The $3.5 trillion reconciliation bill was meant to be, in the words of its principal author Bernie Sanders, “the first time in American history that Congress would have stood up to the pharmaceutical industry,” allowing Medicare to negotiate pharmaceutical manufacturers for lower drug prices, among other things. But that provision is now in trouble, thanks to Democratic centrists working overtime to ensure that first time never happens.
A recent report from Public Citizen suggests how much Big Pharma stands to lose if such a program became law. According to the report, United We Spend, America’s uniquely corporate-dominated health care “system” has also been uniquely lucrative for pharmaceutical companies, bringing them profits far outstripping what they grab in the rest of the world, all at the expense of the ordinary Americans paying sky-high prices for lifesaving medicine.
Comparing publicly reported US and global sales revenue, Public Citizen found that US residents spent nearly double the entire rest of the world for the top twenty best-selling drugs on the globe, and that US sales revenue for seventeen of the of the medicines was greater than that of every other country combined. In other words, with roughly 3.7 percent of the world’s population, the United States was responsible for 64 percent of these drugs’ sales revenues in 2020.
Among those top twenty drugs are vital medicines for a variety of illnesses, including type 2 diabetes, heart disease, and various cancers. At the very top of the chart is Gilead Sciences’s HIV-treatment medication Biktarvy, for which US patients are responsible for more than five times the sales revenue as the rest of the world. Close behind is Humira, used to treat autoimmune diseases like rheumatoid arthritis and produced by AbbVie — the company that by far profited the most in 2020 from the disparity between US spending and the rest of the world’s, with 85 percent of its global revenue from two drugs coming from the United States. After that is Ocrevus, a drug used to treat multiple sclerosis, for which US sufferers were responsible for four times the rest of the world’s revenue.
With eleven of the thirteen pharma companies named making more money in the United States than every other country in the world combined, the revenues listed are stunning: AbbVie made more than $20 billion from US sales of just those two drugs; three drugs were responsible for nearly $18 billion worth of US sales for Bristol Myers Squibb; and just one drug from Merck, the cancer medication Keytruda, made up $8 billion worth of sales in the United States.
Earlier this year, RAND Corporation researchers found that US consumers pay on average 256 percent higher prices for medication than the residents of thirty-two other countries in the OECD, a figure that rises to 344 percent when it comes to brand-name drugs (as opposed to generics), and is still a whopping 190 percent when rebates and other discounts are calculated. The United States, where drug spending shot up 76 percent between 2000 and 2017, was responsible for 58 percent of sales revenue in that thirty-three-country study, but only 24 percent of the volume. A Government Accountability Office study from March similarly found that prices for twenty brand-name drugs were two to four times higher in the United States than in Canada, Australia, and France.
US consumers know they’re getting a raw deal even if they’re not aware of these specific numbers. A poll taken shortly before the 2018 midterms found that 77 percent of Americans think US drug prices are “unreasonable,” and that 89 percent are concerned about the issue. When Sanders traveled to swing states in late August to sell the reconciliation bill — which at that point still had the Medicare price negotiation provision intact — one Hoosier, Larry Alexander, seventy-five, complained that, because of the Medicare Part D “donut hole,” the only medication his wife is able to take for her heart condition quadruples in price after three months, with no alternative for them but to pay the exorbitant cost.
Recent history is littered with politicians’ broken promises to deal with the issue. Despite being unusually outspoken on the issue for a Republican, former president Donald Trump’s administration was quickly captured by the pharmaceutical industry, and he left office having done next to nothing about the issue. Democrats, meanwhile, have been campaigning on the issue for decades with no result.
Bill Clinton’s attempt to let Medicare negotiate drug prices died in 1994 with his larger health care reform effort, and the pharmaceutical industry scored a free ride from Barack Obama, who left the sector untouched in his landmark health care reform law despite a congressional supermajority. A combined effort in 2016 from congressional Republicans, Democrats, and the industry killed an eleventh-hour effort by Obama to tackle the problem. This didn’t stop the Democratic Party from running on the issue in 2018 and winning back the House in a wave of victories.
The pharmaceutical industry soon kicked into high gear to make sure nothing happens yet again, parlaying the massive profits they’re making from price-gouging US patients into a well-funded effort to defeat drug price–lowering initiatives. The industry has spent $15 million on lobbying this year, and contributed a total of $89 million to candidates over the course of 2020, two-thirds of it to Democrats — effectively buying the loyalty of enough Democratic holdouts to obstruct progress on the issue.
There is, in other words, a good chance that despite holding total control of Congress and the White House for the second time in eleven years, Democrats will head into already unfavorable midterm elections having broken a major campaign promise and failing yet again to tackle a consistently, broadly popular issue. What’s stunning is the relative pittance this has cost drug companies: The combined $104 million that the entire industry has spent on buying candidates in 2020 and lobbying this year is a mere 6.6 percent of the US revenue from a single drug produced by just one of the manufacturers listed in the Public Citizen report (AstraZeneca, which had the lowest US sales revenue of the thirteen companies covered by the report).
It’s an absurd situation: US taxpayers foot the bill for the publicly funded research that underwrites much of the production of medicines by these companies; these companies then sell the drugs back to those taxpayers at extortionately inflated prices and reap colossal profits, only a small fraction of which they need to spend to defeat legislative efforts to prevent this cycle from repeating.
It’s a reminder of why failing to lower drug prices is not an option for Democrats or progressives, whose political futures may well depend on finally reining them in. But it’s also a reminder of the need to urgently limit corporate power in the US political system more broadly.