Pharmaceutical companies planning to raise the prices of cancer drugs and other life-saving treatments are justifying the move by saying it needs to fund research and development, but the claim rings hollow given that they spend more on shareholder premiums than on research and development, according to a new study.
Accountable.US, a liberal-leaning consumer advocacy group, found that in the period 2019 to 2021, the five largest US drug companies spent $112 billion on research and development, but $125 billion on share buybacks and dividends.
“Pharmaceutical executives like to hide behind R&D expenditures, but they pale in comparison to huge handouts to a small group of wealthy investors,” said Liz Zelnick, program director of the Accountable.US program on economic security and corporate power.
“The latest indicators show the economy is recovering, but the Federal Reserve appears determined to stop it with more aggressive interest rate hikes that threaten millions of jobs and invite a recession,” he said Zelnick. “The Fed’s one-sided approach to inflation doesn’t adequately address what’s really driving it: corporate greed.”
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Accountable.US took a dive into 2021 and 2022 earnings from Pfizer Inc. PFE,
Bristol Myers Squibb Co. BMY,
AstraZeneca SpA AZN,
AZN,
and Sanofi SA SAN,
CUT,
and found that all four are planning to raise drug prices, even after strong earnings gains and heavy spending on shareholder returns.
MarketWatch has reached out to all four companies seeking comment.
Pfizer, for example, reported a 140% increase in net income in 2021, followed by a 42% increase in the first nine months of 2022. Yet the company plans to raise the prices of nearly 100 drugs and has spent $2 billion in share buybacks. and $6.7 billion in dividends in 2022, according to the study.
Pfizer did not respond to a request for comment.
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Bristol Myers reported a 177.6% increase in net earnings in 2021 and increased buybacks by 206.6%. That company is planning to raise the price of its $400,000 blood cancer treatment by 9%, according to the study.
Bristol Myers declined to comment on the record.
AstraZeneca plans to raise the price of at least two cancer treatments and one asthma treatment after earnings increased more than fivefold in the first nine months of 2022 compared to the prior-year period, according to the study. AstraZeneca did not respond to a request for comment.
Sanofi’s net profit rose 12% in 2021 and more than 26% in the first nine months of 2022, and it has spent more than €13.6 billion in shareholder donations since 2020. The French company plans to raise the price of 14 drugs and vaccines, according to Accountable.US.
Sanofi said the report mischaracterizes its work “and seeks to draw correlations that are misleading at best.
“Its ‘findings’ omit our investments in global health, health systems, helping crisis-hit communities, and the work we do to improve the lives of people around the world,” a spokesperson said in comments via e-mail.
“Sanofi is an industry leader in responsible pricing, and our Pricing Principles recognize our role in preserving a sustainable health care system and limiting our contribution to growth in US health care spending.”
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Zelnick said the organization doesn’t expect the new Republican majority in the House to lobby to block what it called “corporate profiteering.”
The four companies have given more than $500,000 to House Republican leaders and nearly $300,000 to current Republican members of the House Financial Services Committee, he noted. Patrick McHenry, the North Carolina Republican who chairs the financial services committee, alone received $130,000.
A recent report from Reuters found that major pharmaceutical companies planned to raise the price of more than 350 unique drugs in January, citing data from health research firm 3 Axis Advisors.
The Biden administration on Wednesday released a blueprint to implement the Medicare drug price negotiation process initiated by last year’s Inflation Reduction Act.
Facing strong pharmaceutical industry opposition to the negotiations and potential litigation over the implementation process, administration officials on calls with reporters Wednesday said they are focused on engaging with drug makers, health plans, health care providers , patients and other groups as negotiations unfold.
Officials are trying to “maximize transparency, predictability and collaboration,” CMS Chiquita administrator Brooks-LaSure said on a call.
Americans spend more than people in any other country on prescription drugs, according to Accountable.US, which blamed the prices.