​PRICE FIXING                                                   

How Big Pharma Reaps Profits While Hurting Everyday 

AmericansBy Abbey Meller and Hauwa Ahmed August 30, 2019


It’s no secret that the Trump administration has fostered a culture of corruption in which special interests and big donors advance their interests at the expense of everyday people. Perhaps no policy area exemplifies this corruption more than the issue of drug pricing. President Trump has long promised to stand up to the pharmaceutical industry and lower prescription drug prices, but he has avoided taking serious action to drive down prices while at the same time filling top spots in his administration with industry insiders. This administration’s culture of corruption, which continues a decades long practice of political pandering to the pharmaceutical industry, carries a real cost; Americans spent $535 billion1 on prescription drugs in 2018, an increase of 50 percent since 2010. These price increases far surpass inflation, with Big Pharma increasing prices on its most-prescribed medications by anywhere from 40 percent to 71 percent from 2011 to 2015.2Moreover, pharmaceutical companies receive substantial U.S. government assistance in the form of publicly funded basic research and tax breaks, yet they continue to charge exorbitant prices for medications. But the issue goes beyond cost. In America, more than 1 million individuals suffer from Type 1 diabetes3, a condition where the body cannot make insulin, which is essential for getting glucose (also known as blood sugar) into cells from the bloodstream. Without insulin, glucose accumulates in the bloodstream4, causing dangerously high blood sugar levels. Among all Americans suffering from diabetes, at least 1 in 45 have said that they engaged in insulin rationing—a tactic of using less insulin than is needed in order to make the doses last longer—as a direct result of the skyrocketing price of the drug. A vial of insulin, which is the only life-sustaining option for Type 1 diabetics, retails at around $300.6 A 2018 study commissioned by the Congressional Diabetes Caucus found that the price of insulin has doubled since 20127; in the 10 years prior, the price of insulin nearly tripled. Despite the dangers of insulin rationing, which can lead to diabetic ketoacidosis, a fatal condition, many Americans have no other choice. That was the case for Antroinette8, whose daughter was rationing insulin due to the high cost and died at the age of 22 as a result.


2 Center for American Progress | How Big Pharma Reaps Profits While Hurting Everyday Americans Insulin facts • Access to insulin for patients with Type 1 diabetes is a matter of life or death.9• While insulin has existed since the 1920s10, the price since then has skyrocketed, especially in recent years. Prices for insulin increased by 197 percent between 2002 and 2013, from $4.34 per milliliter to $12.92 per milliliter.11• There are three insulin manufacturers serving the United States: Eli Lilly and Co., Novo Nordisk A/S, and Sanofi SA.• Eli Lilly announced12 in March 2019 that it would begin selling a generic version of its Humalog insulin at half the price. The medication, known as lepro, will cost $137.35 per vial. To compare pricing, a 2018 study13 estimated that the cost of making a year’s worth of insulin for one patient ranges from $78 to $133. • Ahead of its hearing on drug pricing in February 2019, the U.S. Senate Committee on Finance sent a letter14 to Eli Lilly asking why insulin is priced so astonishingly high. A vial of NovoLog, one type of insulin, costs15 anywhere from $14 to $300 in the United States but only $48 in Singapore, $14 in India, $6 in Austria, and $0 in Italy. American taxpayers fund basic research Billions of taxpayer dollars go into the creation and marketing16 of new drugs. The Los Angeles Times reports that, “Since the 1930s, the National Institutes of Health has invested close to $90017 billion in the basic and applied research that formed both the pharmaceutical and biotechnology sectors.” Despite taxpayers’ crucial investment, U.S. consumers are increasingly paying more for their prescription drugs. A 2018 study18 on the National Institute of Health’s (NIH) financial contributions to new drug approvals found that the agency “contributed to published research associated with every one of the 210 new drugs approved by the Food and Drug Administration from 2010–2016.” More than $100 billion in NIH funding went toward research that contributed directly or indirectly to the 210 drugs approved during that six-year period. The NIH Research Project Grant (R01)19—which sup-ports health-related research—was by far the most common kind of grant used to fund the science that supported the new drugs. In all, NIH gave out nearly 118,00020R01 grants related to those drugs from 2010 to 2016.Federal perks for Big Pharma add up Pharmaceutical companies also benefit from research and development tax cred-its. The federal R&D tax credit was first introduced in 1981 to encourage private sec-tor investment in pioneering research.21 This tax credit is available to businesses that attempt to develop new, improved, or technologically advanced products or trade