A new House Oversight Committee report finds that the biggest pharmaceutical companies spend more on stock buybacks than on research. They have spent more each year for the last five years. Lowering drug prices will have little bearing on Pharma’s research, which tends to focus on new versions of drugs that generate high profits and keeping generics and biosimilars off the market.
House staff analyzed financial data and business practices of the 14 largest drug companies. They assessed how much these pharmaceutical companies spend on executive salaries and stock buybacks, as well as how much they spend on research. They find that not only is more money spent enriching pharmaceutical company executives and investors than on research, but that regulating prescription drug prices should not affect the innovation we need.
Pharmaceutical companies drive up drug prices in the United States, where they can do so easily, and reduce their drug prices in other countries. Because Congress forbids Medicare from negotiating drug prices, it is easy for pharmaceutical companies to raise their prices. Not surprisingly, Medicare would save close to $500 billion over ten years if it paid prices in line with other wealthy nations.
Even with drug prices in the US at the same level as other wealthy countries, pharmaceutical companies could invest more in innovation than they do today and still make a handsome profit. They would simply need to spend less on stock buybacks and dividends.
Pharmaceutical companies spend hundreds of billions of dollars on stock buybacks and dividends. The 14 companies analyzed spent $577 billion between 2016 and 2020. Their investment in research was $21 billion less than that during the same period. Amgen spent six times more on buybacks, dividends and executive pay than on research in 2018.
Total compensation for the 14 company CEOs for the four years was $3.2 billion. That works out to each pharmaceutical company CEO earning over $57 million a year, on average.
Several pharmaceutical companies that invested in research, invested in ways to keep generics and biosimilars from entering the market and competing with their brand-name drugs. That’s the kind of research that leads to higher drug prices not to breakthroughs.
Here’s more from Just Care:
Leave a Reply