Manufacturers of the 10 medications listed under the novel Medicare price-negotiation program exploited patent laws to keep costs high for patients, according to a new report from the watchdog group Accountable.US.
The report comes nearly two years after President Joe Biden signed the Inflation Reduction Act and with it launched the historic Medicare negotiation program, which allows the Department of Health and Human Services to directly negotiate with drug companies to lower the prices of some of the most expensive but commonly used prescription drugs.
“Despite taking billions of taxpayer dollars for drug development, these Big Pharma companies unleashed an army of patent attorneys to keep life-saving medicine exclusive and more expensive for seniors and other patients,” Tony Carrk, executive director of Accountable.US, said in a statement.
The initial negotiation list included 10 drugs under Medicare Part D, which covers the cost of prescription drugs. When Biden announced the list, companies raced to ensure their life-saving medication remain “expensive and exclusive,” Carrk said at a press conference hosted by Accountable.US on Wednesday.
The companies bent patent law to maintain a monopoly on certain drugs and prevent competition from entering the market, the report found.
For example, Johnson & Johnson reached several confidential agreements to delay generic competition for the blood thinner Xarelto. Known as a ”pay-to-delay agreement,” this entails a company paying its competitors to not release a generic version of their drug at a lower price. Johnson & Johnson also applied for nearly 50 patents on Xarelto, a tactic known as “patent thicketing,” which creates barriers to competitors developing a similar product.
The drug Imbruvica, used to treat cancers like Leukemia, is protected by nearly 150 patents, giving manufacturers Johnson & Johnson and AbbVie market exclusivity on the drug until 2036.
Companies also used a strategy called “evergreening,” which is making “small, insignificant changes to their drugs to acquire new patents to extend their exclusivity,” according to the report.
AstraZeneca’s Farxiga is the most “evergreened” drug on the Medicare negotiation list and is protected by 36 patents until 2030. Farxiga costs over four times as much in the United States as it does in Canada or the United Kingdom, both countries where the government can negotiate for lower prices.
These tactics are a part of an apparent strategy to boost medication prices heading into negotiations with the DHHS. The negotiated prices for the 10 drugs are set to be released in September, with prices set to go into effect in 2026.
Spokespersons for AstraZeneca and Johnson & Johnson did not immediately respond to requests for comment.
“They’re negotiated to a price that is affordable for patients, but also allows for plenty of pharma profit,” Merith Basey, executive director of Patients for Affordable Drugs, said at the press conference Wednesday. “But in the United States, as we’ve heard, Big Pharma manipulates the system loopholes and extends patents far beyond their normal limits.”
The average price of the 10 drugs listed on the Medicare negotiation list is three to eight times the price of those drugs in Australia, Germany, France, the U.K., Canada and Switzerland, according to a study by the Commonwealth Fund.
Allowing Medicare to negotiate “alters the trajectory of drug pricing in the United States,” Basey said. Though price negotiation is likely to have a bigger impact over the long term, the IRA has already made a difference in the lives of Medicare Part D enrollees, even with some companies’ efforts to avoid lower prices.
Jackie Trapp, who has been treating her incurable blood cancer with Xarelto, a drug manufactured by Johnson & Johnson, said Wednesday that she cannot “overstate the significance” the legislation has had on her life.
The IRA introduced a price cap on out-of-pocket drug costs at $3,500 a year. Before the cap, the co-pay for her medication cost her $15,000-$22,000 a year. She and her husband had to sell their cars and refinance their homes to afford the medication.
But the price of Xarelto and other brand-name drugs in the United States is still extremely high. In 2022, one in five U.S. adults aged 65 or older were forced to skip or delay filing a prescription due to high drug costs.
“It’s not hyperbole to say these are life and death changes for people,” she said at the press conference.
Pharmaceutical companies have long argued that patents protect innovation and are necessary to further research and development. Yet the report points out that a good chunk of research for these drugs has been funded by tax-payers, not the companies themselves.
A study by The Institute for New Economic found the federal government spent a combined $11.7 billion on basic and applied research that led to the development of these drugs. Some $6.5 billion of that was spent on developing Stelara, a Johnson & Johnson drug used to treat Crohn’s disease, arthritis and psoriasis.
“Pharma lobbyists and lawyers continue insisting innovation depends on price-gouging seniors, even though the industry’s investment in R&D pales in comparison to their spending on politics, lobbying, and advertising,” Carrk said in a statement. “This is a stark reminder that Big Pharma won’t put seniors and other patients ahead of their profits without Medicare’s historic new authority to regulate their greed.”
We’re not backing down in the face of Trump’s threats.
As Donald Trump is inaugurated a second time, independent media organizations are faced with urgent mandates: Tell the truth more loudly than ever before. Do that work even as our standard modes of distribution (such as social media platforms) are being manipulated and curtailed by forces of fascist repression and ruthless capitalism. Do that work even as journalism and journalists face targeted attacks, including from the government itself. And do that work in community, never forgetting that we’re not shouting into a faceless void – we’re reaching out to real people amid a life-threatening political climate.
Our task is formidable, and it requires us to ground ourselves in our principles, remind ourselves of our utility, dig in and commit.
As a dizzying number of corporate news organizations – either through need or greed – rush to implement new ways to further monetize their content, and others acquiesce to Trump’s wishes, now is a time for movement media-makers to double down on community-first models.
At Truthout, we are reaffirming our commitments on this front: We won’t run ads or have a paywall because we believe that everyone should have access to information, and that access should exist without barriers and free of distractions from craven corporate interests. We recognize the implications for democracy when information-seekers click a link only to find the article trapped behind a paywall or buried on a page with dozens of invasive ads. The laws of capitalism dictate an unending increase in monetization, and much of the media simply follows those laws. Truthout and many of our peers are dedicating ourselves to following other paths – a commitment which feels vital in a moment when corporations are evermore overtly embedded in government.
Over 80 percent of Truthout‘s funding comes from small individual donations from our community of readers, and the remaining 20 percent comes from a handful of social justice-oriented foundations. Over a third of our total budget is supported by recurring monthly donors, many of whom give because they want to help us keep Truthout barrier-free for everyone.
You can help by giving today. Whether you can make a small monthly donation or a larger gift, Truthout only works with your support.