Press Release

PhRMA Statement on Misleading Reports About Price Growth

PhRMA April 30, 2013

Washington, D.C.(November 18, 2009) — Pharmaceutical Research and Manufacturers of America(PhRMA) Senior Vice President Ken Johnson issued the following statement today: 

“It’s pretty obvious that the calls to hold hearings or involve GAO are based on the misleading use of statistics and sensationalized media reports. Contrary to AARP’s claims, the government’s Consumer Price Index shows prescription drug prices grew by 2.7% during the 12-month period ending in September. That’s half of the 5.4% cited by AARP and completely in line with current medical inflation, which grew to 3% during the period. Clearly, AARP has been trying to muddy the waters – for its own political gain – as we enter the homestretch of the health care reform debate.

“Another case in point: prices posted on for AARP’s own Medicare Part D plans show that average annual growth for the top-selling drugs – as identified by AARP – was 3.3% over the last three years. In contrast, AARP’s watchdog reports show price trends for these very same drugs which imply that the average annual price growth is more than twice as high, or 7.4%, over this same period of time. So what else is AARP exaggerating?

“Here’s the real truth: financial results for nearly a dozen of our companies show zero revenue growth in the third quarter and -3% year to date. And it doesn’t appear to get much better down the road. For instance, if you look at aggregate data in a recent Credit Suisse report, you will see only 2% revenue growth projected for our industry over the next five years.

“What’s more, an analysis in yesterday’s U.S. News and World Reportshows pharmaceutical companies lagging far behind other sectors when it comes to median stock performance, rising by only 2.5% over the past 12 months compared to 27% for the overall S&P 500 and 34% for hospitals and health insurers. And finally, according to Forbesmagazine, 58,000 jobs in our industry have been lost so far this year because of the economy and sluggish sales, due – in large part – to an ever-growing increase in the use of generics.

“Companies make price adjustments independently as the result of market forces, which include everything from patent expirations to the huge, sunk R&D costs which typically exceed $1 billion for a single medicine, as well as the ability of powerful purchasers to obtain large savings, benefiting patients.

“Today, prescription medicines account for only 10% of health care spending – the same as it was back in 1960. Unfortunately, medicines are always looked at as a cost and never seen as a savings – even though medicines often reduce unnecessary hospitalizations, help avoid costly medical procedures and increase productivity through better prevention and management of chronic diseases.”


The Pharmaceutical Research and Manufacturers of America (PhRMA) represents the country’s leading pharmaceutical research and biotechnology companies, which are devoted to inventing medicines that allow patients to live longer, healthier, and more productive lives. PhRMA companies are leading the way in the search for new cures. PhRMA members alone invested an estimated $50.3 billion in 2008 in discovering and developing new medicines. Industry-wide research and investment reached a record $65.2 billion in 2008

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