Richard Meyer As I See It, Business of the drug industry

Pharma is big business whose goal is to maximize shareholder value

SUMMARY:

  • Pfizer asks for accelerated approval for a COVID booster shot even though the FDA says it’s unnecessary.
  • From 2016 to 2020, the 14 leading drug companies spent $577 billion on stock buybacks and dividends—$56 billion more than they spent on R&D over the same period.”
  • From 2016 to 2020, compensation for the 14 companies’ top executives totaled $3.2 billion.
  • The drug industry is driven by profits, not by patient’s needs.

According to CNN “Pfizer said Thursday it is seeing waning immunity from its coronavirus vaccine and says it is picking up its efforts to develop a booster dose that will protect people from variants. But in an unusual move, two top federal agencies said Americans don’t need boosters yet and said it was not up to companies alone to decide when they might be needed. Hours after Pfizer issued its statement, the FDA and Centers for Disease and Control issued a joint statement saying Americans do not need booster shots yet”. So who to believe?

This week an article entitles dais that Pfizer’s and Moderna’s vaccines could be seeing a “worst-case scenario.” By that, they meant that the vaccines protect too well, and there is little opportunity to make more money from booster shots. We are reminded that big pharma is a business whose only purpose is to make money.

Pharma loves to use the argument that they need high prices and new products for R&D. Still, a recent report from the Committee on Oversight and Reform U.S. House of Representatives said, “from 2016 to 2020, the 14 leading drug companies spent $577 billion on stock buybacks and dividends—$56 billion more than they spent on R&D over the same period.” In addition, the report showed:

  • Among the 14 companies examined, the eight U.S. companies spent even less on R&D compared to buybacks and dividends. One company, Amgen, spent nearly six times as much on buybacks, dividends, and executive compensation as it did on R&D in 2018.
  • From 2016 to 2020, compensation for the 14 companies’ top executives totaled $3.2 billion, with annual compensation growing by 14% over that five-year period. Some companies paid their CEOs tens of millions of dollars as they raised prices on drugs relied on by millions of Americans.
  • Many drug companies spent a significant portion of their R&D budget on finding ways to suppress generic and biosimilar competition while continuing to raise prices, rather than on innovative research.

Surprise! Big pharma is big business. It’s about getting approvals and then making money and efficacy data be damned.

The drug industry is driven by profits, not by patient’s needs. Here’s another example. In a 2015 study of 36 cancer drugs that had recently been approved, only 5 showed extended life. That is reprehensible.

I understand that pharma is big business and is run to maximum shareholder returns but please stop selling the lie that you need the money to fund R&D. It’s not true as your recent moves clearly show.