Big Pharma rakes in up to 90% profit on expensive cancer treatments

Constantly rising prices mean that over 2 billion people lack access to drugs and the cost of healthcare in countries with public social security systems is skyrocketing. This jeopardises the right to health and, even in rich countries like Switzerland, risks leading to two-tiered healthcare. 

Patent-based and regulatory monopolies, with the ensuing pricing power, enable pharmaceutical companies to impose exorbitant prices. The pharmaceutical industry argues that these are necessary to hedge against the high-risk research and development (R&D) of drugs – yet at the same time it refuses to provide any transparency around actual investments made. It is challenging for researchers and specialised NGOs to estimate the amount of these investments, and both data sets and methodologies are hotly debated. For the industry and its lobbyists, this is a question of nothing less than the legitimacy of their business model. 

Astronomical yields and exploding healthcare costs 

Public Eye estimated the R&D costs and profit margins for six cancer treatments by Novartis, Roche, Johnson & Johnson, Bristol Myers Squibb and MSD Merck Sharp & Dohme. The profit margins are between 40 and 90% and far exceed those of other sectors. Drugs that are relatively new on the market are at the lower end of the scale, but they still have many years to benefit from patent protection and market exclusivity – meaning their profit margins will rise further.  

Monopolies and pricing power are theoretically supposed to guarantee that drugs are developed. However, the huge profit margins on cancer treatments – where the high-risk R&D process has already been priced in – show that pharmaceutical companies are abusing the system. The high prices of cancer treatments make a significant contribution to the companies’ astronomical returns and to the skyrocketing healthcare costs. Rationing or limitations on insurance coverage is curtailing equitable access. 

Health and access to drugs are a human right. Privatising services does not remove the state’s primary duty to protect and guarantee human rights. It must therefore exert effective oversight over the privatised provision of drugs. At the international level, efforts have long been made – most recently through the 2019 WHO Transparency Resolution – to create transparency around prices and R&D investments.  

The Swiss government must act as a matter of urgency – in favour of transparent and fair drug prices taking into account actual R&D investments – and in favour of the sustainability of the Swiss healthcare system.