Americans Paid $11 Billion To Make Drugs You Can’t Afford

By Helen Santoro
February 22, 2024

As the government begins its first-ever price negotiations for a handful of medicines under Medicare, the pharmaceutical industry has launched an all-out legal and PR assault on this meager attempt to control out-of-control drug prices for the country’s most vulnerable. Big Pharma reasons that the government has no place setting prices for the drugs developed by private companies.
But the government, and by extension taxpayers, heavily subsidizes the development of drugs in this country. Now a bombshell new report reveals that Americans funded the development of all 10 drugs up for price negotiations, shelling out a total of $11.7 billion on their research. In 2022 alone, Big Pharma made $70 billion selling those same drugs — and now they want to keep their prices sky high.
According to the new study out of the Center for Integration of Science and Industry at Bentley University, which has not yet been published, the 10 selected prescription drugs received anywhere from $227 million to $6.5 billion in funding from the government’s National Institutes of Health (NIH) for crucial, foundational research.
“When the average taxpayer is paying for the drug, it’s not just what’s being paid at the pharmacy,” said Fred Ledley, professor of natural and applied sciences at Bentley and senior author on the study.
These drugs, which are covered by Medicare’s prescription drug benefit plan, are taken by 7.7 million enrollees, most of them elderly, to treat conditions including blood clots, heart failure, diabetes, autoimmune conditions, and chronic kidney disease. In 2022, Medicare patients spent $3.4 billion out of pocket on these medications, a number that increased by 116 percent over a four-year span.
From 2018 to 2022, out-of-pocket costs for Medicare enrollees climbed for nine of the 10 drugs. The average annual out-of-pocket cost for Stelara, an injectable drug that treats autoimmune conditions, rose the most from $709 per enrollee to $2,058. For non-Medicare U.S. patients, Stelara can be considerably more expensive, especially since drugmakers charge far higher prices in this country than they do elsewhere. A 2019 report found that the regular price for Stelara was $16,600 per dose in the United States, compared to $2,900 per dose in the United Kingdom.
According to the new report from Bentley University, the Johnson & Johnson subsidiary that developed Stelara received $6.5 billion in taxpayer funding for it — by far the most of any of the medicines up for price negotiations.
Total Medicare spending to pay for enrollees’ use of these vital drugs more than doubled from about $20 billion in 2018 to $50.5 billion in 2023. Paying for these particular drugs accounted for roughly 20 percent of all Medicare spending on prescription drugs between summer 2022 and spring 2023.
Pharmaceutical Research and Manufacturers of America (PhRMA), the pharmaceutical industry’s main lobbying group, said it could not comment on the specifics of a study it has not reviewed.
Sarah Ryan, PhRMA’s senior manager of public affairs, added in an email to The Lever that “while the NIH plays a crucial role in fostering basic research, private industry contributions, both financial and technical, are instrumental in turning discoveries into fully developed therapies for patients. There is a rich body of research documenting the nature of these complementary roles, which overwhelmingly demonstrates that the private sector invests significantly more and takes on far greater risk in drug development than the government.”
After finalizing negotiations with the drug manufacturers, the Centers for Medicare and Medicaid Services, which oversees all federal health programs, will publish the agreed-upon drug prices by Sept. 1, 2024, and the new prices will go into effect starting Jan. 1, 2026.