According to the CEO of Gilead “the approval of a drug is the culmination of many years of hard work… supported throughout by major investments with no guarantee of return”. However, in Gilead’s case, that’s an outright lie.
According to the LA Times “the evidence that Gilead itself uses its profits to “innovate” is thin at best. In 2016, the company reported profit of $13.5 billion. It spent $11 billion to repurchase its own shares, and about $2.5 billion on stock dividends. So the buybacks and dividends together came to $13.5 billion, in effect consuming 100% of the company’s profit”.
All that spending benefits shareholders—the repurchases prop up the value of their shares and enhance their gains when they sell, and dividends are, of course, a direct payout. Innovation? Gilead spent $5 billion on research and development, according to its annual report.
In 2015, a similar phenomenon reigned. Gilead recorded $18.1 billion in profit, and spent $10 billion of it on buybacks and $1.87 billion on dividends. R&D cost $3 billion. Since 2011, the Gilead board has authorized stock repurchases totaling $37 billion, of which $9 billion was still unspent as of the end of 2016.
Gilead doesn’t do much research and development itself. Instead, it has acquired firms that have done the heavy lifting and markets their successes. It acquired its blockbuster hepatitis C drug, Sovaldi, by paying $11 billion for the drug’s developer, Pharmasset, in 2011. Its promising new lymphoma treatment, which will be branded Yescarta, came via a $12-billion acquisition of that drug’s developer, Kite Pharmaceuticals, announced in August.
Evidence produced in 2015 by the Senate Finance Committee showed that Gilead executives didn’t spend much time on the consequences for patients deprived of the cure by budgetary pressures. Instead, they calculated how high they could set the price of Sovaldi without shrinking its potential market so much that total profits would fall. The executives concluded that Gilead could make a profit by charging $55,000 per 12-week treatment. But the company decided to charge $84,000, which would deliver higher profits, albeit from fewer patients. A follow-on drug known as Harvoni, which incorporates Sovaldi, was introduced in 2016 at a price close to $100,000 for a full treatment.
When I read an article like this I am left speechless. There is no doubt that pharma companies bring numerous benefits to all of us, but the level of greed, of Gilead clearly shows that the company, and its CEO don’t give a damn about patients. To them it’s about stockholders a Wall Street. This company represents everything that is wrong with big pharma.
The really sad part is that companies like Gilead give a huge black eye to the good, hard working people who really want to help patients without forcing them into bankruptcy.