Pelosi threatens to slide drug pricing reform into Biden's budget bill, rejects industry pushback that innovation would suffer
After a report released by a key House committee showed a projected $1 trillion in buybacks over the next 10 years by Big Pharma, Speaker Nancy Pelosi said she wants to attach drug pricing reform to the current budget bill, and slammed drug companies for suggesting innovation would be harmed as a result.
If passed, the bill would empower Medicare to negotiate directly with drug companies to lower prices, a longstanding goal for Democrats. The House report claims the policy shift could save taxpayers $456 billion in the next 10 years.
“We have an extraordinary opportunity to do this as we craft this reconciliation bill,” Pelosi said on a conference call with reporters.
The House Oversight Committee released a staff report that analyzed financial data from the 14 largest drug companies to evaluate the amount of money they invest in R&D, and the impact that has on Medicare price negotiations.
From 2016 to 2020, the companies spent $56 billion more on stock buybacks and dividends — $577 billion — than on R&D, the report found. The projected number of spending on buybacks from 2020 to 2029 is $1.15 trillion for the same 14 companies.
“The Committee previously released six staff reports showing that the pharmaceutical industry has targeted the United States for price increases for many years, while cutting prices in the rest of the world,” the report said. “The United States is particularly vulnerable to these pricing tactics because current law prohibits Medicare from negotiating directly with drug companies to lower drug prices.”
The 14 companies included the study are AbbVie, Amgen, AstraZeneca, Bristol Myers Squibb, Eli Lilly, Gilead, GSK, J&J, Merck, Novartis, Novo Nordisk, Pfizer, Roche and Sanofi. Between 2016 and 2020, the top executives for these companies brought home a combined salary of $3.2 billion, and eight of those companies spent less on R&D compared to buybacks and dividends, the report states. Amgen’s spending on buybacks was six-fold, compared to R&D costs.
“This report finds that the world’s leading drug companies have used price increases to boost payouts to investors and executives while spending less on research and development,” Rep. Carolyn Maloney (D-NY) said in a press release. “The report also shows that industry claims about the potential impact of pricing reforms are overblown.”
Industry lobbyists have played tight defense, arguing that it would deter the creation of new drugs, and hurt patients in the end. Brian Newell, a spokesperson for biopharma lobbying group PhRMA, told Bloomberg that his organization was committed to working with policymakers on commonsense solutions that address the “real challenges patients face.”