SUMMARY: Make no mistake about it; change is coming to healthcare. What that change will entail and actually look like is anybody’s guess but pharma companies cannot continue to ignore the prevailing wind of change.
PhRMA posted some Tweets about drug “innovation” and 99.9% of the comments were anti-pharma. With an election just over a year away rising healthcare costs are a hot button political issue. Yet, pharma continues to spit in the prevailing wind.
Over the last year, more than 3,400 drugs have boosted their prices, an increase of 17% in the number of drug hikes from a year earlier. The average price hike is 10.5% or 5 times the rate of inflation.
Then there is pharma CEO compensation. The typical CEO in the drug industry earned $5.7 million in total compensation last year, up 39% from the median figure for 2017. Averaged, however, CEO pay across the group came in at $7.2 million, pulled higher by lofty pay packages for heads of the leading pharma and biotech companies
Then there are the tax cuts. The ten largest U.S. based pharmaceutical companies — Pfizer, Merck, Johnson & Johnson, Gilead, AbbVie, Amgen, Bristol-Myers Squibb, Eli Lilly, Celgene, and Mylan shows that in its early days, the new tax law has been almost entirely a boon to shareholders. Five drug companies alone have announced $45 billion in stock buybacks — accounting for 21% of the most massive stock buybacks announced this year.
In 2017, Pfizer’s board of directors was throwing money at CEO Ian Read to persuade him to stay at least through March of this year. His total compensation jumped more than 60% to $27.9 million, though a lot of that came from equity-based incentives.
How can you reconcile all this with an angry public?
A forward-thinking pharma CEO should make it his/her priority to concentrate on serving patients while telling Wall Street that good patients lead to good revenue. With company-sponsored health insurance set to increase again in 2020, anger is only going to grow.
The “get the money now while we can” business model is unsustainable. Why pharma can’t see this is beyond reason.