Big Pharma Must Suspend Summer Price Hikes Amid Historic Economic Uncertainty
By Lauren Aronson
June 23, 2020
Before the COVID-19 crisis, more than 58 million Americans struggled to afford their medications. Now, the economic impact of the pandemic has left millions more American workers, families and seniors struggling just to stay afloat.
Prior to the historic economic uncertainty of the current crisis, too many Americans were already unable to afford their medications and resorting to dangerous measures like cutting pills in half or skipping doses – measures that can lead to severe or even deadly consequences. Heartbreakingly, nearly 34 million Americans report knowing of at least one friend or family member in the past five years who died after not receiving needed medical treatment because they were unable to pay for it. It is critical that patients are able to take their medications as prescribed in order to stay healthy — especially now.
With so much at stake, we cannot afford price hikes that will push necessary prescription drugs out of reach for more Americans, which is why the Campaign for Sustainable Rx Pricing is calling on major pharmaceutical companies to suspend their traditional biennial price hikes this summer.
For too long, Big Pharma’s “business-as-usual” attitude toward pricing has reliably increased prescription drug prices to out-of-control levels. Over five years, Big Pharma raised the price of brand name drugs at a staggering 10 times the rate of inflation.
Like clockwork, these price hikes often occur in two large biennial batches: at the start of the year and mid-year in early summer. In January, Big Pharma rang in the new year by hiking prices on more than 600 drugs by an average of more than 5 percent. Last summer, Big Pharma hiked prices on 104 drugs by an average of more than 13 percent.
Several Big Pharma companies went wild last summer, more than doubling list prices on at least 40 drugs, including Epic Pharma that hiked the price on two versions of one of the company’s products by an eye-popping 399 percent. Meanwhile, drug company B. Braun boosted the price of its antibiotic cefazolin by 50 percent while patients faced supply shortages of the drug.
Big Pharma regularly justifies these price hikes as necessary to support research & development into new treatments and cures — but the evidence doesn’t support drug companies’ rhetoric.
Recent research shows that Big Pharma repeatedly hikes brand-name drug prices without making any improvements to those medications. Between 2017 and 2018, drug companies hiked prices on seven of the most widely prescribed drugs for Medicare Part D patients with no evidence that the drugs had been improved, resulting in $5.1 billion in increased costs for patients and taxpayers.
Big Pharma also doesn’t always use revenue windfalls to invest in R&D. A recent analysis found that Big Pharma used a windfall from the Tax Cuts and Jobs Act of 2017 to line shareholders’ pockets, rather than invest in R&D. In fact, the single-year increase in payouts to Wall Street and shareholding Big Pharma board members and executives was 17 times larger than the increase in R&D spending.
The tax windfall underscores a behavioral trend outlined in another study, that found Big Pharma invests boldly in profits and advertising — not R&D. Recently, Big Pharma took advantage of Americans stuck at home during social distancing to invest even more in television advertising. The 10 largest drug companies spent a whopping $183 million in national TV ads in April, with AbbVie’s blockbuster drug Humira accounting for $52.9 million. In January, AbbVie hiked the price of Humira 7.4 percent – helping the company surpass revenue expectations this past quarter.
AbbVie isn’t the only Big Pharma giant busting profit and revenue expectations as millions of Americans grapple with unprecedented health and economic ramifications. 12 of the largest Big Pharma companies reported expectation-besting earnings for the first quarter of 2020 after hiking prices on American patients earlier this year.
Driven by the industry’s anticompetitive and price-hiking practices, Big Pharma’s business is booming.
During these challenging times, Big Pharma companies should put people before profits and suspend summer price hikes that would increase financial strain and health care uncertainty for millions of American patients and families in the midst of a historic crisis.
At this critical moment, American patients and families need relief, not higher prices.
Lauren Aronson is the executive director of The Campaign for Sustainable Rx Pricing (CSRxP).