The drug industry and its surrogates love to repeat the ridiculous line that the 340B drug discount program “is being exploited by rich hospitals to boost their bottom lines.” Drug companies, they claim, are “incurring heavy losses from 340B abuse,” as one drug company apologist recently put it.
SNHPA has created an infographic that sets the record straight. It compares the Top 12 Fortune 500 drug companies’ profits with the average operating margin for U.S. nonprofit hospital systems. We encourage you to circulate it widely.
So, what’s the real bottom line when it comes to 340B and profits?
Nonprofit hospital systems are struggling to stay above water. Their average operating margin is 2.2 percent.
That’s hardly a portrait of rich, exploitative hospitals, is it?
And how are big drug companies faring? Pfizer’s profit margin is above 40 percent. Gilead Sciences, the infamous maker of the $1,000-a-dose drug Sovaldi, has a profit margin above 25 percent. Amgen, Biogen Idec, Celgene, AbbVie, and Lilly all have margins above 20 percent.
Pfizer is “padding its bottom line” (to borrow phrase from Big Pharma) with more than $22 billion in profits. Johnson & Johnson is “pocketing” nearly $14 billion, Amgen more than $5 billion, and Lilly, AbbVie, and Merck all more than $4 billion.
Around $330 billion is spent on prescription drugs in the U.S. annually. Total sales through the 340B program add up to around $7 billion, or about 2 percent of the U.S. market.
And drug companies complain that they are incurring “heavy losses” from 340B abuse?
It doesn’t pass the smell test.