A few days ago our blog highlighted a report that found American prices for drugs were the highest by far when compared with other countries. So we are not at all surprised by another article that exposes the profiteering of Big Pharma in the USA.
"Price-gouging is central to the industry business model." said Zain Rizvi, law and policy researcher with Public Citizen's Access to Medicines project,
Corporations' quest for profits is what "is driving up drug prices and nothing more" according to Dennis Bourdette, M.D., chair of neurology in the Oregon Health and Science University (OHSU) School of Medicine, who co-authored a study published Monday that sought to find out companies' rationale for the escalating prices on medications for patients with multiple sclerosis.
The prices paid for those drugs have risen by 10% to 15% every year for the past decade.
"The frank information provided by these executives pulls back the curtain of secrecy on how drug price decisions are made," Dr. Bourdette said.
The study by researchers at OHSU and the OHSU/Oregon State University College of Pharmacy, which appears in the journal Neurology this month, was based on interviews with four current and former pharmaceutical industry executives who had direct involvement in the pricing or marketing of MS drugs. The executives, who were not named, laid bare the motivating factor for the surges.
"I would say the rationales for the price increases are purely what can maximize profit," said one executive. "There's no other rationale for it, because costs [of producing the drug] have not gone up by 10% or 15%; you know, the costs have probably gone down."
"The industry executive said the quiet part out loud," said Zain Rizvi
One executive interviewed for the study pointed out that the U.S. is a global outlier when it comes to the price hikes. They said that "it is only in the United States, really, that you can take price increases. You can't do it in the rest of the world. In the rest of the world, prices decline with duration in the marketplace."
Maintaining or lowering the prices would give a negative impression about the medication, said one executive. "We can't come in at less," they said. "That would mean we're less effective, we think less of our product, so we have to go more."
Economist Dean Baker of the Center for Economic and Policy Research noted last year: "The government gives drug companies patent monopolies that make it illegal for competitors to sell the same drug. These patent monopolies allow companies to charge prices that are a hundred or even a thousand times the free market price."
And other recent research backs up the case that drug manufacturers are relying on price hikes to drive their growth.
- Price increases accounted for roughly 60% of recent sales growth recorded in the U.S. for many of the pharmaceutical industry's top-selling drugs, found a new report from analysts at the investment firm Leerink.
- Between 2014 and 2017, U.S. sales for 45 leading products increased by 28%, or about $23 billion. More than $14 billion of those newly won dollars stemmed from price increases during that span, according to Leerink.
- Although the investment bank acknowledged its analysis relies on estimation and incomplete data, the findings highlight just how reliant drugmakers have been on price hikes to drive growth. Without the boost from higher prices, eight of the drugs examined — including Johnson and Johnson's top-selling Remicade and Amgen's Enbrel — would have posted revenue declines.