DATE: February 5, 2024
TO: Interested Parties
FROM: Tony Carrk, Executive Director, Accountable.US
SUBJECT: Will PhRMA-Member CEOs Defend Price-Gouging & Donations to Election Deniers?
This Thursday, drug company CEOs for Johnson & Johnson, Bristol Myers Squibb, and Merck will begrudgingly appear before the U.S. Senate HELP Committee to answer why they’re among the PhRMA-member companies that charge U.S. seniors and patients by far the highest prescription prices in the world. It’s their opportunity to explain how far they’re willing to go to maintain this price-gouging scheme, including whether they endorse PhRMA’s donations to extreme-right, election-denying groups to help pad their profits.
The well-heeled executives are widely expected to shift blame to anyone but themselves for the fact that 1-in-4 Americans can’t afford the medicines prescribed by their doctors. They will likely claim they had no choice but to sue the Biden administration to try to block the Inflation Reduction Act’s historic measures giving Medicare the power to negotiate lower drug prices directly with manufacturers — efforts expected to save nearly 19 million seniors and other enrollees $400 a year by 2025.
Outside the echo chamber of earnings calls and shareholder meetings with a small group of wealthy investors, the sugar coating of profiteering will be a tough sell to any senior who’s been forced to cut pills in half or choose between food or medicine. In fact, most Americans are fed up. An overwhelming 76 percent of Americans back the Inflation Reduction Act’s Medicare drug-price negotiation measures — including two-thirds of Republicans.
Still, many Republicans in Congress who have taken millions of dollars from the drug industry, have eagerly rushed to the defense of their pharma benefactors and vowed to repeal Medicare’s ability to negotiate lower costs. If Republican Senators on the HELP committee sound more like a PhRMA lobbyist during the hearing this week, it’s because they’ve prioritized industry money over lower costs for seniors.
The industry’s own multi-billion-dollar earnings reports show why their excuses for inflated prices are such a hard pill to swallow. Just last week, each of these companies showed their exorbitant prices are based on greed, not need:
- Bristol Myers Squibb: BMS reported $8 billion in 2023 net earnings — up from $6.4 billion in 2022. The staggering total comes as the company faces sharp criticism for charging U.S. patients a whopping $7,100 for its blood thinner, Eliquis, when the same medication can be purchased in Canada for $900 or just $650 in France. In 2023, Eliquis brought in nearly $8.6 billion for BMS in just the United States, a 10% increase from the prior year. It is likely why it is one of the first 10 prescription drugs impacted by the Biden administration’s Medicare negotiation program.
- Merck: The company announced their earnings beat expectations, with quarterly revenue topping estimates. Merck executives boasted to investors while the company has faced sharp criticism for charging U.S. type-2 diabetes patients a whopping $6,900 for its diabetes treatment drug, Januvia, that patients can purchase in Canada for $900 or just $200 in France. Before the Biden administration announced Januvia was one of the first 10 drugs impacted by Medicare’s new negotiation power, Merck filed its own lawsuit against seeking to block the law’s measures working to lower costs for Medicare beneficiaries.
- Johnson & Johnson: The company announced $35.1 billion in FY2023 earnings, exceeding Wall Street predictions and nearly doubling their year-over-year earnings. Johnson & Johnson Innovative Medicine, formerly known as Janssen Pharmaceuticals, is suing the administration after three of the drugs they produce were selected for the initial round of Medicare drug negotiations.
Profiteering is an epidemic across the pharmaceutical industry. Last year, after the Biden administration announced the first ten notoriously expensive drugs affected by the Inflation Reduction Act’s new negotiation powers, an Accountable.US report found the companies that make these drugs reported combined earnings of $38.7 billion in 2022. Meanwhile, these companies’ combined stock buybacks and dividends increased by $1.9 billion and $1.5 billion, respectively.
Big drug company CEOs and lobbyists insult Americans’ intelligence every time they argue they can’t afford to lower costs for seniors while they announce bigger profits, executive bonuses and shareholder giveaways.
It’s no mystery why the industry spent $400 million lobbying in 2022 alone: to keep the system rigged in their favor and at the expense of seniors’ health and financial security. Another Accountable.US analysis found PhRMA companies specifically spent nearly $70 million lobbying against efforts to allow Medicare to negotiate the prices of prescription drugs and other measures to lower drug prices in the years leading up to the passage of the Inflation Reduction Act.
Not to be outdone, another PhRMA member, GlaxoSmithKline (GSK), reported $38.5 billion in 2023 revenue last week, beating fourth quarter expectations and setting up 12 major launches for 2025. This comes as GSK has been criticized for blocking cheaper generic inhalers from entering the marketplace while charging U.S. customers over twelve times more for its inhaler brand Advair HFA than patients in the United Kingdom.
Teaming Up With Election Deniers
But the CEOs on the hot seat this week will have more to answer for than just years of dramatically overcharging seniors and Americans with serious illnesses. They each should state clearly for their record: do they endorse or condemn PhRMA’s decision to donate heavily to extreme-right groups that traffic in election denialism and voter suppression?
Accountable.US released a report last month, first covered by Rolling Stone, finding PhRMA – of which Johnson & Johnson, Merck, and BMS are members – donated over a half a million dollars to right-wing groups advocating for voter suppression and pushing the Big Lie the 2020 election was stolen affiliated with Heritage Foundation’s 2025 Presidential Transition Project, also known as Project 2025.
The advisory board member groups of Project 2025 include FreedomWorks, American Commitment, ALEC and others that have fought against expanded voter access while frequently parroting the Big Lie that the 2020 presidential election was stolen. These groups, through their leadership of Project 2025, are tied to controversial conservative legal puppet master Leonard Leo, whose Teneo Network is advising the effort.
For example, The Heritage Foundation maintains a so-called Election Fraud Database based on unfounded claims that voter fraud is widespread, with a Brookings Institution analysis of the data finding Texas voter fraud was a mere 0.000096%, as Heritage personnel push allegations of third parties “harvesting” mail-in ballots to influence election results.
PhRMA, the most prominent trade group for drug manufacturers, is propping up extreme right-wing groups that promote insurrection and voter suppression. It’s clear the industry is so desperate to stop the Biden administration from lowering costs for seniors, they will even resort to funding far-right groups who openly threaten our democracy to do their dirty work. These donations came even after the deadly January 6th insurrection at the U.S. Capitol and amid ongoing threats to our democracy.
Bottom Line: PhRMA will stop at nothing to restore their price-gouging scheme against struggling seniors, even if it means trading off a healthy democracy and the health of seniors. The question is: are the CEOs for Johnson & Johnson, Bristol Myers Squibb, and Merck willing to break from the pack and admit they’ve gone too far in pursuit of higher profit.