Pharma CEOs claim lifesaving drugs wouldn’t be possible without high prices — an assertion that doesn’t stand up to scrutiny.
The United States has been responsible for many important inventions over the last century and prides itself on being a leader. Yet when it comes to healthcare, particularly the cost of prescription drugs, there is little to be proud of. Americans pay more for prescription drugs than any other country, yet life expectancy in the United States lags behind many other developed nations. Those aligned with the pharmaceutical industry argue that we should actually be grateful for these high prices because they drive the development of new drugs. However, there is no correlation between the two.
It’s no secret that Americans are burdened by exorbitant drug prices. I recently provided testimony to the Senate Health, Education, Labor, and Pensions (HELP) Committee to answer the question, “Why Does the United States Pay, by Far, the Highest Prices in the World for Prescription Drugs?”
For many, the cost of essential medications can be prohibitive, leading to difficult choices between giving up other necessities in order to purchase life-saving treatments or forgoing them altogether. Nearly one in three Americans do not take their medications as prescribed due to high costs, and resort to rationing drugs or not taking them at all. This burden disproportionately affects vulnerable populations, exacerbating health disparities and perpetuating cycles of poverty and illness.
Misplaced Priorities
The CEOs of Bristol Myers Squibb, Johnson & Johnson and Merck told the Senate committee that drug pricing is fair because it is based on value provided and their investment: high prices enable a return on investment for the technology and research that goes into new medicines. But just because something is more expensive doesn’t mean it is better, and just because it is new doesn’t mean it is improved. A number of newly introduced medications are not novel but merely variations of older drugs already on the market. A recent study found that nearly one-third of drugs are no better than older ones, and many are actually worse.
The industry’s exorbitant spending on advertising raises questions about its own priorities. In recent years, pharmaceutical companies have allocated more money toward marketing and advertising than toward research and development.
This is not a new practice; in past decades, as Marcia Angell wrote in The Truth About Drug Companies, pharmaceutical companies on average spent two and a half times more on marketing than on R&D. And while drug companies do pay for clinical trials, many of these are Phase IV studies that are mainly used to introduce doctors and patients to drugs by paying clinicians to use them—another form of marketing. This skewed allocation of resources underscores the industry’s true priorities, where investments to maximize sales take precedent over addressing unmet medical needs.
Furthermore, the modern pharmaceutical business model prioritizes acquisitions and mergers over investing in actual drug development, making pharmaceutical companies more like venture capitalists, diverting research funds toward corporate consolidation rather than advancing medical science.
The Need for Patent Reform
The real answer to the Senate HELP Committee’s question of why the United States pays more is because we have a system that allows pharmaceutical companies to have monopolies over the market. This system prioritizes profits and shareholder and investor returns rather than better health outcomes. Companies accomplish this by exploiting the patent system.
While the system was designed to incentivize original inventions that would lead to groundbreaking therapeutic advances, patent strategies like “evergreening” now extend monopolies on existing drugs to keep generics off the market. Patents should be reserved for new inventions, but pharmaceutical companies will often file additional frivolous patents while heavily marketing tweaks to existing drugs under “innovation” to raise prices and maximize their profits. These patents might include a change in dosage or needle size for an injection, or even a practice known as product hopping, which delivers the same drug in a different format and branding. This distortion of the patent system allows companies to set the prices of drugs on which patients’ lives depend while preventing competition from entering the market.
While the governments of other countries negotiate drug prices with pharmaceutical companies and have policies that curb some of the excesses of the patent system, the United States has yet to show the kind of leadership needed to ensure affordability for all of its citizens. Currently, the Inflation Reduction Act only allows the government to negotiate the price of a limited number of medicines for Medicare. As a result, Americans are left to bear the brunt of inflated drug prices, subsidizing the U.S. pharmaceutical industry’s unquenchable thirst for higher CEO salaries and profits.
We must do better by reforming the patent system. We must also demand transparency and accountability from pharmaceutical companies, ensuring that taxpayer-funded research translates into affordable treatments for those who need them most.
In the end, the true measure of success as a nation is not the profitability of our pharmaceutical industry nor how many patents it is able to file, but rather the health and well-being of our citizens. It’s time to prioritize people over profits and demand a healthcare system that works for everyone. After all, it doesn’t matter if people in the United States have the freedom to access the newest medicines if they don’t have the freedom to afford the drugs.
Tahir Amin is the co-founder and CEO of the Initiative for Medicines, Access & Knowledge (I-MAK), a global nonprofit organization that works to lower drug prices. Follow him on X at @realtahiramin.
Correction (May 1): Tahir Amin’s title was named as executive director in the original version of this article; in fact, he is I-MAK’s CEO.
