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Health Care for America Now released new research today that shows big pharmaceutical companies are making billions of dollars by systematically overcharging taxpayers and seniors for drugs that they sell for a fraction of the cost in other countries. Since we released our research hours ago, the story has been reported by Politico, The Wall Street Journal MarketWatch and Think Progress. We’re expecting to see a lot more coverage, but we wanted to share our research directly with you first. Check out the blogpost by HCAN Executive Director Ethan Rome, which was published by Huffington Post and Daily Kos today.
Big Pharma Pockets $711 Billion in Profits by Robbing Seniors, Taxpayers
By Ethan Rome, Executive Director, Health Care for America Now
Here’s an outrage that must be changed: Big Pharma has been systematically price-gouging the Medicare program for seniors and people with disabilities — and raking in billions in excessive profits. The 11 largest global drug companies made an astonishing $711 billion in profits over the 10 years ending in 2012, and they got a turbo-charged boost when the Medicare Part D prescription drug program started in 2006, according to an analysis of corporate filings by Health Care for America Now (HCAN). ??The drug companies hold the power to charge America’s consumers whatever they want. Worse, Medicare — the nation’s largest purchaser of drugs — is prohibited by law from seeking better prices. The result of this shortsighted policy is dramatic. In 2006, the first year of Medicare’s prescription drug program, the combined profits of the largest drug companies soared 34 percent to $76.3 billion. And unlike other industries, such as Big Oil, drug companies get something even better than a tax subsidy — they get a government program.
There is nothing wrong with a company making profits — that’s what they’re supposed to do. But the drug industry’s profits are excessive as a result of overcharging American consumers and taxpayers. We pay significantly more than any other country for the exact same drugs. Per capita drug spending in the U.S. is about 40 percent higher than in Canada, 75 percent greater than in Japan and nearly triple the amount spent in Denmark.
HCAN reviewed the last decade’s financial filings from the 11 prescription drug giants: Pfizer, Johnson & Johnson, Novartis, Merck, Roche, Sanofi-Aventis, GlaxoSmithKline, Abbott Laboratories, AstraZeneca, Eli Lilly and Bristol-Myers Squibb. Even as millions of Americans struggle to afford their medicines and as Republicans in Congress threaten to cut seniors’ benefits, these corporate behemoths have extracted $711.4 billion in profits for Wall Street investors. The drug companies’ annual profits reached $83.9 billion in 2012, a 62 percent jump from 2003.
The drug companies, of course, say they have no choice and need to charge outrageous prices to pay for research that enables them to innovate and develop new drugs that save our lives. But that’s not true. Half of the scientifically innovative drugs approved in the U.S. from 1998 to 2007 resulted from research at universities and biotech firms, not big drug companies. And despite their rhetoric, drug companies spend 19 times more on marketing than on research and development.
There are two reasons why it matters that the drug industry is booking eye-popping profits. First, American consumers and taxpayers are footing the bill, and second, we could do something about it. ??It’s against federal law for Medicare, the nation’s biggest health plan, to use its unparalleled market power to reduce the cost of prescription drugs. This makes no sense. If the policy were changed, taxpayers and consumers would save huge amounts of money.
Simply empowering Medicare to get the same bulk purchasing discounts on prescription drugs as state Medicaid programs would save the federal government $137 billion over 10 years, according to the Congressional Budget Office. Eliminating price-gouging on that scale would go a long way toward addressing the fiscal challenges that are constantly under discussion in Washington — without harming seniors and middle-class families. This proposal has been supported by President Obama and is in the House Democrats’ budget plan. It is reportedly in the president’s 2014 budget plan as well.
Our politicians give all kinds of tax breaks and subsidies to big corporations that don’t need them: Big Oil. Wall Street. Companies that ship our jobs overseas. Every gift to a special interest, including allowing Big Pharma to overcharge Medicare, is an expenditure of scarce tax dollars. That’s called wasteful spending.
When it comes to addressing our country’s fiscal challenges, we shouldn’t even talk about cutting Medicare or any services people depend on, as the Republicans have proposed. Instead, we should eliminate indefensible special-interest tax breaks and subsidies for big corporations that don’t need them.
Watch live at 5:45 p.m. ET: President Obama delivers remarks in Connecticut on common-sense measures to reduce gun violence. Watch on WhiteHouse.gov/Live.
Ten Letters
Every day, President Obama reads ten letters from Americans across the country. In this from-the-archives video, “Letters to the President,” we take you behind the scenes to see the process of how those ten letters make it to the President’s desk — from among the thousands of letters, faxes, and e-mails that get sent to the White House each day.
Watch “Letters to the President.”
In Case You Missed It
Here are some of the top stories from the White House blog:
Weekly Address: The President’s Plan to Create Jobs and Cut the Deficit
President Obama tells the American people about the budget he is sending to Congress, which makes the tough choices required to grow our economy and shrink our deficits.
Weekly Wrap Up: “We Have Not Forgotten”
Here’s what happened last week on WhiteHouse.gov.
President Obama Marks the End of Easter Season at Prayer Breakfast
Last week, the President and Vice President marked the end of the Easter season with a prayer breakfast at the White House.
President Obama delivers remarks on clean energy at the Argonne National Laboratory in Lemont, Ill., March 15, 2013. (Official White House Photo by Chuck Kennedy)
On March 15, President Obama traveled to the Argonne National Laboratory in Illinois to discuss the Energy Security Trust that he announced in the 2013 State of The Union Address. The Trust, which builds on a proposal supported by a broad bipartisan coalition including retired military leaders, would provide a reliable stream of funding for critical, breakthrough research focused on developing cost-effective transportation alternatives to get our cars and trucks off oil.
The President’s proposal sets aside $2 billion over 10 years and would support research into a wide range of cost-effective technologies – like advanced vehicles that run on electricity, homegrown biofuels, fuel cells, and domestically produced natural gas. Paired with other Administration policies, including our historic new fuel economy standards that are already saving families and businesses money at the pump, the Trust would help solidify America’s position as a world leader in advanced transportation technology.
This represents just a snapshot of the Administration’s Energy Security Trust proposal. For more information, read the White House blog on the Energy Security Trust. Also be sure to check out the President’s recent weekly address on this proposal.
News & Events
New EPA Report: Initial Data Shows Significant Gains in Fuel Economy for 2012
The EPA released its annual report that tracks the fuel economy of vehicles sold in the United States, underscoring the major increases made in the efficiency of the vehicles Americans drive, reducing oil consumption and cutting carbon emissions. According to the report, EPA estimates that between 2007 and 2012 fuel economy values increased by 16 percent while carbon dioxide (CO2) emissions have decreased by 13 percent, and in 2012 alone the report indicates a significant one year increase of 1.4 miles per gallon (mpg) for cars and trucks. In addition, compared to five years ago, consumers have twice as many hybrid and diesel vehicle choices, a growing set of plug-in electric vehicle options, and a six-fold increase in the number of car models with combined city/highway fuel economy of 30 mpg or higher.
President Obama Nominates New Energy Department and EPA Heads
President Obama on March 4 nominated Ernest Moniz to replace Steven Chu as Secretary of Energy, and Gina McCarthy to take over U.S. Environmental Protection Agency (EPA) leadership from Lisa Jackson. Of his new Energy Secretary nominee, Obama said “Ernie knows that we can produce more energy and grow our economy while still taking care of our air, our water and our climate.” In announcing McCarthy’s nomination, President Obama called her a top environmental official in Massachusetts and Connecticut, where she helped design programs to expand energy efficiency and promote renewable energy. She previously served as the assistant administrator of the EPA’s Office of Air and Radiation.
Interior Department Approves Three Renewable Energy Projects in California and Nevada
As part of President Obama’s all-of-the-above energy strategy to continue to expand domestic energy production, Secretary of the Interior Ken Salazar announced on March 13 the approval of three major renewable energy projects that, when built, are expected to deliver 1,100 megawatts to the grid – enough to power more than 340,000 homes – and help support more than 1,000 jobs through construction and operations. Since 2009, Interior has approved 37 renewable energy projects, including 20 utility-scale solar facilities, 8 wind farms and 9 geothermal plants, with associated transmission corridors and infrastructure to connect to established power grids. When built, these projects will provide more than 11,500 megawatts of power, or enough electricity to power more than 3.8 million homes, and support an estimated 13,500 construction and operations jobs.
Obama Administration Holds 39-Million-Acre Oil and Gas Lease Sale in Central Gulf of Mexico
Taking the latest step in President Obama’s efforts to continue to expand safe and responsible domestic energy production, the Department of the Interior recently held a nearly 39 million-acre oil and gas lease sale for the Central Gulf of Mexico. As part of the Obama Administration’s all-of-the-above energy strategy, domestic oil and gas production has grown each year the President has been in office, with domestic oil production currently higher than any time in two decades and natural gas production at its highest level ever.
Energy Department Partnerships Speed Advanced Vehicle Technologies
As part of the Obama Administration’s commitment to speeding the transition to more sustainable energy sources that will help drive economic growth, the Energy Department on March 5 announced 16 major U.S. employers and two stakeholder groups have joined the Workplace Charging Challenge to give more American workers access to new transportation options, while another three U.S. corporations have joined the National Clean Fleets Partnership. These steps support President Obama’s goal to drive new technology that offers more vehicle fueling options to American consumers, as highlighted in his State of the Union address. The Workplace Charging Challenge is a collaborative effort to increase the number of U.S. employers offering workplace charging by tenfold in the next five years. The National Clean Fleets Partnership aims to speed the deployment of clean, energy-efficient vehicles and the infrastructure to support their widespread use.
Be a Seed for Change 
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