DRUGMAKERS SIMPLY WANT A BLANK CHECK TO KEEP OVERCHARGING AMERICANS

The following information was released by the America's Health Insurance Plans (AHIP):

by AHIP

As Congress examines how high and rising prescription drug costs are fueling the affordability crisis, drugmakers' relentless lobbying and advertising campaigns serve as a reminder that they simply want a blank check to continue overcharging Americans.

More than 24 cents of every premium dollar spent goes to prescription drugs, and data show that in 2024 alone, Americans paid a staggering $805 billion for prescription drugs.

Drug spending is only expected to accelerate, driven by rising unit prices, costly new gene and cell therapies, and growing demand for expensive new medications, such as GLP-1s.

What's driving higher drug costs and record drugmaker profits?

Drugmakers Are Setting Higher Launch Prices and Repeatedly Increasing Prices. Prescription drug costs are one of the most dynamic cost pressures for consumers and employers as new treatments come to market at ever-higher prices and drugmakers raise pricesoften multiple times a year, with median list-price hikes outpacing inflation.

A recent analysis by WP Intelligence highlights drugmakers' relentless "higher launch prices and continued [price] increases," finding:

"Despite the years of efforts to reduce costs, many manufacturers are increasing prices for drugs ... So far this year, drug companies have raised prices on 948 brand-name medicines..."

"At the same time, drug companies have boosted the initial prices when drugs are launched which the federal government does not limit in the past few years ... Regardless of what happens with annual price increases of drugs already being sold in the United States, drug companies are setting their initial prices higher than in the past."

Drugmakers' Anti-Competitive Practices Keep Prices High. Drugmakers often keep their prices high by abusing the patent system to block competition, overcharging Americans rather than protect true innovation. They do this by filing overlapping patents ("patent thickets"), making small, non-meaningful changes to drugs to secure new patents ("evergreening"), and using legal tactics to delay generic or biosimilar entry. These strategies extend monopolies, limit competition, and restrict Americans' access to lower-cost alternatives.

Direct-to-Consumer Advertising Drives Up Demand for High-Priced Drugs. Drugmakers spend billions on slick direct-to-consumer advertising to boost demand for their most expensive products. Adding insult to injury, these advertising campaigns are tax deductible, costing taxpayers billions of dollars every year. Drug prices should reflect clinical valuenot drugmakers' lavishly funded, taxpayer-subsidized marketing campaigns to fuel their own record profits.

Americans Foot the Bill for Brand Drugmakers' Record Profits. While Americans pay more for prescription drugs than consumers in any other country, [CB1] pharmaceutical manufacturers average annual profit margins of 23.2%. By contrast, health plans operate under strict federal caps on profits and administrative costsspending at least 8085% of premiums on medical care and earning profit margins of 0.8%.

Common-sense, bipartisan solutions can improve patient affordability.

Health plans are doing everything in their power to shield Americans from high and rising medical costs and remain committed to partnering with policymakers to advance common-sense, bipartisan reforms that ensure access to treatments and lower drug prices. There are immediate policy options on the table, including:

Boosting competition by supporting legislation to curb patent abusessaving taxpayers billions of dollars.

Increasing manufacturer transparency by requiring clear disclosure of pricing practices, so consumers understand what they're paying for.

Cracking down on anticompetitive behavior that blocks generics and biosimilars from entering the market, giving patients more affordable options.