Drugmakers in Medicare negotiations spent more on shareholder payments and marketing than R&D last year: Report

A new report from the center-left watchdog group Accountable US found that most major drugmakers spent more on marketing costs and shareholder payments than on research and development (R&D).

The report looked at eight companies — Johnson & Johnson, Amgen, AstraZeneca, Bristol Myers Squibb, Eli Lilly, Merck, Novartis and Novo Nordisk — that manufacture the 10 drugs whose prices are currently being negotiated by the Centers for Medicare & Medicaid Services (CMS).

Among these eight companies, four — J&J, Bristol Myers Squibb, Novartis and Novo Nordisk — spent more on combined shareholder payments than on research and development.

Five of the companies — J&J, Amgen, AstraZeneca, Novartis and Novo Nordisk — spent more on administrative and marketing costs than developing drugs.

Merck was the sole company in the report that spent more on research and development than it did on executive compensation, marketing, administration and shareholder payments.

Most of the companies in the report, J&J, Bristol Myers Squibb, AstraZeneca, Novo Nordisk, Novartis and Merck, sued to block the government’s Medicare negotiation program. Several federal judges having ruled in favor of upholding the program.

“Big Pharma CEOs often cite investments in R&D to excuse charging U.S. seniors the highest prices in the world for life-saving medicines – but they never put that spending in proper perspective,” Accountable US Executive Director Tony Carrk said in a statement.

“The fact is, pharma industry R&D investment is vastly outpaced by billions upon billions in industry profits, rewards to wealthy investors, and on lobbying and political spending sprees,” Carrk added. “Despite what Big Pharma’s lawyers and lobbyists claim, executives could have passed record profits onto patients with more reasonable prices.”

The report also noted that several of the drugmakers have in recent years made new hefty acquisitions or have announced plans to acquire new companies. AstraZeneca, Amgen, Bristol Myers Squibb and Eli Lilly all acquired new companies in 2023 totalling roughly $38 billion in spending.

The Hill has reached out to the companies listed in the report for comment.

When reached for comment, a spokesperson for the pharmaceutical trade group Pharmaceutical Research and Manufacturers of America, whose own lawsuit against Medicare negotiation was tossed earlier this year by a federal judge, dismissed the report.

“This comparison is a myth we hear often. It often lumps together marketing with everything from shipping to distribution to office supplies,” they said.

“The truth is the biopharmaceutical industry is one of the most research-intensive industries in America. Companies invested $122 billion in R&D in 2020, and we invest six times more on average in R&D as a share of sales than all other manufacturing industries.”

— Updated May 9 at 4:38 p.m.