Congress to drug makers: Why stock buybacks over lowered drug prices?

Members of Congress are faulting drug manufacturers for using savings from last year's tax overhaul to buy back shares rather than lower prices. More than a dozen Democrats in the House of Representatives sent letters to five big pharmaceutical companies in October saying they had benefited from recent tax cuts but kept charging high prices.

Members of Congress are faulting drug manufacturers for using savings from last year's tax overhaul to buy back shares rather than lower prices. More than a dozen Democrats in the House of Representatives sent letters to five big pharmaceutical companies in October saying they had benefited from recent tax cuts but kept charging high prices. The letters singled out certain drugs whose list prices had increased and asked their manufacturers for details about price changes and the costs of research and advertising. Drug companies responded to the letters by saying they had used their tax savings in a variety of ways beyond share buybacks, such as boosting employee compensation, investing in U.S. facilities and making donations, while also cutting the prices of some drugs. The congressional scrutiny is the latest sign that drug pricing is emerging as a leading issue in Washington. Merging the tax overhaul with drug pricing gives Democrats, in particular, an opportunity to score points with voters. Multinational drug firms were big beneficiaries from the changes, because they generate a good portion of their sales outside the U.S. and had been keeping billions of dollars overseas to avoid having to pay U.S. taxes on the sums.