[ Drugmakers are charging foreigners far lower prices for
medicines they want shielded from new Medicare price cuts.]
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BIG PHARMA’S AMERICAN CON  
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Andrew Perez, Matthew Cunningham-Cook
September 1, 2023
The Lever
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_ Drugmakers are charging foreigners far lower prices for medicines
they want shielded from new Medicare price cuts. _

A Merck scientist conducts pharmaceutical research. , AP Photo/Matt
Rourke

 

In response to this week’s launch of a new program letting Medicare
negotiate lower prices for a handful of medicines, drugmakers are
insisting the initiative will limit patients’ access to medicine and
stifle the development of new cures. 

However, all 10 of the drugs up for negotiation are already being sold
in other countries at fractions of what pharmaceutical companies are
charging for them in the United States, according to a _Lever _review
— and drugmakers are reporting huge revenues from those foreign
sales.  

In some cases, Americans — whose tax money subsidizes the
development of virtually all medicines approved for sale in the U.S.
— are being charged 1,000 percent more than foreign patients for the
same drugs.

Drugmakers have filed multiple lawsuits to try to block the new
Medicare negotiation program, claiming that price reductions will harm
American patients. However, some of those same companies recently
raked in upwards of $4 billion in revenue last quarter selling six of
the targeted pharmaceutical products in foreign countries at lower
world-market prices. That’s more than $47 million per day — or $2
million an hour.

That cash haul — disclosed in drugmakers’ earnings reports —
suggests that pharmaceutical companies will still be able to reap
enormous windfalls, even if Americans can finally access prices closer
to those charged on the global market for some drugs. 

For two decades, the U.S. government barred Medicare
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from negotiating drug prices. At the same time, drug companies have
gamed the patent system
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to prevent competitors from selling lower-cost generic versions of
their products. Meanwhile, for decades drugmakers’ congressional
allies blocked legislation designed to help pharmacists and
wholesalers import medicines at lower world-market prices and sell
them at discounted rates in the United States. 

The end result: Americans pay the highest prices
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per capita among residents of wealthy countries for prescription drugs
— even though the American public subsidizes research and
development costs
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on essentially every drug approved for sale in the U.S. 

Pharmaceutical costs are one major reason why the U.S. health care
system is the most expensive in the world
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and yet consistently delivers poor outcomes
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Put simply, higher drug costs kill people
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“TANTAMOUNT TO EXTORTION”

Since at least 2006
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Democratic politicians have campaigned on the idea of allowing
Medicare, the national health insurance program for seniors and those
with disabilities, to join the rest of the world in negotiating drug
prices to lower health care costs for both patients and the
government. 

President Joe Biden pledged
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during his 2020 campaign to “repeal the existing law explicitly
barring Medicare from negotiating lower prices with drug
corporations.”

Last year, Democrats finally passed a drug price negotiation
provision, but the measure was much more limited than lawmakers
originally proposed, thanks to aggressive industry lobbying
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and successful efforts
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by pharma-friendly lawmakers to water it down. 

The law will allow Medicare to begin negotiating prices, effective
starting in 2026, on a select handful of expensive drugs that have no
generic competition and have been on the market for at least
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nine years.

As the biopharmaceutical industry news site _Endpoints News_ points
out
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four of the 10 drugs on the Biden administration’s target list may
not even have their prices negotiated in the end, thanks to
“incoming generic or biosimilar competition.”

The pharmaceutical industry has nonetheless raged against the limited
drug negotiation plan with a series of lawsuits
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and hysterical comments, out of fear that the Inflation Reduction
Act’s drug pricing provisions could open the door for more
aggressive crackdowns in the future. 

“Politics should not dictate which treatments and cures are worth
developing and who should get access to them,” Washington’s top
drug lobby Pharmaceutical Research and Manufacturers of America
(PhRMA) said
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Tuesday, complaining
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administration is “giving a single government agency power to
arbitrarily set medicine prices with little accountability, oversight
or input from patients [and] their doctors.”

The drugmaker Merck, based in New Jersey, sued
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the Biden administration in June, arguing the Inflation Reduction
Act’s drug price negotiation program is “tantamount to
extortion” and unconstitutional. Merck’s action has been followed
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up by lawsuits from PhRMA itself
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as well as from drugmakers Astellas, AstraZeneca, Boehringer
Ingelheim, Bristol-Myers Squibb, and  Johnson & Johnson.   

A TALE OF TWO PRICES

The companies making the 10 drugs on the Biden administration’s
target list have been selling the products for far less elsewhere,
according to a _Lever_ review of government studies, think tank
reports, and international pharmacy websites. 

Take Januvia, a once-daily pill from Merck that helps lower blood
sugar levels in adults with type 2 diabetes. A 2019 report
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from House Democrats found that Januvia was priced at $15.70 per dose
in the U.S., or roughly 1,020 percent higher than in international
markets, where it cost just $1.40 on average.

NovoLog, an insulin made by Novo Nordisk, is priced at $37.30 per dose
in the U.S., or 440 percent more than the $6.90 that it costs in other
countries, according to the report. Stelara, an injection from Janssen
used to treat Crohn’s disease and severe plaque psoriasis, costs
$16,600 per dose in the U.S., or 360 percent more than the $3,585 that
it’s priced at elsewhere.

Another drug on the list, Xarelto from Johnson & Johnson, prevents
blood clotting to reduce the risk of stroke. Xarelto’s domestic
gross retail price was $15.70 per pill, according to a 2021 report
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Accountability Office. That’s 575 percent higher than the $2.30 it
is sold for on average in Australia, Canada, and France.

Entresto, a drug from Novartis used to treat heart failure, retails in
the U.S. for $9.20 per pill, or 230 percent higher than the $2.82
it’s sold for in Australia, Canada, and France, per the report.
AbbVie’s Imbruvica, used to treat blood cancers, retails for $158
per pill in the U.S., more than double what it costs in those
countries.

Eliquis, from Bristol-Myers Squibb, is used to prevent blood clotting
and reduce the risk of stroke. According to a report
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last year from the nonprofit Health Care Cost Institute, Eliquis has
been sold in the U.S. at a median cost of $7.30 per pill, which is 267
percent higher than the $2 it’s been sold for in Germany, Spain, and
Switzerland.

PUBLICLY FUNDED PROFITS

The United States spends $45 billion
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National Institutes of Health (NIH), which in turn goes to fund new
drug research. Every drug that the U.S. Food and Drug Administration
(FDA) approved for sale between 2010 and 2019 benefited from research
funded by the NIH, according
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to a 2020 study from the Institute for New Economic Thinking. 

Because the U.S. so heavily subsidizes R&D, reducing profits on top
drugs by 15 to 25 percent would have a negligible effect on the number
of new drugs introduced over the next decade, according to a 2021
study
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from the federal, nonpartisan Congressional Budget Office.

While the pharmaceutical industry claims that negotiating drug prices
could reduce companies’ incentive to spend on research and
development, a study last year
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found that, between 2012 and 2021, the largest publicly-traded
pharmaceutical companies spent more on stock buybacks and dividends to
reward shareholders than they spent on research and development. 

Among the drugs on the Biden administration’s negotiation list are
two used to treat Type 2 diabetes: Jardiance, from Boehringer
Ingelheim; and Farxiga, from AstraZeneca. 

A 2016 research update from the NIH’s National Institute of Diabetes
and Digestive and Kidney Diseases found
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that the institutes had “supported many stages” of the research
that led to the creation of both Jardiance and Farxiga. 

According to PharmacyChecker.com
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discounted price for Jardiance in the U.S. is $19.04 per tablet, which
is 1065 percent higher than the $1.63 it’s sold for on average at
online international pharmacies. 

The lowest discounted U.S. price for Farxiga is $18.14 per tablet,
according to the same website
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percent higher than the $1.70 it’s sold for on average via online
international pharmacies. 

The U.S. government also liberally grants
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patent exclusivity to drugmakers, an arrangement that allows companies
to maximize profits. The government has furthermore permitted
companies to employ dubious strategies to artificially maintain
monopolies
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on lucrative drugs for years after their exclusivity should have
expired.

A 2022 report from I-MAK, an advocacy group that works on drug patent
issues, found
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that pharmaceutical companies file on average 140 patents per drug,
with an average of 66 percent of those patents filed _after _the FDA
had granted approval. 

Enbrel, made by Amgen, treats symptoms of rheumatoid arthritis. Enbrel
is sold in the U.S. in packages of four single-dose injections at a
median cost of $5,087, according to the Health Care Cost Institute
report
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That cost is 373 percent higher than the $1,076 that patients pay on
average in Germany, Spain, and Switzerland.

In 2016, the FDA approved
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a biosimilar to Enbrel, which is essentially a lower-cost reprise of a
drug, as opposed to a generic discount alternative. However, due to a
2021
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court decision in New Jersey, where the pharmaceutical industry is a
major employer, the biosimilar competitor was blocked from coming to
market until 2029. 

On Wednesday, _Endpoints News_ reported
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that Enbrel may not end up being part of the 2026 price negotiations,
due to incoming competition.

Andrew Perez

Covering money and influence on politics, Andrew’s award-winning
work has appeared in MapLight, International Business Times,
ProPublica and HuffPost.

Matthew Cunningham-Cook

Matthew covers labor, private equity, health care and the retirement
crisis. He previously worked at the International Business Times and
contributed to The Intercept.

_The Lever_ is a nonpartisan, reader-supported investigative news
outlet that holds accountable the people and corporations manipulating
the levers of power. The organization was founded in 2020 by David
Sirota, an award-winning journalist and Oscar-nominated writer who
served as the presidential campaign speechwriter for Bernie Sanders.

* Big Pharma
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* Medicare
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