Part of a continuing CtWatchdog series on high drug and medical prices.
Despite claiming for years that Americans have to pay high drug prices because the money is needed to fund research and development, a study released Thursday that it’s just not true.
The staff study from a Democrat controlled Congressional committee makes clear that income is instead going to enrich shareholders and executives.
According to the data, the 14 largest drug manufacturers invested $522 billion on research and development from 2016 through 2020.
During the same period, the companies spent $56 billion more – $578 billion – on stock buybacks and dividends.
And not all the R&D money was spend on finding new drugs.
“Many drug companies spent a significant portion of their R&D budget on finding ways to suppress generic and biosimilar competition while continuing to raise prices, rather than on innovative research,” says the report.
In addition, the Committee on Oversight and Reform staff report says that during the same period, top executives at these companies received $3.2 billion in compensation with annual compensation growing by 14 percent annually.
“These findings show that drug company executives are incentivized to raise drug prices in the United States through bonus structures that increase revenue targets year after year,” the report says.
These costs, and the refusal of the government to control drug prices, are why Americans are paying more for medicine than those living in any other industrialized country.
Thankfully American can buy drugs directly from Canadian firms, as we pointed out in our recent story.
Only AstraZeneca and Roche spent more on R&D than on buybacks and dividends, the report says.
That is not the case with Amgen as the following graph shows:
As expected, the Pharmaceutical Research and Manufacturers of America disagreed with the report, calling it partisan politics, but promised to help lower drug prices.
“While we can’t speak to specific examples cited in the report, this partisan exercise is clearly designed to garner support for an extreme bill that will erode Medicare protections and access to treatments for seniors,” spokesman Brian Newell said, according to a news report from NJ.com.
“Every year, biopharmaceutical research companies invest tens of billions of dollars in the research and development of new cures and treatments, as well as our significant investments in time and resources creating treatments and vaccines to combat the global pandemic.”
