WASHINGTON, DC — On the heels of a PhRMA-filed lawsuit against the Biden administration seeking to block the Inflation Reduction Act’s measures allowing Medicare to negotiate directly with manufacturers for lower prices on Rx drugs, a new analysis from government watchdog Accountable.US found that the five largest U.S. pharmaceutical companies by market cap saw profits rise steadily from FY 2021 to FY 2022, as price increases and acquisitions of competing firms led to generous shareholder handouts at the expense of Americans struggling to afford life-saving medicine. While manufacturers reportedly upped prices on at least 350 drugs in the U.S. in January, Accountable.US’ review found these top drug companies reported combined earnings of $81.9 billion — an over $8.8 billion increase from 2021 — while combined stock buybacks and dividends increased by $4.4 billion and $2.5 billion, respectively.
Seniors and families already struggling to afford life-saving medicines are told to brace for further price hikes by the same industry that saw its profits and shareholder rewards skyrocket by billions in a year. It only adds up to corporate greed,” said Liz Zelnick, Director of Accountable.US’ Economic Security & Corporate Power.
“Pharma executives’ claims that research and development expenses drive costs remain unconvincing when those costs are often eclipsed by billions of dollars in handouts to a small group of wealthy investors. PhRMA’s lawsuit against the administration’s Medicare negotiation measures is all about preserving their industry’s corporate profiteering strategy, which has clearly been immune to repeated interest rate hikes from the Fed,” Zelnick noted.
While drug companies often claim that price increases are necessary to fund research and development, Accountable.US has previously found that the five-biggest U.S.-based pharmaceutical companies’ $112 billion in research and development spending from 2019 through 2021 had been outpaced by the $125 billion they spent on stock buybacks and dividends over the same period. Based on their own earnings reports, it’s clear these price hikes are just a way to extract more money from patients in need and redistribute it to wealthy shareholders.
Accountable.US’ report comes on the eve of the Federal Open Market Committee (FOMC)’s “widely expected” decision to raise interest rates. The evidence of uninhibited profiteering in the big drug industry despite 10-straight interest rate hikes from the Fed shows how ineffective the policy has been at rooting out corporate greed driving up costs – and why it makes no sense to resume that policy later this month with another economy-squeezing interest rate increase.