CEOs of 7 pharmaceutical multinationals addressed the Senate Finance Committee:
Pharma execs offer Senate ideas to lower drug costs – except actually cutting prices. Executives from seven pharmaceutical companies — AbbVie, AstraZeneca, Bristol-Myers Squibb, Johnson & Johnson, Merck, Pfizer and Sanofi — are testifying before the Senate Finance Committee. The pharma executives have a number of ideas to reduce drug prices for patients, except lowering list prices. High drug prices has become a rare bipartisan issue, with lawmakers on both sides of the aisle demanding change.
One of these questions posed to the CEO of Abbvie was how much of the benefit from the 2017 tax cut did his company pass onto consumers. I guess the Senator was expecting an honest answer being “none”. But the actual answer came out that AbbVie did not get much benefit from this reduction of corporate profit tax rates. How could that be? Well – look at its past 10-K filings and you will see that AbbVie has sourced little to none of its massive profits to the U.S. parent. Why would you benefit from a tax rate cut when one is engaged in massive transfer pricing manipulation?!
PGL:
When their return for every dollar invested is $14.50 why would they care? Also half of their R&D in written off. They also use a value based analysis in setting their prices to the public such as improving health, life, population having a particular disorder, etc. They will also set according to income expectation. Who is going to challenge them? People die due to over pricing and it does not bother them. Their is an article out their from the CEO of Novartis and how he ripping off the public with his expectations.
Androgel, Humira, Vicodin are some of the biggies. A sure way to solve the tax problem is to stop their sales in the US until they pay taxes in the US. I would bet most of their drug sales are in the US.
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If India and or China (not a compulsory licensing issuer) or any group of countries would like to break American drug monopolies they can simply offer the American public enough medicine, a generic version of Harvoni, to wipe out Hep C in a single stroke for a miserly $1 billion (earning themselves a nice hundreds of millions manufacturing profit, assuming similar production costs) — but US drug patent laws would have to double-reverse their incentives to make it legal to accept the $299 billion saving, and miss out on the years of needlessly spreading disease and the 20,000 Americans who die of the disease annually.
One (of many?) possible revamps: replace US drug patent structure with government funded research on drugs and medical devices — all new drugs becoming generic. For already patented drugs, erect a regulated monopoly system similar to electric power distribution models. Harvoni, for example, having long since paid off Gilead’s (not very chancy) $11 billion dollar gamble could be immediately designated generic.
DD:
That was one proposal for 100% funding of R & D. It is already 50% funded. Unfortunately Pharma wants more than this. Similar to utility companies Pharma would be regulated under “common carrier” laws governing their status.
“If India and or China (not a compulsory licensing issuer) or any group of countries would like to break American drug monopolies they can simply offer the American public enough medicine, a generic version of Harvoni”.
Indeed one would think the arbitrage potential would be compelling. But something tells me that the lawyers of Gilead know this and have devised all sorts of ways to make sure U.S. doctors do not prescribe the generic alternatives.
Massachusetts has mandatory interchange (unless the doctor specifically requires a specific brand, sometimes the particulars of the way the branded medication is produced do differ from the generics). Is this not common in other states?
J:
Unless specified or the brand is the only one available, you are going to get generic. And yes sometimes generic can be slightly different.