The CEOs at 11 large pharmaceutical companies have made a staggering $1.57 billion over the last decade as their companies have gouged the public, a policy group charges, in a release aimed at fomenting anger at the companies.
Health Care for America Now, a Washington, DC group that favors universal medical coverage under strict federal regulation, issued the report Wednesday in response to proposals to cut back on Medicare benefits, or at least on Medicare increases.
HCAN railed against the federal law that bars Medicare from negotiating prices with drug companies, in addition to slamming the CEO profits.
“By prohibiting Medicare from getting better drug prices, the federal government is subsidizing the greed of the drug companies and their CEOs,” said Ethan Rome, executive director of HCAN. “This is why Americans pay vastly higher prices than people in other countries for identical drugs. It should not be the official policy of the United States to price-gouge our people and government – a practice that’s especially offensive when some in Washington are talking about cutting Medicare benefits to seniors and middle-class families.”
HCAN points out that violations of state and federal laws have led to a ballooning number of fines and settlements for marketing abuses, which routinely total in the billions of dollars each year.
The nonprofit group also notes that profits at the 11 companies totaled $711 billion over the last ten years. That’s a two-edged sword, as the profit was at the expense of consumers but also could be used to increase the number of jobs in the industry.
Drug companies say they need the profits to support enormous research costs, which can lead to losses of upwards of $1 billion for a single drug that never reaches the market. They also say the outsized pay for their CEOs — an average of $13 million a year per CEO, per company — is designed to attract and retain the best managers.
Both arguments are leaky, especially the CEO pay excuse. They pay those amounts because they can, and shareholders go along with it because they’re browbeaten by management and directors who say all the companies do it.
As for research costs, that’s a more complicated picture but it comes down to this: U.S. taxpayers are subsidizing the world’s drug consumers as well as investors in big drug companies. It’s not an efficient way to create jobs and wealth.