A new report released today by Sen. Bernie Sanders (I-Vt.), chairman of the Senate Health, Education, Labor, and Pensions (HELP) Committee, found that Americans virtually always pay far more than people in other countries for prescription drug treatments created with the help of National Institutes of Health (NIH) scientists. With few exceptions, private corporations in the U.S. have the unilateral power to set the price of medicines, even when they are developed with taxpayer-funded research. The government asks for nothing in return for its investment. As a result, the average price of new treatments over the past 20 years that NIH scientists helped invent is $111,000 – more than ten times the price that led the NIH to first introduce a reasonable pricing clause in 1989.
“What makes the greed of the pharmaceutical industry so reprehensible is the fact that the American people are paying twice for some of the most expensive prescription drugs on the market: First through their taxes and a second time at the pharmacy counter,” said Chairman Sanders. “It is unacceptable that half of new prescription drugs invented with the help of NIH scientists now cost more than $111,000. The price of some of these taxpayer-funded drugs is now over $1.9 million. Now is the time for the Biden Administration to take executive action to substantially lower the price of prescription drugs and to take on the unacceptable corporate greed of the pharmaceutical industry.”
The HELP Committee Majority Staff Report documents the pricing for treatments invented with the help of NIH scientists – the first systematic attempt to quantify the price of federally supported medicines.
The analysis traces how pharmaceutical corporations use taxpayer-funded research to develop products to sell back to those same taxpayers for exorbitant profits – a phenomenon, ubiquitous in the development, production, and commercialization of prescription drugs in the U.S., that has played a major role in Americans paying by far the highest prices in the world for lifesaving medications. The report uncovers the role of federal scientists in developing two outrageously priced treatments: Hemgenix, the world’s most expensive medicine with a $3.5 million price tag, and the cancer therapy Yescarta that costs $424,000 in the U.S., but just $212,000 in Japan.
The report finds that Hemgenix is the culmination of major scientific breakthroughs led by researchers at St. Jude Children’s Research Hospital and the NIH. However, the NIH appears to have handed over taxpayer technology while obtaining very little in return. Licensing agreements reviewed by the HELP Committee Majority Staff reveal that the NIH negotiated royalties of around 1 percent on sales, without any pricing constraints. In the case of Yescarta, the report finds that NIH scientists initially developed the cancer therapy that a small biotech company worked to refine. This company told investors it was “highly dependent on [NIH] for research and development” but was purchased by Gilead Sciences for $11.9 billion, with its CEO, Arie Belldegrun, receiving a $694 million payout.
The report also examines the steps the federal government can take to ensure pharmaceutical corporations set reasonable and affordable prices for new medicines when they benefit from taxpayer support. After a pharmaceutical company launched an AIDS drug developed with the help of NIH scientists at $10,000 per year, the NIH responded in 1989 by inserting a “reasonable pricing clause” into contracts when taxpayers supported new drugs, according to the report. The clause was withdrawn six years later after industry pressure. In addition, during the COVID-19 pandemic, the federal government included in some contracts a “most favored nation” obligation that required pharmaceutical companies to charge the U.S. government the lowest price among G7 countries, like Canada, the U.K., France, and Japan, for initial vaccine doses. The report concludes the federal government should reinstate and strengthen a “reasonable pricing clause” in all future research agreements to protect American taxpayers – an action that Sanders has urged the Biden Administration to take.
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