DRUG COSTS III: Industry’s Profit Margins ‘Obscene’
Calling pharmaceutical companies' profits "obscene," congressional supporters of legislation that would regulate drug prices urged their colleagues yesterday to take action. "This Congress is dithering. It is sucking up to the prescription drug companies and it is not living up to its responsibilities to the American people," Rep. Brian Baird (D-Wash.) said. Sen. Paul Wellstone (D-Minn.) added, "We have an industry that makes exorbitant profit off the sickness, illness and misery of people. That is obscene." Wellstone, Baird and others yesterday brandished charts of figures released last month in Fortune magazine's annual Fortune 500 compilation, showing that drug company profits "outstripp[ed] those of virtually every other industry" (CongressDaily/A.M., 5/4).
The Fleecing of America?
Rep. Bernard Sanders (I-Vt.) said an analysis of the new profit numbers provides evidence that drug companies are "continuing to fleece Americans while working to kill major prescription drug legislation in Congress." According to Sanders' comparison, the top seven pharmaceutical companies earned "more in pure profit" than the top seven firms in the auto, oil, airline and media industries. Merck's 18.9% profit-to-revenue ratio was "the highest margin of any" U.S. industry, Sanders said. He added: "[T]hese figures show [that] the industry is pocketing the largest profit margin of any industry in the nation, with these profits far outweighing their spending on research and development. Make no mistake about it, there is a direct connection between the drug companies' massive profits and Americans being charged the highest prices for prescription drugs in the world." Sanders and others want to pass the International Prescription Drug Parity Act, which would authorize pharmacists, wholesalers and distributors to reimport drugs from other countries, provided they meet strict FDA standards (Sanders release, 5/3).