WASHINGTON, D.C. — The House Committee on Oversight and Reform released a new report today demonstrating that Big Pharma’s argument that the industry requires high drug prices to develop meaningful innovation is simply untrue. The report finds that 14 pharmaceutical corporations spent $56 billion more on stock buybacks and dividends than on research and development from 2016 to 2020.
Today’s press call, hosted by Chairwoman Carolyn B. Maloney alongside Speaker Nancy Pelosi and Rep. Peter Welch, highlighted patient advocate Lynn Scarfuto, a retired nurse and cancer patient who faces a $14,000 price tag for her cancer medication, Imbruvica. The report finds that even if the pharmaceutical industry were to see a decrease in revenue due to drug pricing reforms like H.R. 3, which would allow Medicare to negotiate lower prices for Americans, drug corporations could maintain or exceed current research and development levels by spending less on buybacks and dividends.
“Patients don’t buy Big Pharma’s lie that drug corporations must be allowed to dictate sky-high prices in order to drive research and development — we can have the innovation we need at prices we can afford,” said David Mitchell, a cancer patient and founder of Patients For Affordable Drugs Now. “Americans should not be paying almost four times what other wealthy nations pay for the same brand-name drugs. Congress must put patients first and allow Medicare to have the power to negotiate lower prices by passing H.R. 3.”
Lynn Scarfuto told the press that she is worried that she will soon lose the ability to afford her prescription.
“I don’t have the financial resources to pay for my medication — and not many people do,” said Scarfuto, from Herkimer, New York. “My inability to afford Imbruvica’s astronomical price once my assistance runs out would certainly expedite my death.”
AbbVie, the company that makes Imbruvica, made more than $4.3 billion in net revenue from Imbruvica in 2020 alone. AbbVie CEO Richard Gonzalez admitted that price increases that led to increased revenue had nothing to do with innovation or improvement to that drug. The new report shows AbbVie, along with other drug companies, spent more on stock buybacks and dividends than research and development every year for the past five years.
Key takeaways from the report include the following:
- 14 pharmaceutical corporations are expected to spend more on stock buybacks and dividends from 2020 to 2029 than the U.S. would save by lowering prices with H.R. 3.
- The same corporations are projected to spend $1.15 trillion on stock buybacks and dividends. That is twice the amount that H.R. 3 is expected to save over the same period of time.
- U.S.-based companies spent even less on research and development as compared to buybacks and dividends than drug corporations based in other countries.
- Significant portions of funds drug companies did spend on research and development were actually used to find ways to suppress generic and biosimilar competition, not for true innovation.
- Over the last five years, the companies spent over $3.2 billion in executive compensation, which increased by 14% during that time. Price hikes on certain drugs were directly linked to higher bonuses for executives.
“Big Pharma companies, like AbbVie, want patients and Congress alike to believe that we must face high prices to fund important innovation. But that’s just not the case,” Scarfuto continued. “Congress has the power to change our broken system by passing H.R. 3 and allowing Medicare to negotiate drug prices so we can have the innovative medications we need at prices we all can afford. For patients like me, it is a matter of life and death.”
H.R. 3, the Elijah E. Cummings Lower Drug Costs Now Act, was reintroduced in the House of Representatives in April. The chamber passed the bill in the 116th Congress. It will lower prices, rein in price gouging, and reduce out-of-pocket costs by restoring balance to the U.S. drug pricing system to ensure both innovation and affordability.