Over the course of the last month, major drug pharmaceutical companies announced multi-billion dollar revenue in their Q2 reports as Virginia families continue to be financially stressed with skyrocketing prescription drug costs. These revenue announcements come after Republicans in Virginia’s House of Delegates killed SB957, which would have established a Prescription Drug Affordability Board
(PDAB) in Virginia to rein in rising high drug prices. Meanwhile, these same companies are exploiting tax loopholes by shifting their profits overseas, challenging Medicare’s ability to negotiate for lower drug prices and lobbying against the Prescription Drug Affordability Board – all while contributing to Republican campaigns in Virginia.
The Problem: Virginia families are paying too much for prescription drugs
- Virginia residents have seen a 6.6% average increase in the spending for prescription drugs.
- Virginia is above the national average on prescription drug costs. In 2020, Virginia residents spent 36% more per person on prescription drugs.
Key Findings: Drug Company Q2 Profits
Drug companies are reporting enormous quarterly revenues, in part thanks to drugs that are placing an enormous burden on Virginia and Virginians.
- Merck announced $15 billion in quarterly revenue
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- One of Merck’s most successful drug to treat Type 2 Diabetes, Januvia, has seen a 213% price increase since its launch
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- AbbVie announced $13.87 billion in quarterly revenue
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- AbbVie’s Humira, which is used to treat arthritis and auto-immune conditions, is the most burdensome drug by total spend in Virginia’s state employee health plan and also the most burdensome in the commercial market in Virginia as measured by total dollars spent (1)
- Business Insider reported, “An investigation by Democratic Sen. Ron Wyden of Oregon found the company booked 99% of its profit abroad in 2020, despite generating only three- quarters of its sales overseas.”
- According to Business Insider, “More recently, AbbVie claimed it’s actually losing money in America: The company reported a $5 billion loss on its US operations in 2022, while generating a $18 billion profit outside the US. Rather remarkably, AbbVie reported only $12 billion in non-US sales, meaning its reported profit outside the US exceeded its revenue.”
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- Pfizer announced $12.7 Billion in quarterly revenue
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- Pfizer’s breast cancer drug Ibrance is priced at over $181,000 per year
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- AstraZeneca announced $11.4 billion in quarterly revenue
- Eli Lilly announced $8.3 billion in quarterly revenue
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- Eli Lilly’s Trulicity, which is used to treat Type 2 Diabetes, is Virginia’s 3rd most burdensome drug, in terms of cost to the state employee health plan. It is also the 8th most burdensome drug on the commercial market in Virginia in terms of total dollars spent. (2)
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- Amgen announced $7 billion in quarterly revenue
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- Amgen’s Enbrel is priced at $82,000 a year, a 346% increase since 2008.
- Enbrel, which is used to treat arthritis and psoriasis, is the 5th most burdensome drug in Virginia’s state employee health insurance program by total spend and the 3rd most burdensome drug on the commercial market in Virginia in terms of total dollars spent (3)
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- Gilead announced $6.6 billion in quarterly revenue
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- Over the last three months, shareholders were rewarded with $150 million in stock buybacks.
- The average monthly cash price for Gilead’s Biktarvy, which is used to treat HIV, is over $4,000 a month
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- Regeneron announced $3.16 billion in quarterly revenue
Meanwhile, a new piece published by Business Insider shows how Big Pharma is exploiting tax loopholes to shift their profits overseas and avoid paying their fair share in the United States.
Key excerpts from the piece, which was written by Council on Foreign Relations’ Brad Setser and Tess Turner, include:
- “Most of America’s major pharmaceutical companies have simply perfected the art of legally shifting the profit on their US sales out of the country to low-tax jurisdictions.”
- “Companies’ ability to keep their US tax bill low is made possible by the US’s treatment of money made overseas. Through 2017, US companies were allowed to indefinitely defer US tax payments of profits earned offshore.”
- “Many companies, unsurprisingly, found ways to move profits to no-tax jurisdictions in the Caribbean and Europe. The most common way to do this was by parking their intellectual property — such as the patents that give them a legal monopoly to sell a drug they’ve developed — in no- or low-tax jurisdictions. Add in overseas manufacturing, and almost all profits earned on US sales were shifted to the low-tax jurisdictions.”
Many of these same drug companies are fighting to keep costs up by Opposing the Inflation Reduction Act and a Virginia Prescription Drug Affordability Board
- At the federal level, Merck, the CEO of Eli Lilly, Pfizer, and other drug companies and their representatives are suing the Biden Administration through the pharmaceutical association PhRMA to stop Medicare from negotiating with drug companies to lower drug prices for families across Virginia and the United States.
- At the state level, pharmaceutical companies lobbied to defeat efforts to establish a PDAB. This proposal would:
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- Bring together health care experts to review costs of prescription drugs
- Set reasonable caps for certain high-cost prescription drugs if the board determines that the cost of certain drugs place a financial burden on Virginia residents.
- Provide more transparency to lawmakers and the public on how drug prices are set.
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CONCLUSION
With 1 in 4 Virginia residents not taking their medicines due to cost, it’s clear that Virginia families want, and deserve, action on rising prescription drug costs. Nearly a year after the passage of the Inflation Reduction Act, four of the five most popular provisions of the landmark law relate to lowering prescription drug and health care costs. Furthermore, 82% of Virginia voters support establishing a PDAB including majorities of Republican, Independent, and Democratic voters.
A broad and diverse coalition of advocacy groups and experts also supports the establishment of a PDAB. Virginia’s Commonwealth Council on Aging, which is composed of both Democratic and Republican appointees, recommended establishing a PDAB in their annual report. Additionally, AARP Virginia, the Virginia Association of Counties, and the Virginia Catholic Conference, have also declared their support for a PDAB.
All candidates should be clear on their position on this important issue this election cycle: will they side with Virginia families or will they side with Big Pharma?
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1, 2, 3 Virginia Department of Medical Assistance Services and Virginia Department of Human Resource Management
