House report: Drug companies spent more on buybacks, dividends than research
House Democrats on Thursday released a report that found that the 14 leading drug companies paid out more in stock buybacks and dividends from 2016 to 2020 than they spent on research and development.
The report from the House Oversight and Reform Committee finds that the 14 companies spent $577 billion from 2016 to 2020 on stock buybacks and dividends, $56 billion more than the $521 billion they spent on research and development over the same time period.
The release of the report comes as House Democrats try to make the case for their sweeping bill aimed at lowering drug prices, known as H.R. 3, which would allow the secretary of Health and Human Services to negotiate lower prices.
That measure could be included in a coming legislative package along with elements of President Biden’s American Jobs Plan and American Families Plan.
Democrats sought to push back on the pharmaceutical industry’s argument that the bill would harm innovation, saying that drug companies could simply cut back on payouts to shareholders, rather than cutting research and development.
“Even if the pharmaceutical industry collected less revenue due to reforms such as H.R. 3, drug companies could maintain or even exceed their current levels of R&D if they spent less on rewarding shareholders and executives,” said House Oversight Committee Chairwoman Carolyn Maloney (D-N.Y.).
Speaking on a call with reporters to tout the new report, House Speaker Nancy Pelosi (D-Calif.) noted that the coming infrastructure package that would be passed through a budgetary process known as reconciliation, is an “opportunity” to include drug pricing reforms.
Still, she stopped short of guaranteeing that drug pricing measures would be included in the package. “We're not negotiating the reconciliation package on this call,” Pelosi said.
Asked to respond to the report, a spokesman for the Pharmaceutical Research and Manufacturers of America pointed to data showing that drug prices on average declined somewhat in 2020 once rebates that drug companies pay to negotiators known as pharmacy benefit managers are taken into account.
Drug companies argue that those negotiators and insurance companies should do more to share the discounts they get with consumers at the pharmacy counter.
“While we can’t speak to specific examples cited in the report, this partisan exercise is clearly designed to garner support for an extreme bill that will erode Medicare protections and access to treatments for seniors,” said PhRMA spokesman Brian Newell.
“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," he added.
Senate Democrats are working on their own measure to lower drug prices, which could be more scaled-down compared to the House bill, given the concerns of some moderate Senate Democrats.
Still, Pelosi said she was “pleased” by the drug pricing principles released by Senate Finance Committee Chairman Ron Wyden (D-Ore.), who is leading that chamber’s effort, and said she thinks the House and Senate can find “common ground.”