A new House oversight report found that 14 of the largest drugmakers in the U.S. spent $577 billion on stock buybacks and dividends from 2016 to 2020 as Democratic leadership presses to give Medicare drug negotiation powers.
The report (PDF), released Thursday from the House Oversight Committee, comes as Congress is exploring giving Medicare the power to negotiate for lower drug prices as part of an infrastructure package. Democratic leadership slammed drugmakers’ most common defense that pricing reforms will lead to fewer new innovations.
“How can pharma say with a straight face after spending $577 billion on buybacks and dividends in the last five years that lowering drug prices for Americans will have to come at the expense of research and development?” said House Speaker Nancy Pelosi during a press call Thursday.
The report comes as the House and Senate begin to hammer out a major reconciliation package that could include drug pricing legislation.
House Democrats reintroduced in April legislation to give Medicare the power to negotiate for lower drug prices. Under the legislation, drugmakers would have to offer the same price paid by Medicare to commercial plans.
However, it remains unclear whether Congress will include the bill H.R.3 in the reconciliation package expected to be voted on in the coming weeks.
Democrats hope to include in the package several healthcare priorities that include making enhanced tax credits on the Affordable Care Act permanent. Democrats aim to use a budgetary procedure called reconciliation that lets legislation advance in the Senate via a simple majority and avoid a legislative filibuster that takes 60 votes to break.
Pelosi did not say that the reconciliation package will include H.R.3, only that “we will see how we proceed there.”
Pelosi wants the Senate to pass the reconciliation package first and then send it to the House, meaning the Senate will take the lead on drafting the package.
“We would want to get this done as soon as possible so Americans can enjoy the benefits of it,” she said.
She expects the Senate to have a number for the total package to be hammered out in the next week or so. The package is moving at the same time as a bipartisan $1.2 trillion infrastructure package.
Pelosi refused to say whether House Democrats will support an infrastructure package that does not include legislation to give Medicare negotiating powers but highlighted how important the policy was.
“Our goal is to lower the cost of prescription drugs for the American people. In order to do that it is essential we have the power to negotiate,” she said.
H.R.3 was introduced in the last Congress and passed the House but stalled in the Senate due to widespread GOP opposition. Republicans have said the legislation would lead to fewer innovative medical products.
Democrats argue, though, that the pharmaceutical industry already does not devote enough of its profits to research and development.
From 2016 to 2020, the 14 drugmakers spent $56 billion more on stock buybacks and dividends than what they spent on research.
“Four of these companies—AbbVie, Johnson & Johnson, Novo Nordisk and Amgen—had buyback and dividend expenditures in each of the past five years,” the committee report said.
Other companies that were included in the report were Novartis, Pfizer, Gilead, Merck, Bristol Myers Squibb, Roche, Eli Lilly, AstraZeneca, GlaxoSmithKline and Sanofi.
The pharmaceutical industry slammed the report as a "partisan exercise."
"Every year, biopharmaceutical research companies invest tens of billions of dollars in the research and development of new cures and treatments, as well as our significant investments in time and resources creating treatments and vaccines to combat the global pandemic," said Brian Newell, spokesman for pharma lobbying group Pharmaceutical Research and Manufacturers of America, in a statement to Fierce Healthcare.