Drugmakers in Medicare Price Talks Spent Less on R&D Than on Shareholders, Marketing, Overhead: Report
Health Care

Drugmakers in Medicare Price Talks Spent Less on R&D Than on Shareholders, Marketing, Overhead: Report

Bryan Woolston

Eight drug companies that make the 10 medications whose prices are currently being negotiated by Medicare spent billions more last year on stock buybacks, dividends, marketing and administrative costs than they did on research and development, according to a report from Accountable.US, a left-leaning watchdog group.

The report says that the eight companies — Johnson & Johnson, Amgen, AstraZeneca, Bristol Myers Squibb, Eli Lilly, Merck, Novartis and Novo Nordisk — spent $95.9 billion on research and development expenses, compared to $162 billion on stock buybacks, dividends, and marketing and administrative costs and almost $500 million on compensation for their boards and executives.

“Additionally, these companies spent at least $83.2 million on trade association dues, $10.6 million on political contributions and $57.8 million on lobbying, all in 2023 alone,” Accountable.US adds. “Meanwhile, these companies pulled in a combined $367 billion in sales in 2023, according to their financial filings.”

The group says that four of the companies — Johnson & Johnson, Bristol Myers Squibb, Novartis and Novo Nordisk — spent more on various shareholder payments than on research and development. Five companies spent more on administrative and marketing expenses than R&D. Only Merck put more toward research and development than it spent on shareholder payments, executive compensation, marketing and administrative costs.

Six of the companies have sued to block the Medicare price negotiations, enacted for the first time under the Inflation Reduction Act of 2022.

“Big Pharma CEOs often cite investments in R&D to excuse charging U.S. seniors the highest prices in the world for life-saving medicines – but they never put that spending in proper perspective,” Accountable US Executive Director Tony Carrk said in a statement. “The fact is, pharma industry R&D investment is vastly outpaced by billions upon billions in industry profits, rewards to wealthy investors, and on lobbying and political spending sprees.”

A spokesperson for the Pharmaceutical Research and Manufacturers of America trade group dismissed the report when reached by The Hill. “This comparison is a myth we hear often. It often lumps together marketing with everything from shipping to distribution to office supplies,” they said. “The truth is the biopharmaceutical industry is one of the most research-intensive industries in America. Companies invested $122 billion in R&D in 2020, and we invest six times more on average in R&D as a share of sales than all other manufacturing industries.”