Healthcare costs: pharma and insurer profits Case The Campaign for Sustainable Rx Pricing found brand-name pharmaceutical manufacturers' average net income margin was 24.8% in 2025 - 11 times higher than every other sector of the drug supply chain (distributors, retail Pharmaceutical margins versus production cost The Campaign for Sustainable Rx Pricing found brand-name pharmaceutical manufacturers' average net income margin was 24.8% in 2025 - 11 times higher than every other sector of the drug supply chain (distributors, retail pharmacies, pharmacy benefit managers, and health insurers), which averaged under 2% margins over the same period. A 2017 GAO analysis found pharmaceutical and biotech sales revenue rose from $534 billion to $775 billion between 2006 and 2015, with 67% of drug companies increasing annual profit margins over that period - some up to nearly 20%. More recent industry data puts major pharmaceutical companies' gross margin around 68% and net margin around 12-25% depending on the segment as of 2026. Industry sources note the gap between production cost and price reflects patent exclusivity (up to 20 years) and R&D/regulatory costs, not simply manufacturing expense - one industry analysis noted a bottle of 60 tablets might cost under $0.50 to produce but sell for $150-$2,000, attributing the difference to patent protection and market exclusivity rather than inflation. Insurer profits amid rising premiums and denials The five largest U.S. health insurers earned a combined $371 billion in profits since the ACA's passage in 2010, an increase of 230% - with more than 40% of that going to UnitedHealth Group alone, whose profits rose nearly 400% over the same period. UnitedHealth Group generated $34 billion in profit in 2024 (the largest of the seven biggest publicly traded insurers, which together earned $71 billion) and denied about 33% of in-network claims for ACA plans that year, per KFF data - compared to an industry-wide average denial rate of 19%. UnitedHealth raised its 2025 profit forecast to at least $16.25 adjusted earnings per share even as its medical loss ratio (share of premiums spent on actual care) sat around 89.9%, above insurers' typical target of roughly 80% - meaning the company still increased profit guidance despite paying out a higher share of premiums than targeted. At a 2025 congressional hearing, Rep. Buddy Carter (R-GA), a pharmacist, directly challenged UnitedHealth CEO Stephen Hemsley on claim denials, and Rep. Nanette Diaz Barragan (D-CA) questioned Hemsley's up-to-$60 million stock-based compensation package while patients struggle to afford premiums. Insurers attributed 2025-2026 premium hikes partly to the scheduled expiration of enhanced ACA tax credits; proposed hikes included UnitedHealthcare seeking a 66%+ increase for some New York policyholders and 37% in Washington state, while the company simultaneously spent $9 billion on stock buybacks and $7.5 billion on dividends in the prior year. Note Insurers and drugmakers attribute rising prices mainly to rising underlying costs of care, not their own margins. Sources [1] Jacobin/The Lever (https://jacobin.com/2024/12/health-insurance-profits-unitedhealthcare-aca) [2] Yahoo Finance (https://finance.yahoo.com/news/unitedhealth-lifts-2025-profit-forecast-095953873.html) [3] InsuranceNewsNet (https://insurancenewsnet.com/oarticle/congress-grills-unitedhealth-ceo-stephen-hemsley-on-claim-denials-insurance-costs) [4] eMarketer (https://www.emarketer.com/content/insurers-face-heat-over-rising-costs-unitedhealth-pledges-aca-rebates) [5] Jacobin (https://jacobin.com/2025/07/health-insurers-profits-rising-premiums) [6] CSIMarket (https://csimarket.com/Industry/industry_Profitability_Ratios.php?ind=803) [7] GAO (https://www.gao.gov/products/gao-18-40) [8] CSRxP (https://www.csrxp.org/csrxp-analysis-big-pharmas-profit-margins-climb-to-11-times-greater-than-other-sectors-in-drug-supply-chain/) Connections Related — CFPB under Vought: medical-debt protections rolled back, and who runs it now Shared theme: the cost of healthcare pushed onto families as debt. Related — Synthesis: does Trump's own conduct normalize self-dealing by others? Cited by contrast: insurer/pharma profit patterns predate this administration and are NOT shown to be caused by Trump's conduct specifically.