Congressional Democrats claim pharma industry profits have soared by as much as $8 billion in the first six months after the Medicare drug benefit went into effect.
An audit released this week by Democratic members of the House’s Government Reform Committee claimed eight of the world’s 10 largest pharma companies have seen swelling bottom lines since Jan. 1, 2006, when the new Medicare drug plan went into effect.
For example, Pfizer’s profits over the six-month period increased by $2.7 billion, a 73% increase, the analysis found.
Merck’s profits increased by $1 billion (44%); Sanofi-Aventis’ profits increased by more than $1.3 billion (35%) and AstraZeneca’s profits have jumped by more than $750 million (33%).
The Congressional consortium behind the audit, which dubbed itself the “Democratic Truth Squad” in a news release, attributed the profit surge to a combination of three factors -- failure of private plans to negotiate low prices, the elimination of billions in rebates paid by pharmaceutical companies for drugs used by low income beneficiaries and increased sales due to the Medicare subsidy.
PhRMA spokesman Ken Johnson called the Democrats’ report “politically-inspired.” Johnson said the report “failed to mention that the new Medicare prescription drug program has improved the lives of millions of seniors.”
“While it’s common to hear so much political rhetoric this time of year, it is our hope that we can all continue to work together – industry, Congress,” Johnson said.