$38 Billion Spent on Acquisitions: Major Drugmakers Prioritize Shareholder Payments and Marketing Over R&D – What to Know!

Report Reveals Major Drugmakers Prioritize Shareholder Payments Over R&D Spending

Major Drugmakers Spending Habits Spark Concerns Over Medication Pricing

According to The Hill, a watchdog group has shed light on the spending habits of major drugmakers in the United States. According to the report eight prominent pharmaceutical companies allocated more funds towards shareholder payments and marketing than towards research and development (R&D) in the past year. The companies scrutinized in the report include Johnson & Johnson, Amgen, AstraZeneca, Bristol Myers Squibb, Eli Lilly, Merck, Novartis, and Novo Nordisk. These major drugmakers manufacture the ten drugs currently under negotiation by the Centers for Medicare & Medicaid Services (CMS). Shockingly four of these major drugmakers namely J&J, Bristol Myers Squibb, Novartis, and Novo Nordisk prioritized shareholder payments over R&D expenditure. Additionally, five companies including J&J, Amgen, AstraZeneca, Novartis, and Novo Nordisk spent more on administrative and marketing costs than on developing drugs. Merck stood out as the only company in the report that allocated more funds to R&D than to executive compensation, marketing, administration, and shareholder payments combined.

Interestingly, most of the major drugmakers involved in the report such as J&J, Bristol Myers Squibb, AstraZeneca, Novo Nordisk, Novartis, and Merck filed lawsuits to challenge the government’s Medicare negotiation program. Despite their efforts several federal judges ruled in favor of maintaining the program. In response to the report Tony Carrk the Executive Director of Accountable US criticized Big Pharma CEOs for justifying high drug prices by citing investments in R&D while neglecting to address other significant expenditures. Carrk emphasized that industry profits rewards to investors and lobbying efforts far exceed R&D spending. The report also highlighted the substantial acquisitions made by some drugmakers in recent years. Companies like AstraZeneca, Amgen, Bristol Myers Squibb, and Eli Lilly collectively spent approximately $38 billion on acquiring new companies in 2023.

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$38 Billion Spent on Acquisitions: Major Drugmakers Prioritize Shareholder Payments and Marketing Over R&D – What to Know! (PHOTO: Los Angeles Times)

PhRMA Spokesperson Dismisses Report on Drug Companies’ Spending Habits, Defends Industry’s Research Intensity

Furthermore, when approached for comment a spokesperson for the Pharmaceutical Research and Manufacturers of America (PhRMA) a pharmaceutical trade group dismissed the report’s findings. The spokesperson argued that the comparison between R&D spending and other expenses was misleading asserting that the pharmaceutical industry remains one of the most research-intensive sectors in the country. The discrepancy between spending on R&D and other areas raises concerns about the pricing of life-saving medications and the transparency of pharmaceutical companies’ financial priorities.

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