Drug companies’ perennial claim that high prices are key to funding innovation is exposed as a smokescreen for disproportionate payouts to shareholders and executives in “Life Sciences? How ‘Maximizing Shareholder Value’ Increases Drug Prices, Restricts Access, and Stifles Innovation,” the first of two papers submitted by The Academic-Industry Research Network to the UN Secretary-General’s High-Level Panel on Access to Medicines, which released them on March 8. Over the decade 2005-2014, theAIRnet found, the 19 pharmas in the S&P 500 combined to spend $226 billion buying back their own shares, enough to have increased their overall R&D outlays by 51%. Used to push stock prices up, buybacks are a boon to executives, whose compensation is overwhelmingly stock based. An egregious example of what this often leads to is provided by Gilead Sciences, which charges close to $100k for a course of its hepatitis-C drugs – and handed its three highest executives a total of $434 million in compensation for 2015.
In its second submission to the UN panel, “U.S. Pharma’s Business Model: Why It Is broken, and How It Can Be Fixed,” theAIRnet asserts the “Theory of Innovative Enterprise” in order to debunk the corporate-governance ideology known as “Maximizing Shareholder Value” and to explain how and why it has done so much not only to hobble innovation in the U.S., but also to hollow out the nation’s companies generally and to downgrade or eliminate American workers’ jobs. The paper then offers recommendations for fixing the U.S. pharmaceutical industry’s broken business model – starting with banning drug makers from repurchasing their stock – and for influencing pharmaceutical companies worldwide to increase availability of and access to the innovative medicines that people around the world so desperately need.
[Click HERE to display the full list of contributions to the UN Secretary-General’s High-Level Panel on Access to Medicines]