AbbVie CEO compensated on delaying Humira competition

  • Richard Gonzalez, C.E.O. of AbbVie, told a congressional hearing that his pay was tied to the price of the company’s drug for rheumatoid arthritis and other conditions, Humira.
  • The annual per-patient cost of Humira doubled between 2012 and 2018 to $38,000.
  • In 2016 the $3.3 billion spent on the drug by Medicare and Medicaid accounted for 31 cents of every dollar spent on Humira in the U.S.

CEO’s deserve to be rewarded for their leadership. And tying some of their pay to their company’s performance is reasonable. What’s not fair is blocking the generic version of your drug so that you and your shareholders can earn a lot more money.

Via Fierce Pharma:

In a pay package that will rank among the largest in biopharma, Gonzalez, the CEO of AbbVie, pocketed $21.27 million in 2018. Nearly 20% of that, or $3.9 million, came from a performance-based cash incentive award. That $3.9 million was smaller than the $4.33 million Gonzalez snared for 2017, but it’s still 58% more than his target award, which in itself is 1.5 times his base salary.

Using Humira sales as a critical factor to evaluate Gonzalez’s performance would make some sense; after all, the immunology megablockbuster accounts for about 60% of the company’s total revenue. But with Humira’s growth fed by price hikes and protected by aggressive patenting tactics, AbbVie has drawn increasing public scrutiny.

Humira sales, plus net revenues, operating margin and return on assets, account for about 60% in Gonzalez’s bonus review. Ironically, it was the only financial goal that AbbVie didn’t quite match up to in 2018.

This is a company that has done everything within its power to hold off competition because their drug is a cash cow. Drugmaker AbbVie is facing a putative class-action lawsuit over its array of patents shielding the blockbuster drug Humira from U.S. competition until 2023.

“AbbVie has erected significant barriers to entry to block biosimilar competition,” the complaint said. “Specifically, AbbVie has created and employed an exclusionary ‘patent thicket’ —an unlawful scheme whereby it secured over 100 patents designed solely to insulate Humira from any biosimilar competition in the U.S. for years to come.”

Humira’s annual sales exceed $16 billion. But few drugmakers are willing to challenge the more than 100 patents maker AbbVie has constructed around the medicine.

If you are reading this and it doesn’t bother you, you’re not paying attention. This is costing ALL of us a LOT of money while the CEO laughs all the way to the bank. AbbVie along with Gilead are examples of what’s really wrong with pharma.