More Perfect Union: The Pharmaceutical Industry’s Lucrative Profits, By the Numbers Top executives at Johnson & Johnson, Merck, and Bristol Myers Squibb are set to testify before Congress on drug pricing. FEB 4, 2024

 

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The Pharmaceutical Industry’s Lucrative Profits, By the Numbers

Top executives at Johnson & Johnson, Merck, and Bristol Myers Squibb are set to testify before Congress on drug pricing.

FEB 4

 

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By Eric Gardner, More Perfect Union

Under threat of subpoena, Johnson and Johnson and Merck & Co. chief executives have agreed to voluntarily testify this week about what their companies are doing to combat high prescription drug prices. 

Initially, the corporations contended that the CEOs lacked the necessary expertise to discuss the pricing strategies of their firms. They will now voluntarily participate alongside the CEO of Bristol Myers Squibb. “The use of a subpoena was clearly a last resort and I’m delighted that these CEOs will be coming into our committee voluntarily,” Sen. Bernie Sanders (I-VT) said after the announcement.

In preparation for the hearing, to be held on Thursday, February 8, here are a few numbers showcasing the issue facing America.

$378 billion 

Total U.S. prescription drug spending in 2021. That’s $1,432 per person. This is 36 percent higher than Germany (the next highest developed country), and more than double the per-person average in some other other developed countries.

$200 billion

The amount of revenue Bristol Meyers Squib, Johnson and Johnson, and Merck generated last year. If the three companies were a country, their GDP would be $50 billion more than Morocco, a nation of 37 million. 

$120 billion

The total amount that the federal government is slated to spend on prescription drugs through Medicare Part D in 2024.

$38.7 billion

The amount of profit the three firms are expected to record from 2023.

$31.9 billion 

The total gross cost of the drugs Medicare is slated to negotiate with the three pharmaceutical companies. The gross cost does not include any discounts that the companies might give Medicare providers. Previously, Medicare was barred from negotiating prices with insurance companies, but the Inflation Reduction Act (IRA) allowed the Center for Medicare Services to negotiate 10 drugs, with the number of drugs open to negotiation increasing each year.

10 

The number of lawsuits facing the federal government over this provision in the IRA that allows the government to negotiate prices of ten drugs for Medicare. One law professor said there are “better odds that Elizabeth Holmes wins Medtech Innovator of the Year than that Merck wins its lawsuit.” 

Still, Bristol Meyers Squib, Johnson and Johnson, and Merck have all filed lawsuits, and the cases are all pending and are expected to make it to the Supreme Court. 

$147 million

The total compensation paid by the three firms to their top five executives in 2022. Giovanni Caforio, the CEO of Bristol Meyer Squibb, was the highest paid, totaling over $20 million.

162:1

The average CEO-to-worker pay ratio at the three firms.

$25 billion

The annual sales of Merck’s Keytruda, a blockbuster, life-saving cancer drug that was developed from four patents funded by the American government.

$102,000

The difference between what Merck charges American patients and Germans for Keytruda. In Germany, insurers collaborate to negotiate drug prices, leading to costs substantially below those in the U.S., where prices are determined by pharmaceutical firms and negotiated by individual insurance plans.

66%

The percentage of revenue from the blood thinner Eliquis that is generated in the U.S. Eliquis grosses Bristol Meyers Squibb $11.7 billion and has a U.S. list price of over $6,700 compared to $650 in France.

$14 billion

According to SEC filings, Bristol Myers Squibb and Johnson & Johnson together spent this amount on buying back their stock in 2022. While Merck paused repurchases for last year, its board of directors has approved up to $5 billion for future buybacks.

60 

The number of years Johnson and Johnson has consecutively increased its dividend payment to investors. In 2022, the company spent $11.6 billion on dividends.

2 to 4 times

The amount that Americans pay more for brand-name drugs than other Western countries, according to estimates from the nonpartisan Government Accountability Office.

4.5%

Pharmaceutical companies are hiking prices for more than 700 medications this year, and the median list price increase is 4.5 percent according to industry researcher 46 Brooklyn. That’s a full percentage point higher than inflation. 

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