Drug prices soared by nearly 4 times the inflation rate in 5 years, House investigation finds

From 2016-20, drugmakers raised the prices of brand name drugs by 36 percent, nearly four times the rate of inflation during that period, according to a report detailing the findings of an investigation by the U.S. House Committee on Oversight and Reform.

The report, released Dec. 10, focuses on 10 drugmakers who manufacture 12 drugs that are among the costliest to Medicare: Humira, Imbruvica, Enbrel, Sensipar, Revlimid, Acthar Gel, Gleevec, Lyrica, Copaxone, NovoLog products, Humalog products and Lantus products.

Here are seven more notable findings from the investigation:

1. The drugs included in the investigation are now priced at a median of almost 500 percent higher than when they were brought to market.
   
   
2. All 10 drugmakers' compensation structures tie incentive payments to revenue and other financial targets, and several drugmakers directly linked incentive compensation to drug-specific revenue targets.
   
   
3. The drugmakers obtained more than 600 patents on the 12 drugs, potentially lengthening their monopoly periods to a combined total of nearly 300 years.
   
   
4. Internal documents revealed the drugmakers view patient assistance programs as essential for public relations, but the amount drugmakers spend on such programs is far outweighed by the revenue generated by these drugs.
   
   
5. Internal documents showed drugmakers targeted the U.S. market for price increases in part because Medicare cannot negotiate lower prices. From 2016-20, taxpayers could have saved more than $25 billion on just seven of the drugs included in the report (Humira, Imbruvica, Sensipar, Enbrel, Lantus, NovoLog and Lyrica) if private Medicare Part D plans had received the same discounts as other federal health programs that can negotiate.
   
   
6. All 10 drugmakers engaged in at least one strategy to suppress competition from generics or biosimilars. The strategies included shifting patients to new products or drug formulations just before generic competition emerged for the old formula, entering contracts with pharmacy benefit managers and insurers that include rebates and discounts for excluding competition, and aggressively marketing directly to physicians and patients to drive sales before facing competition.
   
   
7. From 2016-20, the 14 leading drugmakers spent $577 billion on stock buybacks and dividends, $56 billion more than they spent on research and development during the period. Additionally, drugmakers spend a significant amount of their research and development dollars to prolong their monopolies, execute market campaigns and stifle competition.