Cracking the code: Unveiling Pharma’s tactics behind sky-high drug prices

September 11, 2023

Ever wondered why prescription drugs are so expensive in the United States?

It’s not just about research costs. Pharma companies have extended their monopolies and used other tactics to keep prices high. Last year’s Inflation Reduction Act aimed to change this by allowing the government to negotiate drug prices for Medicare, which could save $237 billion over a decade.

But Big Pharma isn’t thrilled about this change, according to The Lund Report. The industry had a system that worked just fine. Back in 2003, Congress barred Medicare from negotiating drug prices, leading to soaring costs. Humira, a drug for autoimmune diseases, is protected by more than 100 patents, making it hard for generics to compete.

When generics did try to enter the market, Humira’s parent company, AbbVie, offered would-be competitors deals to keep them off the market, all while raising the cost of Humira to $88,000 a year. Humira biosimilars are finally entering the market this year, even though they’ve been available in Europe for years.

There are multiple examples of tactics like this – from AZT, the first drug to successfully treat HIV/AIDS in the late 1980’s, to Revlimid, a drug that treats cancer today.

Today, AZT pills contain a combination of two or three medicines, including one off-patent medication made by Gilead Sciences. But these combination pills still can cost thousands of dollars a month. That’s because many manufacturers have agreements with Gilead. They use its version of the drug, and Gilead makes it worth their while.

Eight in 10 Americans support drug price negotiation, and the Biden administration and Congress can push back against Big Pharma’s lawsuits. While the industry may not win the lawsuits, if a judge files an injunction, companies may be able to keep up their tactics for years while the cases wind their way through the courts.

Ever skipped essential meds due to costs? How has Pharma’s playbook affected you? Share here.