Chairwoman Maloney Releases Staff Report Showing Pharmaceutical Industry Spends More on Buybacks, Dividends, and Executive Compensation Than on R&D
Washington, D.C. (July 8, 2021)— Today, Rep. Carolyn B. Maloney, Chairwoman of the Committee on Oversight and Reform, released a staff report analyzing financial data from 14 of the largest drug companies in the world to evaluate the amount they spend to enrich investors and executives, the amount they invest to research and develop new treatments, and the potential impact of direct Medicare price negotiations.
“Today’s staff report makes clear that Congress needs to act to rein in out-of-control prescription drug prices,” Chairwoman Maloney said. “This report finds that the world’s leading drug companies have used price increases to boost payouts to investors and executives while spending less on research and development. The report also shows that industry claims about the potential impact of pricing reforms are overblown. 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.”
The Committee’s analysis shows:
- From 2016 to 2020, the 14 leading drug companies spent $577 billion on stock buybacks and dividends—$56 billion more than they spent on R&D over the same period.
- Assuming the same rate of spending, these 14 companies are projected to spend $1.15 trillion on buybacks and dividends from 2020 through 2029. This is more than twice the amount the Congressional Budget Office projected would be saved by H.R. 3 over the same period.
- From 2016 to 2020, compensation for the 14 companies’ top executives totaled $3.2 billion, with compensation growing by 14% over that five-year period.
- Many drug companies spent a significant portion of their R&D budget on finding ways to suppress generic and biosimilar competition while continuing to raise prices, rather than on innovative research.
The Committee previously released six staff reports showing that the pharmaceutical industry has targeted the United States for price increases for many years, while cutting prices in the rest of the world. The United States is particularly vulnerable to these pricing tactics because current law prohibits Medicare from negotiating directly with drug companies to lower drug prices.
H.R. 3, the Elijah E. Cummings Lower Drug Prices Now Act, would address many of the findings in the Committee’s staff reports by empowering Medicare to negotiate directly with drug companies to lower prices. The Congressional Budget Office estimates that H.R. 3’s negotiation provisions would save taxpayers $456 billion over ten years.
Click here to read today’s staff report.
The Committee previously released staff reports on:
- Bristol Myers Squibb/Celgene regarding Revlimid;
- Teva regarding Copaxone;
- Amgen regarding Sensipar and Enbrel;
- Novartis regarding Gleevec;
- Mallinckrodt regarding H.P. Acthar; and
- AbbVie regarding Humira and Imbruvica.