Profits aren’t key to innovation – U.S. subsidies ensure stable pharma
ANDREW PEREZ and MATTHEW CUNNINGHAM-COOK ’23, September 2, “Big Pharma Is Massively Overcharging Americans,” JACOBIN, accessed July 16, 2024, https://jacobin.com/2023/09/drug-prices-profiteering-medicare-negotiation-inflation-reducation-act-big-pharma
The United States spends $45 billion annually on the National Institutes of Health (NIH), which in turn goes to fund new drug research. Every drug that the US Food and Drug Administration (FDA) approved for sale between 2010 and 2019 benefited from research funded by the NIH, according to a 2020 study from the Institute for New Economic Thinking.
Because the United States so heavily subsidizes R&D, reducing profits on top drugs by 15 to 25 percent would have a negligible effect on the number of new drugs introduced over the next decade, according to a 2021 study from the federal, nonpartisan Congressional Budget Office.
While the pharmaceutical industry claims that negotiating drug prices could reduce companies’ incentive to spend on research and development, a study last year found that, between 2012 and 2021, the largest publicly traded pharmaceutical companies spent more on stock buybacks and dividends to reward shareholders than they spent on research and development.