Senator calls out drugmakers for buying back stocks rather than slashing prices for consumers

An analysis by Sen. Cory Booker, D-N.J., suggests the nation's largest pharmaceutical companies do not plan to use new tax savings to lower prescription drug prices for consumers.

For the 15-page analysis, Mr. Booker's office examined transcripts of the fourth-quarter 2017 earnings calls and other public forecasting statements of drugmakers to see their initial plans for tax benefits they are set to receive under the Republican tax bill President Donald Trump signed into law last December. The senator's staff specifically looked at the nation's 10 largest drugmakers — Pfizer, Merck & Co., Johnson & Johnson, Gilead Sciences, AbbVie, Amgen, Bristol-Myers Squibb, Eli Lilly & Co., Celgene and Mylan.

The analysis ultimately found "no evidence" the drugmakers will use their expected "windfall" from the tax plan to lower prescription drug prices.

"Not a single company has forecast lowering prescription drug prices as a direct result of the tax law, even though such actions could provide immediate relief to millions of Americans," the analysis reads. "By contrast, these companies have announced $45 billion in new stock buyback programs, with more buybacks expected to come. Out of the more than $200 billion in recent buyback announcements across all industries, five pharmaceutical companies alone accounted for approximately one-fifth of the total."

According to the analysis, AbbVie, Amgen, Pfizer and Merck & Co. each revealed a $10 billion stock buyback plan, while Celgene plans a $5 billion stock buyback program.

The analysis noted, however, that Mr. Booker's staff found some drugmakers pointed to investments in "economically productive uses" such as increases in research and development, support for employee pay and benefits, new construction and job creation, and charitable donations.    

The Pharmaceutical Research and Manufacturers of America trade group took issue with the report.

Holly Campbell, a spokesperson for PhRMA, said in a statement to NJ Advance Media the report "buries the lede."

"According to the report, these same companies have made billions in commitments to reward employees with bonuses and base pay increases, increase their venture capital investments, expand the drug development pipeline, invest in and strengthen their pension systems and support U.S.-based nonprofits including increased aid for rebuilding Puerto Rico," the statement reads.

Mr. Booker's office said in a news release the report was sent to the CEOs of the drugmakers.

 

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