Big Pharma Trots Out Tired, Dishonest Arguments Designed to Evade Accountability, Keep Prices High

As lawmakers in Congress continue to weigh market-based solutions to lower prescription drug prices, Big Pharma is once again doubling down on bogus blame game tactics — designed to evade accountability for brand name drug companies’ egregious practices and keep prices high.

The latest ad campaign from Pharmaceutical Researchers and Manufacturers of America (PhRMA) is the latest dishonest escalation of Big Pharma’s blame game strategy. Here, we set the record straight and shine a light on how branded drug companies’ anti-competitive tactics and pricing practices are responsible for out-of-control prescription drug prices.

What Do PBMs Do?

Pharmacy Benefit Managers’ (PBMs) mission is to bring down health care costs for patients. They do this in a few ways.

First, they negotiate with drug companies for lower prices – savings that Americans see in lower premiums and lower out of pocket costs. Second, they work with doctors to ensure that patients are getting medications that are right for them. Third, they work with patients to ensure they take their medication properly, so they get healthier faster and stay healthier longer.

More than 266 million Americans are served by the PBM industry. Even Big Pharma companies, who are themselves large employers, contract with PBMs to negotiate lower drug prices for their own employees. And despite placing blame on others for the rising cost of prescription drugs, not so long ago, the brand name drug industry was quick to praise the role of PBMs.


Despite Big Pharma’s attacks, understanding how PBMs help Americans is straightforward:

  1. PBMs negotiate lower drug prices, using competition from generic drugs, as well as formulary placement, to secure discounts, rebates and other savings.
  1. The resulting savings are then passed on to patients and consumers. Those savings can be seen through lower out-of-pocket costs, lower premiums or lower tax dollars.

PBMs lower prescription drug costs by directly negotiating down drug prices with drug manufacturers and encouraging competition in the market. To do this, PBMs often rely on formularies, a list of preferred drugs that balance effectiveness with cost.

For example, if a generic becomes available, PBMs might promote its use by placing it on a formulary rather than a clinically equivalent but pricier brand-name medication. Drug makers looking to boost their market share want patients to use their drugs and jockey for position on the formularies by offering discounts on their drugs, known as rebates. Because PBMs serve a large number of clients and individuals, they can leverage their buying power to negotiate steeper discounts, which in turn lowers overall prescription drug costs and helps keep premiums down. These rebates, however, remain confidential out of concern drug manufacturers will collude to game the system and institute a floor price that prevents PBMs and payers from negotiating savings for consumers.

Big Pharma’s Biennial Price Hikes

Big Pharma traditionally hikes prescription drug prices in two major batches each year — the first starting in January and the second starting in June. The industry’s biennial price hikes have continued unabated despite the COVID-19 pandemic.

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:

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

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

Anti-Competitive Patent Strategies Block Competition And Harm Consumers

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.

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.”

Spending on Share Buybacks and Ads, Not R&D – While Blaming Others

Often, when asked for the underlying reason behind their egregious price hikes, drugmakers point to research and development costs (R&D). Though, over the last several years, a number of reports have debunked that rhetoric and instead shown that brand drug makers spend more on share buybacks and advertising and marketing than R&D.

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.

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