HELP Committee Hearing Statement: Why Does the United States Pay, by Far, the Highest Prices in the World for Prescription Drugs?
The following testimony was delivered to The Senate Committee on Health, Education, Labor and Pensions as part of their hearing on February 8, 2024: “Why Does the United States Pay, by Far, the Highest Prices in the World for Prescription Drugs?”
Read Peter Maybarduk’s full written testimony here.
Access to Medicines Program Director Peter Maybarduk delivers testimony at the Senate HELP Committee.
Hearing Statement of Peter Maybarduk, Access to Medicines Director, Public Citizen
Chairman Sanders, Ranking Member Cassidy and Members of the Committee,
Thank you for this opportunity.
Public Citizen is a national public interest organization. We have 500,000 members and supporters, and for 50 years, we have advocated, with success, for health and consumer protections.
Drug prices are high because of monopoly power, leading to the rationing of treatment and preventable suffering.
1 in 3 Americans has failed to take medicine as prescribed due to cost.
- Like Lois Chisolm of Fort Worth, who tells us of Merck’s diabetes drug, “I need Januvia to control my blood sugar, but I can’t afford it while on Social Security.”
- Or Robert Charovano of Loveland, CO, and his wife, both trying to afford J&J’s Xarelto: “Why do we have to pay so much? We are 90 and 81 on Social Security. Does anyone care about the elderly?”
- Carolyn Busch, Titusville, FL, on Bristol-Myers Squibb: “I take Eliquis as a blood thinner, which I cannot afford, so therefore I am going to stop taking it, though I need it to prevent the risk of having a stroke.
- Keith Cliburn, Lafayette, LA, on paying for Eliquis & other pricey meds: “So, what do I do? I ration them so that I can eat and pay rent.”
Patients for Affordable Drugs has compiled 34,000 such stories from people struggling to afford their medicine. And that’s a tiny fraction, a sample, of the heartbreaking problems out there.
High prices cost people their health, they can cost lives, they force impossible family budget decisions.
We all pay for high prices, whether we are patients or not, whether out-of-pocket, or through higher insurance premiums and wasted tax dollars. Medicare & Medicaid spent nearly $200bn on prescription drugs last year.
Americans pay the highest prices in the world. Three times what other countries pay.
We also do the most to support R&D.
The world’s largest biomedical research funder is a public funder, the National Institutes of Health – and we should be very proud of it, contributing more than $45 billion a year and laying groundwork for many if not most new medicines. Plus, public support is indispensable to the late-stage development of one in four drugs.
So, Americans first pay for the research, then contribute to development, and then, on top of it, when a drug comes to market, pay the highest prices in the world.
Other countries negotiate prices broadly to protect their people.
But here, pharma has accrued tremendous influence in our politics, spending hundreds of millions a year in lobbying, outranking every other industry. Even more flows from pharma coffers to patient groups and others with influence over policy.
Now — our government provides patent protection and exclusivity on medicines. In theory, this should support innovation.
But in practice, drug corporations write the rules, extending monopoly power, sometimes for decades, blocking competition far longer than Congress intends.
The corporations testifying here today claim any price relief would compromise their ability to invest in new medicines.
No.
That framing erases the millions of Americans rationing treatment,
- It erases the tens of billions of dollars that taxpayers invest in R&D for health priorities,
- And it erases the hundreds of billions the industry spends on self-enrichment.
Last year, drugmakers selected for Medicare negotiation spent $10 billion more on stock buybacks, dividends and executive compensation than they spent on R&D.
- J&J and BMS each spent $3bn more on these self-enriching activities than R&D
- Over the prior decade:
- Merck’s buybacks & dividends also exceed R&D by $3 billion.
- And J&J spent an impressive $43 billion more on buybacks & dividends than R&D over this period.
So much for our high prices going to pay for R&D.
Of course, drugmakers do not set prices according to R&D costs.
Instead, the price of a patented drug is simply the most that we, as a society, are willing to pay to care for our sick and loved ones, where monopoly power blocks affordable alternatives, blocks market competition, and we have little choice.
Today, perhaps for the first time, our country is making progress challenging high prices and rationing, including through price negotiation & countering price spikes.
We commend the committee’s attention to this problem. But the problem is getting worse, much worse, and more action is needed.
We should negotiate prices from the moment a drug hits market; not wait a decade as we are today, which costs taxpayers tens of billions.
We support legislation before your committee to strengthen market competition and transparency and accelerate generic entry.
Ultimately, we will have to confront monopoly power. That is the rotten foundation allowing drugmakers to project influence, to game the law and keep prices high. Other real challenges, including providing patient assistance and challenging middlemen who take advantage — these flow inevitably from the patent monopolies that make it so lucrative and so easy to rip off patients.
We can, we must, do better, for health, for access to medicine.
Thank you for your time, and please count us with you in the fight.