Rep. Katie Porter (D-CA) on Friday published a damning report revealing the devastating effects of Big Pharma mergers and acquisitions on U.S. healthcare, and recommending steps Congress should take to enact “comprehensive, urgent reform” of an integral part of a broken healthcare system.
The report, entitled “Killer Profits: How Big Pharma Takeovers Destroy Innovation and Harm Patients,” begins by noting that “in just 10 years, the number of large, international pharmaceutical companies decreased six-fold, from 60 to only 10.”
While pharmaceutical executives often attempt to portray such consolidation as a means to increase operational efficiency, the report states that “digging a level deeper ‘exposes a troubling industry-wide trend of billions of dollars of corporate resources going toward acquiring other pharmaceutical corporations with patent-protected blockbuster drugs instead of putting those resources toward’ discovery of new drugs.”
Merger and acquisition (M&A) deals are often executed to “boost stock prices,” to “stop competitors,” and to “acquire an innovative blockbuster drug with an enormous prospective revenue stream.”
“Instead of spending on innovation, Big Pharma is hoarding its money for salaries and dividends,” the report says, “all while swallowing smaller companies, thus making the marketplace far less competitive.”
The report calls M&As “just the tip of the iceberg of pharmaceutical companies’ anti-competitive, profit-driven behaviors”:
Pharmaceutical companies often claim that lowering the prices of prescription drugs in the United States would devastate innovation. Yet, as prices have skyrocketed over the last few decades, these same companies’ investment in research and development have failed to match this same pace. Instead, they’ve dedicated more and more of their funds to enrich shareholders or to purchase other companies to eliminate competition.
“In 2018, the year that [former President] Donald Trump’s tax giveaway to the wealthy went into effect, 12 of the biggest pharmaceutical companies spent more money on stock buybacks than on research and development,” the report notes. Read Full Article >