Key Issues
CEO and Executive Pay
The average salary of the 10 highest paid CEO's in pharma was $21.6M USD with a total of $216M USD. Including other top-tier executives, this expands to almost half a billion dollars, from these companies alone.
What is the opportunity cost of paying these super high salaries? Would that money be better utilised in research, improving employee salaries and lowering drug prices?
Excessive Medicine Prices
Making medicines is expensive. However the profitability from many drugs is not tied to the cost of R&D, and we have seen countless examples of unwarranted medicine price jumps many years after the initial research is completed. This has led patients unable to afford medicine for a number of conditions such as Insulin for diabetes, Monoclonal Antibodies for arthritis and many others.
Stock Buybacks
The practice of stock buybacks is a way of artificially inflating the share price of a company by reducing the amount of shares on the market therefore increasing the value of remaining shares, effectively by reducing supply. Between 2012 to 2021, the 14 largest publicly-traded pharmaceutical companies spend $747 billion on stock buybacks and dividend payments. During the same period, they spent $660 billion on R&D.
CEO's and executives are incentivised to perform this activity as it greatly increases their net salary, as such a high proportion of their overall salary is paid in company stocks.
Global Medicine Access & Affordability
As a recent example, global access to Covid-19 vaccines has been unequal. As of 30 June 2022, 16% of people in low-income countries have been fully vaccinated, compared to 74% in high income states.
A study from India determined that the lowest paid government worker would require 88 and 55 days’ wages respectively, to afford medication for standard-risk leukaemia and Hogkin’s lymphommma. The situation looked even worse for patients with high-risk B-cell precursor acute lymphoblastic leukaemia with medicine cost at 225 days’ wages.
Corporate Lobbying
In 2020, the industry spent $89M on corporate lobbying just in the US, rising each presidential cycle, and a 170% increase from the past decade. The industry's policy goals of late seem to have been leading in the COVID-19 vaccination effort, opposing H.R. 3 (a bill which would give the government the ability to negotiate and cap drug prices based on an international index), and resisting government-run health care. The industry seems to believe that private sector-driven health care would ensure a quicker approval process for drugs and products entering the market and strengthening intellectual property protections. We argue that cash-to-persuade is unethical in persuading politicians away from making unbiased decisions. To make choice that are in the best interests of the electorate, pharmaceutical cash should stay out of politician's hands entirely.
