To fix drug costs, stop Big Pharma price-gouging and tax-dodging
Prescription drugs sit on a pharmacist’s counter. (Photo by John Moore/Getty Images.)
By Hannah Hendrix, American Medical Student Association
I’m studying at The Ohio State University to become a doctor because I want to help people. Unfortunately, far too many Americans today are confronting skyrocketing prescription drug costs that prevent them from following their doctor’s advice because they can’t afford treatments they need.
Drug prices are rising faster than the price of any other good or service, forcing nearly one-third of Ohioans to ration medicine in order to avoid choosing between their prescriptions and other basic expenses like food or rent.
Why are drug prices continuing to spiral out of control? The simple answer is because lawmakers are letting pharmaceutical companies set and keep prices as high as they want. Monopoly power to price gouge has made Big Pharma one of the most profitable industry in America even as ordinary people can barely afford their prescriptions.
Let’s be clear: While other players in the health care industry, such as insurers and pharmacy benefit managers (PBMs) profit from high drug prices, drug companies are the ones who set those prices and who raise them, often twice a year. (Editor’s Note: PBMs have the power to keep certain drugs off their formulary — meaning that for all their millions of patients, those drugs are not covered. So manufacturers offer ever-bigger rebates and raise list prices to cover the rebates and keep their products profitable.) Today, the net price of brand name drugs is increasing three times faster than inflation. While the industry touts that as a reduction compared to past decades, the cost is still too high for patients to afford.
Shamefully, even as these companies continue to raise drug prices to unconscionable levels, our government continues to reward them with billions in federal funds and tax giveaways. The industry is heavily dependent on National Institutes of Health (NIH) funding for research, including for the COVID vaccine, which cost taxpayers $12 billion and is projected to make Pfizer $26 billion in 2021. Drug companies also get tax breaks for marketing, for CEO pay and then more tax breaks off their massive profits. Rather than investing these immense taxpayer-funded profits here in the United States, drug companies offshore more of their profits than any industry except for information technology.
Drug companies promised they would use their massive tax cuts under the 2017 Trump tax law to lower prices and support jobs. But instead, the biggest corporations mostly spent them on stock buybacks and bloated executive salaries. Meanwhile, millions of Americans in Ohio and across the country live in constant fear of being unable to afford their insulin or other life-saving medications.
To control prescription drug costs in Ohio and nationwide, Congress must act. We need legislation like the Lower Drug Costs Now Act, which would finally require drug corporations to negotiate fair prices for hundreds of medicines in Medicare and extend those lower prices to everyone while also capping out-of-pocket costs and stopping the drug corporations from charging Americans three times more for medicines than people in other countries pay.
In addition to lowering drug prices, Congress also needs to ensure that corporations, including Big Pharma, finally pay their fair share of taxes, to eliminate tax loopholes that allow industry to dodge taxes, and to stop rewarding corporations that jack up prices and offshore profits with discounts on their tax bills.
As a future physician, I believe that the U.S. should be a place where everyone can afford the medications they need without rationing or going into debt. We know it’s possible because other countries pay three times less than Americans do for similar drugs. But it can only happen if Congress is willing to take on Big Pharma. It’s time to stop showering drug corporations with taxpayer money and lower drug prices for patients instead.
Hannah Hendrix is an Ohio State University medical student and national president of the American Medical Student Association.
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