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, which Big Pharma wields like a shield to protect the industry’s anti-competitive and price-hiking practices, 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.

In addition, a 2020 U.S. House Committee on Oversight and Reform report found that Big Pharma’s price hikes and pricing practices were tied to executive compensation benchmarks and earnings targets, and had little if nothing to do with clinical improvements.
BIG PHARMA INVESTS BOLDLY IN ADVERTISING AND PROFITS — NOT R&DIn 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.

Big Pharma also used a windfall from the Tax Cuts and Jobs Act of 2017 to line shareholders’ pockets, rather than invest in innovation and R&D.
BIG PHARMA PROFITS FROM TAXPAYER-FUNDED R&DBig Pharma tries to justify out-of-control list prices by invoking the industry’s investments in innovation, but leaves out of their rhetoric the fact that taxpayers carry much of the risk and cost of researching and developing new cures.

Brand name drug maker Gilead offers a case study in how Big Pharma capitalizes on taxpayer-backed innovation to fuel profits — and then engages in price hikes on these products the company had no role in developing.

Policymakers must see through Big Pharma’s bogus innovation rhetoric and advance bipartisan, market-based solutions that hold brand name drug makers accountable and lower prescription drug prices.

Read more about Big Pharma’s empty rhetoric and pandemic price hikes HERE.

Learn more about market-based solutions to hold Big Pharma accountable and lower prescription drug prices HERE.

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