Enhance Transparency Surrounding Pharmaceutical Company Profits in Minnesota

 

This bill aims to ensure all Minnesotans have unimpeded access to detailed information about the profit margins of

pharmaceutical companies. Requiring pharmaceutical manufacturers to report the portion of each drug’s sale that

constitutes profit versus production, research, and marketing costs exposes unjustified price inflation. This allows

policymakers, healthcare providers, and the general Minnesota public to fight for and obtain fair and affordable

prescription drug prices.

This bill is meant to complement 62J.84 PRESCRIPTION DRUG PRICE TRANSPARENCY, an act to mandate transparent reports on

pricing methods. This bill addresses one major weakness of the current bill that leaves a major gap in public

accountability of pharmaceutical companies: companies do not have to report on company profits, just spending. By also

requiring mandatory reporting of profits, we can better determine if a steep price hike is justifiable or an exploitive

hack.

 

 

Over the past decade, prices of prescription drugs in the United States have increased by almost 40%, according to the

U.S. Department of Health and Human Services in 2024. More specifically, in Minnesota, the average out-of-pocket cost

for a prescription rose 27% between 2018 and 2023. This significantly outpaced both inflation as well as wage growth. In

a 2024 survey, the Minnesota Department of Health found 29% of adults in Minnesota reported not buying or rationing

medications due to the high price, while 14% of adults said they have to choose between buying medications and paying

for necessities such as food or rent.

Pharmaceutical companies, on the other hand, have reported record-high profits. In 2023, the House Committee on

Oversight and Reform found that the top ten drug companies in the United States made well over $112 billion in profits

in just one year. This far exceeds any amount of money spent on the research and development of the medication. The

Kaiser Family Foundation found that brand-name drugs had profit margins of around 24%, while the cost of researching and

developing the drug was only 14% of the total revenue, revealing a 10% discrepancy.

This bill provides Minnesotans with the information that they need to hold corporations accountable by requiring

companies to report not only the costs of production, research, and marketing, but also profit margins. Greater

transparency helps prevent exploitative pricing practices, guide effective and fact-based regulation, and ultimately

makes buying life-saving medications more feasible for families across Minnesota.

 

 

Pharmaceutical Companies: A business that researches, develops, manufactures, and markets medications and other

health-related products

Prescription Drugs: A medication that requires a written order from a licensed healthcare professional

Profit Margins: The percentage of revenue that remains as profit after all costs and expenses are deducted

Department of Health and Human Services: The federal executive branch department responsible for protecting the health

of Americans and providing essential human services

Minnesota Department of Health: The state agency responsible for protecting, maintaining, and improving the health of

all people in Minnesota

House Committee of Oversight and Reform: The main investigative committee of the U.S. House of Representatives,

responsible for ensuring the efficiency, effectiveness, and accountability of the federal government

Kaiser Family Foundation: A nonpartisan, nonprofit organization that provides research, polling, and journalism on U.S.

and global health issues to inform policymakers, the media, and the public

 

 

This bill will be funded yearly through a reallocation of 0.25% of the MDH’s budget. Any additional funding needed will

be drawn from the civil penalties collected from noncompliant manufacturers due to this bill.

 

If a pharmaceutical company fails to submit an annual report by April 15th of each year, financial penalties shall be

determined based on the company's most recently filed Minnesota corporate income tax bracket. The date of April 15th

will be adjusted if it lands on a weekend or holiday in accordance with the same process of US Tax Day.

If a company is in the 3rd tax bracket (less than 100,000$), then they shall be fined 2,500 per day of non-compliance.

If a company is in the 2nd tax bracket (100,000$-999,999$), then they shall be fined 10,000$ per day of non-compliance.

If a company is in the top tax bracket (more than 1,000,000$), then they shall be fined 25,000$ per day of

non-compliance.

 

 

This bill shall go into effect on January 1, 2030.