Despite pressure from consecutive presidential administrations, prescription drug pricing remains an expensive issue for millions of Americans.
Speaking on Thursday, President Biden stressed the importance of lowering prescription drug costs. The president noted that 25% of Americans who need prescription drugs have trouble affording them while nearly 30% have skipped taking prescriptions because of the cost.
“Others have simply not filled prescriptions that the doctor had given them, tried to use over-the-counter drugs, or pills cut in half because they can’t afford the cost of their prescription,” Biden said. “This is the United States of America, for God's sake. That’s just wrong. It's simply wrong, especially since it doesn't cost the drug companies nearly, nearly, nearly, nearly as much to make the drug or the research that went into them.”
Dr. John Abramson, a professor at Harvard Medical School and author of 'Sickening: How Big Pharma Broke American Health Care and How We Can Repair It,' stated that the government’s inability to solve this crisis is a result of the powerful influence of the pharmaceutical industry.
“The pharmaceutical industry is very bipartisan in the way it doles out lobbying money and campaign contributions,” Abramson told Yahoo Finance. “More than 80% of Americans want drug prices to be controlled. And the same number think that the drug companies are more interested in profits than they are in helping people. So the fact that legislation cannot get passed is a demonstration of the failure of our democracy to play the people’s will, to play a countervailing role against industry, which is in control here."
'Big Pharma has big wallets'
Any meaningful change at the legislative level would have to compete with Big Pharma's influence in D.C.
“Health care swamps all other sectors of the economy in terms of the amount of lobbying that goes into it,” Shawn Gremminger, director of health policy for Purchaser Business Group on Health, told Yahoo Finance. “The biopharmaceutical sector is by far the sector of the health care lobbying community that spends the most money, which means they are very successful at stopping legislation that might take a chunk out of their profit margin.”
Yahoo Finance analyzed data from OpenSecrets and found that 10 Democratic politicians and five Republicans were the top recipients of donations from the combined pharmaceutical health and pharmaceutical manufacturing industries during the 2021-22 election cycle.
Senate Majority Leader Chuck Schumer (D-NY) took the top spot, receiving a whopping $372,826 in donations, and Rep. Cathy McMorris Rodgers (R-WA) trailed in the second position with $203,920.
One provision aimed at lowering prescription drug costs was dropped from a recent spending bill after Sen. Kyrsten Sinema (D-AZ), a key voter for Democrats, objected to it. According to OpenSecrets, she received $185,010 from pharmaceutical donors during the 2021-22 election cycle.
“It’s easy for people running for office to say they’ll do something about this problem,” Laura Packard, executive director of Health Care Voter, told Yahoo Finance, “but then once they’re actually in office, Big Pharma has big wallets.”
'People are increasingly being forced to choose'
Meanwhile, regular Americans across the country are feeling the pain.
Carl Nelson, a 74-year-old who lives in West Virginia, is on Medicare but still struggles to pay for 11 prescriptions, four over-the-counter drugs, and an inhaler.
“Most are not hugely expensive, but now that I’m in the donut hole, prices have gone up,” Nelson told Yahoo Finance, referring to a common Medicare coverage gap. “My blood thinner is now $130 per month, my cost $518 total.”
Nelson paid $5,510.44 out of pocket for his prescription drugs in 2021, which was almost 60% of the overall amount. Yahoo Finance corroborated Nelson's account by reviewing his prescription cost documents.
He is not alone in paying more for the same prescription drugs: According to GoodRx, prices for 810 medications increased by an average of 5.1% in January.
“In January and July each year is when they typically increase their prices, and it can be up to as much as 10%,” Packard said. “Just unbelievable because that’s much higher than the rate of inflation and the rate of ... Social Security increases and so on. So people are increasingly being forced to choose between food, a roof over their heads, and their prescription drugs.”
Nelson, who retired from AT&T after nearly 39 years in 2004, has a small pension and Social Security checks while also operating a farm. Those sources of income have been key to avoiding late payments, but he also resorted to skipping lunch and eating peanut butter and jelly sandwiches for dinner.
“The money I currently make covers food and gas to get to work" after accounting for prescription drug costs, he said. "My diet isn’t great, mostly prepared food I heat in the microwave, but my cost is usually under $3 per meal.”
Nelson began a part-time job at Home Depot during the pandemic and is still able to keep his farm operating, but conceded he is “slowing down and losing stamina, neither by choice.”
Furthermore, like many older Americans, Nelson is also responsible for lingering medical debt: After his wife passed away in 2017, he became responsible for paying off her medical bills.
“For years, I was always the one with injuries or health issues requiring surgery or treatment, so we put the best insurance we could afford on me and minimal on my wife,” he said. "When fall enrollment came along, I signed her up for the better insurance, and I took the minimal amount. She passed away two days after Christmas so never had the better insurance, leaving me with the minimum for the following year.”
Nelson also underwent open-heart surgery in 2018, received a pacemaker, and was hospitalized three times for a bleeding ulcer.
“I am also fortunate that I can still work at age 74, though it does take a lot out of me,” Nelson said. “I have had to neglect some things on the farm, like painting and trimming, but I still get asked how I do it all. More than once I have been told I’m a tough old buzzard.”
Can pharma be held responsible? 'The answer is: Yes.'
The trend in prices is clear when evaluated over the course of the 21st century.
“For example, retail prescription drug spending was estimated to account for nearly 12% of total personal health care service spending in the United States in 2019,” a report from the Government Accountability Office (GAO) found. That's up from about 7% in the 1990s.
A separate report by the IQVIA Institute for Human Data Science found that patients paid a record $67 billion out of pocket for prescriptions filled in retail pharmacies in 2019.
In October, Pfizer CEO Albert Bourla admitted that drug pricing was a “real issue” in the U.S., but he insisted that pharmaceutical companies weren’t to blame.
Gremminger called the CEO’s comments “a common tactic by drugmakers, [which] is to shift blame onto somebody else and say ‘it’s not our fault,’ that everybody’s at fault.”
“He’s partly right, right now, but I will say he’s also largely wrong,” Gremminger added. “When you have a drug that has no competition, Pfizer has the ability to set the price of that drug. They’re the ones who get to decide what the launch price, what the list price is. Then there’s a complicated and frankly, pretty corrupt, drug supply chain in between the initial launch price of the drug and the price of the drug at the pharmacy counter that the insured individual is gonna pay.”
Abramson also strongly disagreed with Bourla’s assessment.
“Can pharma be responsible for what’s going on in American health care if it only accounts for 17% of our spending?” he said. “The answer is: Yes, it can, because pharma has taken over virtually all of the knowledge that’s produced that informs doctors about how to practice medicine.”
According to Abramson, even though pharma spending represents just 17% of American health care dollars, it tilts the country’s research agenda towards developing new drugs and devices over research on how to make Americans healthier.
“The health of Americans is a crisis that should be covered every day in the news,” Abramson said. “We rank 68th in the world in our healthy life expectancy. We’ve gone down from 38 in 2000 to 68 in 2019 before the pandemic started. And for this poor health, falling so far behind the other wealthy countries, we’re spending a trillion and a half dollars extra.”
'The most profit-generating way of providing care'
The U.S. stands apart from most other countries on the issue of drug pricing.
A January 2021 report from the RAND Corporation found that “prescription drug prices in the United States are significantly higher than in other nations, with prices in the United States averaging 2.56 times those seen in 32 other nations.”
“What we’ve got is a market that is driving our health care towards the most profit-generating way of providing care, which is going to make the investors maximally happy, but we don’t have the welfare of the American people at hand,” Abramson said. “And our health is far inferior to the health of other people in similarly wealthy countries.”
Gremminger explained that it all comes down to the fact that drugs are an international commodity.
“Other countries have fairly tight price controls on their drugs,” he said. “They decide at the outset ‘here’s how much we’re willing to pay as a country,’ and usually the country has a pretty expansive social welfare system and universal health care. The drug company has to decide whether or not they’re going to sell that drug in that country. The United States is really the only country in the world that doesn’t have that.”
A common refrain from pharmaceutical companies is that U.S. profits are needed for innovation in order to reinvest and develop new drugs.
“There’s a kernel of truth,” Gremminger said. “Companies do need profits to be able to reinvest. Research and development for new drugs is very expensive. A lot of drugs don’t come to market — they fail in clinical trials. So there’s a lot of truth to that.”
But “none of the other countries are basically paying for that,” Gremminger noted, adding: “it’s also kind of unbelievable to think that first of all, the United States should be solely responsible for paying for innovation around the world.”
“That was one of President Trump’s critiques: Why are we the only ones who have to pay for this?” he continued. “Basically we’re overpaying so that people in England and Canada and Japan can get cheap drugs. Shouldn’t we spread that around a little more so [the U.S. isn’t the only one] who has to pay those innovation premiums?”
Adriana Belmonte is a reporter and editor covering politics and health care policy for Yahoo Finance. You can follow her on Twitter @adrianambells and reach her at email@example.com.