Dems aim for insurer and pharma profits

WASHINGTON — Sen. Bernie Sanders and other progressives seeking the Democratic presidential nomination are zeroing in on pharmaceutical and insurer profits, money they say would be better spent providing health care for everyone under “Medicare for All.”

Their idea: Health care dollars from government programs, employers and families that are going into the pockets of investors instead could be used to pay for services.

But research by the Associated Press suggests those dollars might not go so far. While there’s no single ledger for drugmakers and insurers, the AP found major companies had about $97 billion in profits last year. That wouldn’t even cover a couple of weeks in a health care system that costs $3.6 trillion a year.

“My view is that we are having a debate in fantasy world,” said Marc Goldwein, senior policy director with the nonpartisan Committee for a Responsible Federal Budget. “Insurer profits and excess drug costs are large in dollar terms but small relative to the size of national health expenditures.”

To be sure, Sanders and other Medicare for All advocates also acknowledge the need to raise taxes to pay for comprehensive medical care to every resident with no premiums or deductibles, and virtually no copays.

But Sanders’ legislation does not specify new revenues. Instead, the Vermont independent provides a separate list of “options” that include higher taxes on the wealthy, corporations and employers while promising the middle class will be better off.

For drugmakers, the AP asked FactSet, a global financial data firm, to run the numbers for major pharmaceutical and biotechnology companies. FactSet focused on 19 companies that are part of the Standard & Poor’s 500 stock index. Its analysis found they made $71 billion on revenues of $385.5 billion last year, with an average profit margin of 18 percent. The list included Johnson & Johnson, Merck, Gilead, Amgen and Pfizer.

The Pharmaceutical Research and Manufacturers of America said such calculations don’t convey the full picture.

Harvard University health care economist Amitabh Chandra said focusing on the profitability of major drugmakers misses a crucial part of the drug industry’s story. Many companies engaged in research and drug development don’t make money and are instead kept afloat by investors hoping for discoveries that will lead to big returns.