Skip to main content

Pharmaceutical Companies Are Big Winners in Trump’s America

By August 3, 2018No Comments

They are gaming the system and earning huge profits from Republican tax breaks and charging consumers more.

As second quarter earnings start to pour in, one trend is clear — pharmaceutical companies are reaping huge benefits from Republican tax breaks and earning massive profits while President Trump pushes sham drug pricing policies.

Pharmaceutical Companies Have The Highest Profits In The Health Industry. With earnings from only 85 of 118 health care companies announced, profit is already higher for Q2 than it has been for any quarter in the past year. So far, health companies have announced $47 billion in global profit, with pharmaceutical companies making the highest profit margins. Why the sudden growth? In large part, because of Republican corporate tax breaks.

Republican Tax Cut Fueling Pharmaceutical Profits. As Axios reports: “But the larger earnings also stemmed from Republicans’ massive cut in corporate taxes. The income tax expense for drug giant AbbVie, for example, was 93% lower in the second quarter of this year compared to the same period last year.”

At The Same Time, Pharmaceutical Companies Also Reaping Profits By Charging Higher Prices. Between February 1st and July 15th, drug companies raised prices on 255 drugs. As Bloomberg notes, “For all..categories of drugs, list prices rose far faster than inflation. Prices for 10 commonly used diabetes drugs rose 25.6 percent, on average, while average prices for rheumatoid arthritis and other autoimmune treatments rose 40.1 percent.” To learn more the high costs of drug prices, check out a handy explainer video from the Center for American Progress.


How Pharmaceutical Companies Are Playing The Trump Administration

Pharmaceutical Companies Are Doing Nothing But Posture In Response To President Trump’s Twitter Rants. Politico reports that despite President Trump’s Twitter rants, pharmaceutical companies have found a way to make symbolic concessions that have not resulted in lowering prescription drug prices:

The Drug Industry’s Strategy Is To Take “Nothing Burger” Steps That Give Trump Something To Brag About. The gestures turned out to be largely symbolic — efforts to beat Trump at his own game by giving him headlines he wants without making substantive changes in how they do business. The token concessions are ‘a calculated risk,’ said one drug lobbyist. ‘Take these nothing-burger steps and give the administration things they can take credit for.’” [Politico, 8/3/18]

Pharmaceutical Companies Do This By Cutting Prices For Products That Are No Longer Used And “Halting” Price Increases During Times Of The Year When There Are Not Normally Price Increases. Of the few companies that actually cut prices, for instance, most targeted old products that no longer produce much revenue — such as Merck’s 60 percent discount to a hepatitis C medicine that had no U.S. revenues in the first quarter. Others volunteered to halt price increases for six months — in some cases, just weeks after announcing what is normally their last price hike for the year.” [Politico, 8/3/18]

Secretary Azar, Former Eli-Lilly Executive, Encourages Pharmaceutical Companies To Play Along. “He publicly touts industry price freezes and reversals ‘in part to show Trump they’re making progress, but also to show the industry that you get recognized for playing ball,’ said a person familiar with the discussions.” [Politico, 8/3/18]

Azar Does This While At The Same Time Pushing For Pharma-Friendly Policy. ““[Trump’s] strategy diverges sharply from what Azar is saying publicly — raising doubts about how serious the administration is about cracking down on drugmakers…The HHS secretary’s rhetoric often targets pharmacy benefits managers — the obscure middlemen who manage the drug side of patient’s health insurance benefits — not drug companies. And targeting the middlemen is a play directly out of pharma’s strategy book — drug companies have long sought to pin patients’ frustration with rising costs on PBMs. HHS has also signaled it wants to overhaul a drug discount program for hospitals that could put money back in pharma’s pocket.” [Politico, 8/3/18]