Blog Post

Chart of the Day: Health Care Profits Increasingly Support Shareholder Payouts

$2.6 Trillion From Publicly Traded Companies Went to Dividends and Stock Buybacks, LDI Study Shows

March 13, 2025

By:

Chris Tachibana, PhD, MS

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Figure 1. Payouts increased from health care companies that were in the Standard & Poor’s 500 Health care Index for at least one quarter, 2001-2022. Shown are payouts as total amounts and as shareholder dividends or stock buybacks in billions of U.S. dollars.

Payouts to shareholders from large, for-profit, publicly traded health care companies totaled $2.6 trillion from 2001 through 2022, LDI Senior Fellow Victor Roy and colleagues report. Over this period, the number of corporations in the study sample in a given year doubled, from 30 to about 60, but payouts increased more than 300%, from $54 billion in 2001 to more than $170 billion in 2022 (Figure 1).

“Only 19 companies—20% of our sample—were responsible for 80% of this activity,” Roy said. Those companies were mainly pharmaceutical and biotech firms and large managed care corporations. Managed care conglomerates sell insurance, own physician groups and pharmacies, and determine prescription drug costs through their pharmacy benefit managers, which negotiate drug prices with pharmaceutical companies.

For companies in the study sample, 95% of net income went to payouts. Sixty percent of the payouts were stock buybacks, in which companies purchase their own stock to increase its value. Buybacks may particularly benefit company executives who receive stock options as compensation.

Roy and colleagues studied 92 companies in the Standard & Poor’s 500 Health Care Index for at least one quarter from 2001 through 2022. The index contains the largest companies, measured by stock value. Data came from vendors of historical financial and market information. This descriptive study does not include nonprofit health systems or companies owned by private equity firms.

Pursuing Greater Investment in Health Care

The study was motivated in part by Roy’s book, Capitalizing a Cure: How Finance Controls the Price and Value of Medicines, which showed how pharmaceutical company Gilead’s profits from a hepatitis C drug mainly went to shareholders rather than future research and development. Large shareholder payouts may stimulate private capital investment in health care. However, some argue that practices like buybacks promote short-term stock trading rather than long-term investment.

Roy and colleagues also wrote an in-depth commentary on the financial sector’s growing influence on health care, complementing other research on health care profits. “Given the extent to which people experience financial burdens for an essential need like health care,” Roy said, “these payouts deserve far greater scrutiny.”

As for ways to encourage investing profits into health care delivery and innovation, Roy’s study mentions U.S. government conditions in the bipartisan CHIPS and Science Act that incentivize reinvestment rather than buybacks. “Patients want the health care system to work for them,” Roy said, “and policymakers need to take bolder steps to respond to these growing concerns.”

The study, “Shareholder Payouts Among Large Publicly Traded Health Care Companies” was published on February 10, 2025, in JAMA Internal Medicine. Authors include Victor Roy, Victor Amana, Joseph S. Ross, and Cary P. Gross.