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Why Are Drug Prices Rising So Much? Pharma Exec Admits 'No Other Rationale' But Profit-Making

"The industry executive said the quiet part out loud," said one outside expert in response. "Price-gouging is central to the industry business model."

Medical professionals, medical students, ACTUP New York, and their supporters held a rousing protest rally outside Pfizer World Headquarters in New York. At the beginning of this year, the corporate giant announced price increases for 40 of its drugs.

Medical professionals, medical students, ACTUP New York, and their supporters held a rousing protest rally outside Pfizer World Headquarters in New York. At the beginning of this year, the corporate giant announced price increases for 40 of its drugs. (Photo: Erik McGregor/Pacific Press/LightRocket via Getty Images)

Corporations' quest for profits is what "is driving up drug prices and nothing more."

That's according to Dennis Bourdette, M.D., chair of neurology in the Oregon Health and Science University (OHSU) School of Medicine, who co-authored a study published Monday that sought to find out companies' rationale for the escalating prices on medications for patients with multiple sclerosis.

Prices for those drugs, an accompanying press release notes, have jumped up by 10% to 15% every year for the past decade.

The study by a team of researchers at OHSU and the OHSU/Oregon State University College of Pharmacy, which appears in the journal Neurology this month, was based on interviews with four current and former pharmaceutical industry executives who had direct involvement in the pricing or marketing of MS drugs.

The executives, who were not named, laid bare the motivating factor for the surges.

"I would say the rationales for the price increases are purely what can maximize profit," sad one executive. "There's no other rationale for it, because costs [of producing the drug] have not gone up by 10% or 15%; you know, the costs have probably gone down."

Such statements, said the researchers, counter the industry's narrative that the high drug prices are an effort to recoup their research and development costs.

"The industry executive said the quiet part out loud," said Zain Rizvi, law and policy researcher with Public Citizen's Access to Medicines project, in a statement to Common Dreams. "Price-gouging is central to the industry business model."

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One executive inteviewed for the study pointed out that the U.S. is a global outlier when it comes to the price hikes. They said that "it is only in the United States, really, that you can take price increases. You can't do it in the rest of the world. In the rest of the world, prices decline with duration in the marketplace."

Maintaining or lowering the prices would give a negative impression about the medication, said one executive. "We can't come in at less," they said. "That would mean we're less effective, we think less of our product, so we have to go more."

The responses, said Bourdette, who also directs the OHSU Multiple Sclerosis Center, speak volumes.

"The frank information provided by these executives pulls back the curtain of secrecy on how drug price decisions are made," he said.

While the new study focused on MS medications, the issue of skyrocketing prices is more widespread. As economist Dean Baker of the Center for Economic and Policy Research noted last year: "The government gives drug companies patent monopolies that make it illegal for competitors to sell the same drug. These patent monopolies allow companies to charge prices that are a hundred or even a thousand times the free market price."

And other recent research backs up the case that drugmakers are relying on price hikes to drive their growth.

Thus, the need for fundamental change is clear, said Rizvi.

"This is not the case of just one bad actor. This is the case of an entirely bad system," he added. "The study underscores that we need a sea change in our drug pricing system to put public health over private wealth."

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