The pharmaceutical industry is putting a tremendous burden on Arizona taxpayers and small businesses by utilizing anti-competitive practices to undermine market forces in health care and engaging in monopoly pricing practices.
Among these practices are incessant price hikes on brand name prescription drugs that face little or no competition. In the first month of 2021 alone, the list price of more than 800 brand name drugs was increased by large pharmaceutical companies.
Big Pharma is able to engage in these price hikes by gaming the system to maintain monopolies on their products.
For example, the world’s top-selling drug, Humira, manufactured by AbbVie, has applied for 257 patents. 90 percent of the patents were submitted after the U.S. Food and Drug Administration’s (FDA) initial approval of the drug – meaning after the drug was already available on the market. By stockpiling these patents for reasons unrelated to the actual development of the drug, AbbVie has been able to block any competition to Humira for 39 years. With no affordable alternative for patients, AbbVie has hiked the price of Humira by more than seven percent every year for the last six years in a row, including by 7.4 percent in January 2021 in the middle of the COVID-19 pandemic.
According to a study conducted by Avik Roy and Gregg Girvan of the Foundation for Research on Equal Opportunity (FREOPP), Big Pharma’s abuse of the patent system around biologic drugs, such as Humira, cost American patients and taxpayers an additional $5 billion between 2015 and 2020. Without congressional action to hold brand name drug companies accountable, the report estimates this anti-competitive behavior around just this one class of drug will cost the American people another $25 billion by the end of the decade.
In addition to anti-competitive patent abuse and incessant price hikes, Big Pharma is also hitting consumers, businesses and taxpayers with staggeringly high prices on medications new to the market.
In June of this year, the FDA approved controversial Alzheimer’s treatment Aduhelm, despite objections from the agency’s advisory board of experts and a lack of evidence the drug is effective in helping patients. The drug company that manufactures this drug gave it an annual price of $56,000 for treatment, despite analysis that found the drug should be priced at less than half that amount at the highest.
A Kaiser Family Foundation analysis estimates taxpayers face a crushing $57 billion cost per year to pay for this pricing on Aduhelm, even at the low end of expected use.
The aggregate impact of Big Pharma’s practices is an unsustainable burden on consumers, small businesses and taxpayers. A pre-pandemic survey from Gallup showed that 58 million Americans were struggling to afford their prescription medications.
A May 2021 survey from Small Businesses for America’s Future found 89 percent of small business owners stated the cost of prescription drugs is too high. A majority blame the pharmaceutical industry and say drug costs threaten their ability to continue to offer health coverage for their employees.
Addressing the pricing practices of Big Pharma to deliver relief for consumers, small businesses and taxpayers has bipartisan support in Washington.
Solutions that have received backing from both sides of the aisle, include those to increase price transparency, encourage competition, cap out-of-pocket costs for older Americans, end taxpayer-funded subsidies for price increases that outstrip inflation, and give pharmaceutical companies shared responsibility for covering costs when Medicare Part D beneficiaries hit the catastrophic phase of coverage.
Arizona’s senators should vocally join the fight to get the job done.
Arizona consumers, small businesses and taxpayers need them to now deliver significant reform and meaningful relief. Passing solutions with bipartisan support into law this year would be a critical first step.
Chuck Schmidt is the President of Market Freedom Alliance.