A new report released Tuesday by Sen. Bernie Sanders (I-Vt.) takes aim at the prices and executive compensation of three major drug manufacturers, previewing his lines of attack when the companies’ CEOs appear at a hearing later this week.
In the report prepared by Democratic staff on the Senate Health, Education, Labor and Pensions Committee, longtime industry critic Sanders accused Johnson & Johnson, Merck and Bristol Myers Squibb of “ripping off the American people.”
For some of their most popular drugs, the report noted the companies made more money in the U.S. than the rest of the world combined.
The companies start by setting high prices for new drugs and then raise prices over time, the report found, compared with other countries where the prices fall over time.
For example, Merck began selling a vial of its cancer drug Keytruda in 2015 at an annual cost of $147,000 in the U.S. and $132,000 in Germany. Keytruda now costs $89,000 in Germany, but $191,000 in the U.S.
Other countries typically pay far less for prescription drugs than the U.S., in large part because their governments control the cost. The Biden administration this year for the first time will negotiate the prices of 10 of the most expensive drugs, including Johnson & Johnson’s arthritis drug Stelara and Bristol Myers Squibb’s blood thinner Eliquis.
According to the report, the launch prices of the companies’ most innovative drugs have also increased. From 2004 to 2008, the median launch price was $14,000. Over the past five years, that’s increased to $238,000.
The report also called out the massive profits the companies are making, as well as the tens of millions of dollars in compensation their CEOs receive.
The report additionally noted that Johnson & Johnson spent $17.8 billion on stock buybacks, dividends and executive compensation, compared with $14.6 billion on research and development in 2022.
Merck spent almost twice as much on research and development as it did on dividends and executive compensation. But the company’s Keytruda brought in nearly $21 billion in revenue in 2022, rivaling the annual revenue of Marriott International, and nearly matching McDonald’s and Mastercard.
Tuesday’s report comes two days before the CEOs of the three companies are scheduled to appear at a hearing, where the Vermont senator has said he wants them to explain why their companies charge substantially higher prices for medicine in the U.S. compared to other countries.
Sanders last month threatened to subpoena the CEOs of Merck and J&J after they initially declined to testify and instead offered other officials who they said had more expertise.