Executive Director, Health Care for America Now
There is nothing wrong with a company making profits — that’s what they’re supposed to do. But the drug industry’s profits are excessive as a result of overcharging American consumers and taxpayers. We pay significantly more than any other country for the exact same drugs. Per capita drug spending in the U.S. is about 40 percent higher than in Canada, 75 percent greater than in Japan and nearly triple the amount spent in Denmark.
The drug companies, of course, say they have no choice and need to charge outrageous prices to pay for research that enables them to innovate and develop new drugs that save our lives. But that’s not true. Half of the scientifically innovative drugs approved in the U.S. from 1998 to 2007 resulted from research at universities and biotech firms, not big drug companies. And despite their rhetoric, drug companies spend 19 times more on marketing than on research and development.
There are two reasons why it matters that the drug industry is booking eye-popping profits. First, American consumers and taxpayers are footing the bill, and second, we could do something about it.
It’s against federal law for Medicare, the nation’s biggest health plan, to use its unparalleled market power to reduce the cost of prescription drugs. This makes no sense. If the policy were changed, taxpayers and consumers would save huge amounts of money.
Simply empowering Medicare to get the same bulk purchasing discounts on prescription drugs as state Medicaid programs would save the federal government $137 billion over 10 years, according to the Congressional Budget Office. Eliminating price-gouging on that scale would go a long way toward addressing the fiscal challenges that are constantly under discussion in Washington — without harming seniors and middle-class families. This proposal has been supported by President Obama and is in the House Democrats’ budget plan. It is reportedly in the president’s 2014 budget plan as well.
Our politicians give all kinds of tax breaks and subsidies to big corporations that don’t need them: Big Oil. Wall Street. Companies that ship our jobs overseas. Every gift to a special interest, including allowing Big Pharma to overcharge Medicare, is an expenditure of scarce tax dollars. That’s called wasteful spending.
When it comes to addressing our country’s fiscal challenges, we shouldn’t even talk about cutting Medicare or any services people depend on, as the Republicans have proposed. Instead, we should eliminate indefensible special-interest tax breaks and subsidies for big corporations that don’t need them.