Pharmaceutical companies have told us that we must pay ultra-high prices for patented medications so they have money to continue research that will ultimately lead to the development of the next wonder drug.
Like most everything involved with medicine, people in the U.S. pay much more for prescription drugs than anyplace else in the world. Of course name-brands always cost more than generics, but the U.S. that cost is much higher. In fact, here in the U.S., we make up 4-5% of the world’s whole population and 33% of the developed world’s population, yet account for 42% of all pharmaceutical revenue. The following quote from NCPSSM.org 2014 (The National Committee to Preserve Social Security and Medicare)
“Part D already costs about $80 billion a year and is on track to double by 2022 as benefits improve and Baby Boomers retire. For two reasons, a significant chunk of that money is wasted on overpayments to drug companies: When Part D began, millions of patients were shifted over from Medicaid, the state-federal program for low-income people that gets far lower drug prices than Medicare. Suddenly, the cost of providing drugs to the same people shot up. Congress barred Medicare from negotiating the way Medicaid and the Department of Veterans Affairs do with drug makers to get lower prices. Instead, lawmakers insisted the job be done by private insurance companies.”
The big question is, is pharmaceutical research really so expensive that, even at the current prices of name-brand medications, they have little profit left over to invest in research? We can always look at the annual financial statements that has to be filed each year. These reports include annual revenues, itemizes costs, profits, etc. Check out this list of the top Pharmaceutical companies in the U.S. for 2015. Just below that, we’ll see just how much they spent on research and development… then you be the judge.
Here is a list of the top companies in 2015 and the products they bring to the marketplace:
Johnson & Johnson
Revenue: $74.331 billion
Headquartered in New Brunswick, New Jersey, United States, Johnson and Johnson ranks No. 1 in the USA. Johnson and Johnson is the largest pharmaceutical company in the U.S. Some of the most popular consumer products manufactured by this company are–Band-aid bandages, Johnson baby products, Acuvue contact lenses, Neutrogena skin care products, Clean & Clear face wash, and Tylenol medications.
Revenue: $58.98 billion
Headquartered in New York City, United States, Pfizer is one of the oldest pharmaceutical companies in the USA. Pfizer specializes in developing and manufacturing a wide array of drugs and vaccines for oncology, immunology, cardiac ailments, endocrinology, neurology, etc.
Revenue: $39.87 billion
Headquartered in North Chicago, Illinois, in United States, Abbott Laboratories is one of the largest pharmaceutical companies in the USA. Abbott Laboratories has etched its place in history by developing the first ever HIV blood-screening test in 1985. Medical tests developed by Abbot Laboratories along with the diagnostic instruments manufactured by it are used worldwide for diagnosing and monitoring major health conditions such as cancer, HIV, cardiac failure, hepatitis, metabolic disorders, etc.
Bristol Myers Squibb
Revenue: $18.8 billion
Headquartered in Park Avenue, New York City. This global biopharmaceutical company aims at discovering and manufacturing world-class medicines to assist patients in recovering from serious health conditions such as cancer, heart ailments, HIV, AIDS, mental disorders, and rheumatoid arthritis. In past 10 years, Bristol Myers Squibb has delivered fourteen innovative medicines to the world.
Revenue: $15.58 billion
Headquartered in Thousand Oaks, California. Amgen is ranked the second largest independent biotechnology company in the world. Amgen specializes in discovering, developing and delivering innovative drugs that are used for the treatment of rheumatoid arthritis and several autoimmune diseases. Amgen also manufactures drugs used for preventing infections in patients who undergo chemotherapy.
Revenue: $5.05 billion
Headquartered in Weston, Massachusetts. Biogen is one of the top biopharmaceutical companies in the U.S that discovers, develops and manufactures drugs for serious health conditions such as, cancer, neurodegenerative disorders, and autoimmune disorders. Biogen is known for developing the first remarkable therapy for treating haemophilia A and haemophilia B.
Revenue: $84 billion
Headquartered in Summit, New Jersey. This company focuses on manufacturing innovative medicines for cancer, autoimmune and other inflammatory disorders. Celgene aims at delivering life-changing medicinal therapies for patients worldwide. Celgine’s operates in more than fifty countries worldwide.
Revenue: $7.75 billion
Headquartered in Foster City, California. Gilead Sciences primarily focuses on developing antiviral drugs for treating patients infected with hepatitis B, influenza or HIV. It also discovers, develops and manufactures medicines for cancer.
Revenue: $4.683 billion
Headquartered in Indianapolis. Eli Lilly is widely known for its polio vaccine, penicillin and insulin. It is also the largest pharmaceutical company in the world in terms of developing and distributing psychiatric medication.
Now back to that question, is pharmaceutical research really so expensive that, even at the current prices of name-brand medications, they have little profit left over to invest in research?
Take a look at this screenshot of the Johnson & Johnson 2015 Annual Report.
The total sales for 2015 are $70+ Billion
The total spent on research and development is $9+ Billion BUT look at that “Marketing” expense – $21+ Billion!
Then I hopped over to OpenSecrets to see just how much Johnson & Johnson spent lobbying in Washington in 2015. Total Lobbying Expenditures for 2015: $6,350,000
What does that tell you?
Now, the real reason prescriptions and healthcare in general are SO high compared to other countries isn’t because we cover research and development of new drugs, in fact, much of the research is conducted through universities. The real reason is, Medicare is forbidden in the law that created Medicare Part D to negotiate lower prices and that’s no accident. The drug lobby (Billy Tauzin, R-La make sure you read more on this schmuck below) worked hard to ensure Medicare would NOT be allowed to cut into the profits which would flow to big Pharma thanks to millions of new customers delivered to them by Part D.
According to a report by the Center for Public Integrity, congressmen are outnumbered two to one by lobbyists for an industry that spends roughly $100 million a year in campaign contributions and lobbying expenses to protect its profits.
About the Medicare Prescription Drug Bill
Billy Tauzin (former Democrat turned Republican Congressman from Louisiana), was the primary driving force behind this catastrophic bill. Tauzin resigned from Congress in Feb 2004. In Jan 2005, the day after his term in Congress ended he began work as the head of the Pharmaceutical Research and Manufacturers of America, or PhRMA a powerful trade group for pharmaceutical companies. Tauzin was hired at a salary outsiders estimated at $2 million a year.
Two months before resigning as chair of the committee which oversees the drug industry, Tauzin had played a key role in shepherding through Congress the Medicare Prescription Drug Bill. Many said that the bill was “a give-away to the drug makers” because it prohibited the government from negotiating lower drug prices and bans the importation of identical, cheaper, drugs from Canada and elsewhere. The Veterans Affairs agency, which can negotiate drug prices, pays much less than Medicare. The bill was passed in an unusual congressional session at 3 a.m. under heavy pressure from the drug companies.
As head of PhRMA, Tauzin was a key player in 2009 health care reform negotiations that produced pharmaceutical industry support for White House and Senate efforts. Tauzin received $11.6 million from PhRMA in 2010, making him the highest-paid health-law lobbyist. Tauzin now is on the Board of Directors at Louisiana Healthcare Group.
So in the end, when the U.S. government is the LARGEST customer of pharmaceutical products and healthcare, and without the ability to NEGOTIATE pricing for products and services, pharmaceutical and healthcare companies can name their price – even when that price is ULTRA-High! It has NOTHING to do with the cost of research and development, but everything to do with greed and an ability that was gifted them by our elected officials in the wee hours of the morning when the world was sleeping!
Gayla – follow me @Gayla
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