All Five Claims in Rep. Katie Porter’s Sensationalist Report on the U.S. Drug Industry Are Factually Incorrect, New ITIF Analysis Finds

May 20, 2021

WASHINGTON—As U.S. policymakers press for legislation to lower prescription drug prices, a common justification for aggressive government intervention has been that ‘Big Pharma’ has run amok, with drug companies rapidly consolidating and prioritizing profits over innovation or patients’ best interests. This argument was on full display in a blistering staff report issued earlier this year by Rep. Katie Porter (D-CA), deputy chair of the Congressional Progressive Caucus. But on closer inspection, it turns out Porter’s report was grounded in a series of fatally flawed assertions that are contradicted by real-world data, according to a new analysis by the Information Technology and Innovation Foundation (ITIF), the leading think tank for science and technology policy.

“Over the past few years, the tide of opinion among progressives has been that the U.S. economic model needs to be fundamentally transformed, not just reformed. Rep. Porter’s factually distorted attack on ‘Big Pharma’ is emblematic of that agenda,” said Robert D. Atkinson, president of ITIF and co-author of the report. “The Porter report alleges that America’s leading biopharmaceutical companies are rapaciously consolidating in a quest for profit that is destroying innovation and harming patients—but that is an ideologically inspired attack that is grounded in assertions that are factually flawed. The truth is America’s drug-development system is working very well.”

ITIF’s analyis examines the five main thrusts of the Porter report’s indictment of the U.S. drug industry and finds that all five are factually flawed:

  • Contrary to the Porter report’s claim that industry concentration has exploded because of mergers and acquisitions, concentration has increased only modestly. The top eight firms increased their market share from 54 percent in 2002 to 58 percent in 2017—a ratio viewed by antitrust experts as unconcentrated.
  • Contrary to the report’s claims that firms are cutting research and development (R&D) because of mergers and that large drug firms in particular are disinvesting in R&D, the industry’s R&D-to-sales ratio has increased.
  • Contrary to the report’s claim that new drug innovation is declining, data from the U.S. Food and Drug Administration shows that it has been increasing.
  • Contrary to the report’s claim that drug prices are increasing dramatically and that the industry is earning excessive profits, the data shows otherwise.
  • Contrary to the assertion that the government is largely to thank for breakthrough drug development, patent and investment data show that private biopharma firms devote far more capital to develop and bring drugs to market than does government.

“The effort to demonize ‘Big Pharma’ and portray the private-sector-led drug-development system as a failure may advance a radical policy agenda, but it doesn’t contribute anything constructive to the ongoing debate about how best to find new cures or lower prescription drug prices for patients,” said Stephen Ezell, vice president of global innovation policy at ITIF and co-author of the report. “The truth is that America’s private-sector-led drug-development system—with its mix of large, midsized, and start-up firms, plus government funding for basic science—is the best in the world. Instead of upending it, policymakers should continue improving it with steps such as expanding the research and experimentation tax credit and renouncing support for the TRIPS COVID-19 IP waiver.”

Read the report.