling drug from competition expected as soon as 2028.”

This is just the latest example of a strategy Big Pharma companies have used repeatedly to extend their monopolies on blockbuster products – filing for patents for changes such as intake method or dosage that don’t represent truly new innovations or improve clinical benefits for patients. This enables Big Pharma to add to patent thickets designed to block competition from more affordable alternatives, keep drug prices high and boost profits.

Dr. Shailender Bhatia, an oncologist at the Fred Hutchinson Cancer Center in Seattle said, “I don’t think it’s going to improve the safety or the effectiveness of the drug.”

“It’s the way the pharmaceutical companies now use that system — it’s all about taking up as much space as possible, making it difficult for anybody to enter,” Tahir Amin, co-founder of Initiative for Medicines, Access & Knowledge (I-MAK), said in Reuters coverage of the move. “Keytruda is going to be the next Humira by all accounts.”

According to research from I-MAK, Merck has filed for 129 patent applications on Keytruda – more than half of which were filed after the drug’s initial approval by the FDA The Big Pharma company has been granted 53 patents on this one drug. I-MAK estimates that Americans will spend at least $137 billion on Keytruda while the drug faces no competition due to its extended exclusivity that already totals more than eight years — without reflecting the added impact of the Big Pharma giant’s new patent strategy.

Patent Abuse on Brand Name Inhalers Produced $111 Billion for Big Pharma After Active Ingredient Patents Expired

In 2023, William B. Feldman and Aaron S. Kesselheim, physicians at Brigham and Women’s Hospital and faculty members at Harvard Medical School, highlighted Big Pharma’s extensive patent abuse on brand name inhalers used to treat asthma and chronic obstructive pulmonary disease in an op-ed published in The Washington Post.

The authors explained brand name manufacturers “have used the patent and regulatory system to keep generics off the market,” including through tactics like patent thicketing.

“Of the $178 billion that manufacturers earned on inhalers in the United States from 2000 to 2021, about $111 billion of that total came after patents on their active ingredients had expired,” according to the experts, who added, “the patent system was designed to promote innovation, not grant monopolies for small tweaks to devices containing decades-old drugs.”

Bringing the Patent Abuse Playbook to a New Category of Blockbuster Products: GLP-1 Weight Loss Drugs

A February 2024 analysis published in JAMA Network found brand name drug makers marketing a new category of weight loss drugs, glucagon-like peptide 1 (GLP-1) receptor agonists, are increasingly utilizing device patents to build patent thickets around these products to create and elongate periods of monopoly pricing power — despite the drugs effectively being older diabetes medications repackaged for a different indication. In other words, Big Pharma isn’t protecting actual innovation, but gaming the patent system to block competition, keep prices high, and boost profits.

The authors state in their conclusion, the “removal of these patents may substantially reduce barriers to generic entry by decreasing the number of patents that generic firms must contest ahead of [U.S. Food and Drug Administration] approval.” Without this competition, “prices for GLP-1 receptor agonists will remain high for many years, reducing access for patients and raising health care costs.”

A report released earlier this year from the IQVIA Institute for Human Data Science underscores the staggering potential cost of Big Pharma’s unsustainable prices on weight loss drugs if Congress does not act to foster competition. According to the report, spending on obesity drugs could reach between $35 billion and $73 billion by 2028, depending on the level of expansion in eligible patients for the drugs. Currently, spending on obesity medications was $5.4 billion in 2023, “up from just $0.7Bn in 2018 and largely driven by the uptake of novel GLP-1 treatments.”