Drug CEOs Make Millions | Arthritis Information
After watching the program on the profit-driven pharmaceutical companies marketing practices, I thought I'd repost what the ceos of these companies are compensated, in salary and stock holdings. Mighty big business, when you consider not only their multi million dollar salaries, but the billions spent on advertising and lobbying -- though they'll tell consumers they need to charge so much for drugs cuz of research and development. Yeah, r i i i i g h t.
CEOs generally do get very large salaries and stock options. In all probability, the goverment gets half of that for starters. It probably takes another quarter million to keep up appearances. FWIW, most of these guys have a relatively short tenure, they'll do this at a couple different companies and that's it. One or two divorces along the way and some bad investments and it ain't quite as much as it looks like on the chart. Most of these guys aren't spring chickens either. Time at the top is rather short indeed.
Nice work if you can get it though. Keep the Tums handy.
Edited for Fibro fog
mab522008-05-17 19:48:12I'm not opposed to reasonable and fair compensation, but the CEOs of drug companies, some of the highest paid CEOs in the world, receive these excessive pay packages at the expense of the consumer. Now, you may say well thats business, but in this instance the consumer is the sick, often the elderly, is it conscionable to make such exhorbitant profits when so many Americans are struggling with increasing costs of health care, increasing costs of prescription drugs?
The drug companies spend billions on marketing, much more than they do on research and development. They spend more on lobbying than most other industries. Are we, as consumers, better off because of this, or worse off? The cost of prescription drugs continue to rise.
CEOs should be rewarded for doing a good job, yet in the news lately, we have read how clinical studies have not been fully disclosed in order to favorably market a new drug; how some new expensive drugs are no better than cheaper generic drugs; how drug companies employees write reports, get a physician to put his name on it, and publish it in a medical journal to influence doctors to prescribe their new drug; how drug lobbyists lied about the actual cost of Medicare Part D in order to get it passed through Congress. Is this good business? Should these drug companies CEOs be rewarded with multimillion dollar pay packages for these type of practices? They are not in the business of selling soap or computers, they are selling prescription medication, that people need in order to continue to work, in order to care for their families, to not become disabled, to not become sicker, in some instances to not die. Yet, because of the price of drugs, some of these people go without. And CEOs of drug companies are some of the highest paid in the world. I'm sorry, I cannot share your sympathetic viewpoint of CEOs.
Joie2008-05-18 09:23:49
[QUOTE=mab52]
CEOs generally do get very large salaries and stock options. In all probability, the goverment gets half of that for starters. It probably takes another quarter million to keep up appearances. FWIW, most of these guys have a relatively short tenure, they'll do this at a couple different companies and that's it. One or two divorces along the way and some bad investments and it ain't quite as much as it looks like on the chart. Most of these guys aren't spring chickens either. Time at the top is rather short indeed.
Nice work if you can get it though. Keep the Tums handy.
Edited for Fibro fog
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Dude, you've lost me. All this time, I thought CEOs were being compensated for running a profitable company. So what you are saying is that the salary is for them to keep up appearances, dump their wives, and make bad investments? Are you saying they are actually compensated for being...um....it starts with an 'a'......
No what I am saying is that their salaries are not any higher than one would find elsewhere, that it's not really particularly high due to the same circumstances that face them and that they have a short time at that pay level. The drug companies compete with all other businesses for CEOs and they base salaries on revenues and market forces.
The amount that a CEO makes is a small percentage of overall revenue. It has absolutely nothing whatsoever to do with the price one pays for medications. I would say that government regulations, liability lawsuits and pharmacy markups have more to do with the price one pays at the counter. And the pharmacy markups have to cover all the lawsuits and regulations they have as well.
Last year I had a prescription for an anti-nausea drug for my chemotherapy. Three tablets wrapped in a sleeve with directions carried a price tag of over 0. I needed 12 of these over the course of my chemo. Fortunately my prescriptions were largely covered by insurance. I paid each time. Any guess how much the insurance company paid? Sure wasn't 0. Probably less than half of that.
Here are some excerpts from a Los Angeles Times article about the CEO of the drug company Amgen. Not only are shareholders angry w/him, but one of their major anemia drugs has caused tumors in some patients. You say lawsuits are driving up costs, well what if you or a family member were a victim of one of these drugs, if the drug company was at fault or negligible, wouldn't you want justice?
Amgen CEO tries to inject optimism into shareholder meeting
Kevin Sharer tells often-hostile investors that the company is off to a good start this year.
By Daniel Costello, Los Angeles Times Staff Writer
May 8, 2008
The beleaguered chief executive of biotech giant Amgen Inc. confronted an often testy group of shareholders Wednesday, his first annual meeting with investors since the company's fortunes took a hard turn last summer.
"Last year was awful. I deeply, deeply regret that," Kevin Sharer said, appearing calm and confident during an hourlong presentation to an audience of several hundred at the Four Seasons Hotel in Westlake Village.
Several questions focused on the chief executive's nearly .2-million compensation last year, which included a car and driver and personal use of the company's plane.
In all, his pay was nearly 29% less than his 2006 compensation.
Theodore Goldberg, a 73-year-old retired Los Angeles accountant, said he believed the board should consider changing Amgen's management in light of its poor financial performance and Sharer's compensation.
"The board has a fiduciary duty to protect stockholders," Goldberg said before receiving loud applause.
Sharer has been Amgen's chief executive since 2000; he has been chairman of the board of directors since 2001.
Now, the company is increasingly at risk of losing its place atop the spectacularly lucrative but equally treacherous biotech industry.
Studies have suggested that the company's lucrative anemia drugs, Aranesp and Epogen, can increase tumor growth in some cancer patients, especially at higher doses.
The medications accounted for more than half the company's profit in recent years.
For complete article see:
Joie2008-05-18 12:20:46MAB,
I respectfully disagree with you. Perhaps compensation of CEOs of drug companies is comparable to some CEOs of other industries, though drug companies are some of the most profitable industries in the US and their CEOs some of the highest paid. In the link in the first post of the list of ceo salaries, you will note that most of them are in the top 250 revenue producing US companies. But you are right in that their compensation is comparable to other CEOs, ALL of whom in the last 20 years have seen huge increases in pay package.
Excerpts from link listed below:
"... compensation for top executives has grown at an unprecedented rate in the past two decades resulting in a dramatic increase in the ratio between the compensation of executives and rank-and-file employees. "
"The chief executive officers of large U.S. companies averaged .8 million in total compensation in 2006, more than 364 times the pay of the average U.S. worker, according to the latest survey by the United for a Fair Economy.[2]
Boards of directors are responsible for setting CEO pay. Frequently, however, directors award compensation packages that go well beyond what is required to attract and retain executives and reward even poorly performing CEOs. These executive pay excesses come at the expense of shareholders, as well as the company and its employees.
According to a recent study by ERI Economic Research Institute and The Wall Street Journal, executive compensation grew substantially faster than corporate earnings in the past year. The study of 45 randomly selected public companies found that executive compensation increased 20.5 percent from a year ago, while revenues grew just 2.8 percent.[3]
During the past 12 months, overall total compensation of the highest-paid executive increased 20.5 percent while revenues increased 2.8 percent, the study found. As of February 2008, the average top executive received overall total compensation of ,813,697, according to the study. In comparison, the median pay for workers rose only 3.5 percent to ,140 in 2007, from ,892 the previous year, according to the U.S. Bureau of Labor Statistics.[4]
Moreover, while performance-based bonuses for chief executives of large public companies dropped in 2007, companies more than made up for that decline by giving out bigger discretionary bonuses and other payments not tied to a specific financial target, according to a recent study by Equilar, the executive compensation research firm.[5]
Equilar found that the median value of bonuses tied to performance fell 18.6 percent in 2007, from 9,249 to 2,717. Thanks, however, to sizable increases in discretionary awards and multi-year performance awards, overall CEO bonuses for 2007 inched up 1.4 percent to a median value of .41 million from .39 million in 2006.
Excessive CEO pay takes dollars out of the pockets of shareholders—including the retirement savings of America’s working families. Moreover, a poorly designed executive compensation package can reward decisions that are not in the long-term interests of a company, its shareholders and employees."
Fo rest of article see:
In response to your comment that government regulation is to blame for high drug prices, again I must respectfully disagree. It is because of the lack of government regulation that prices have increased. The drug lobby was successful in passing the Medicare Part D Prescription Act which bans the federal government from negotiating for lower drug prices (as the VA does). Consequently, a windfall for drug companies with taxpayers and consumers picking up the tab for overpriced prescription meds.
As far as lawsuits, if drug companies would disclose all their clinical trials findings, instead of misrepresenting them and presenting only favorable data to support their million dollar marketing campaigns (ie. Vioxx), then consumers would be safer, and not sue.
Obviously, we disagree on what contributes to increasing drug prices, but I believe we probably agree that it cannot continue, and something must be done to keep prescription meds affordable.
CEO's from any company, business, you name it, are grossly overpaid. And it isn't just what is on the paycheck, it is all of the perks that go with it and are totally tax free.
Let's see, he's the lowest paid Drug CEO on the Forbes list, rather much so and less than than last year. So we can demand that he works for say 0,000K, probably less than anyone else in the executive wing. And we can sue them if something goes wrong. So how much less do you think that drug will cost. There is no free lunch.
FWIW, Amgen is a very small young startup company that has created some very innovative drugs including one that I took on chemo. It might very well have kept me alive considering the one infection I fought off. Nowhere else in the world would they have been able to do what they did. They were entirely financed by many individual investors.
We can get all sorts of self-righteous and indignant as patients but medicine is still a business. The drug companies have an overhead that is substantially higher than most other businesses. Between the government and the lawyers and the insurance companies, it makes the drug prices high.
I'm
not defending them. I think they often make poor decisions in marketing medicines and a number of them should have never seen the light of day. Based solely on the fact that a newly developed drug gets only so many years on the market before generics are permitted, drug companies are often forced into offering products that aren't necessarily better than what's out there just to keep their stockholders happy.
If Obama wins; these CEO's will be paying an extremely large price in the end. The government will rake in a good portion of this and it will help pay for so many of these government benifit they are promising; right? You are right. On the Forbes list he is the lowest drug/biotech ceo at .97 million, his efficiency rank is 169 (efficiency rank is based on performance/pay with 175 the least efficient). Yet the Los Angeles Times lists his compensation at nearly .2-million last year, which included a car and driver and personal use of the company's plane. Geez, you don't think he got million worth of perks and services do ya?
I posted the LA Times article to make the point that the shareholders, whom he works for, were dissatisfied with his compensation package.
As far as suing, no one is going to take on a big pharmaceutical company with all their lawyers unless they have a good case, and drug companies don't pay up unless they are found guilty, or in the Vioxx case and Merck, decide to settle.
I recognize the value of these medications, they save lives, improve lives. But you make an interesting point -- "medicine is business" -- but business is about the "bottomline," making a profit. So where does that live us, with more and more struggling to pay for prescription drugs and health care, secondary to a companies shareholders? Isn't there a moral conflict here?
There are many countries, capitalist, democratic countries, Switzerland, Germany, Japan, Taiwan, that provide affordable medical care and prescription drugs to all their citizens and pay less than what the US pays for health care which leaves 47 million uninsured. One way they do that is by negotiating with pharmaceutical companies over drug prices. Switzerland's drug companies still thrive, still do research and development, and the Swiss pay less for prescription drugs than us.
US drug companies get all kinds of tax breaks, they get patent protection of up to 14 years and during that time they can charge whatever they choose. They spend billions of dollars for lobbyists to protect their interests, to "influence" representatives that are suppose to be looking out for "our" interests.
I think the real problem is that we have layer after layer of bureaucracy in the insurance business, the medical profession and the drug business. Think about it. Your doctor shells out more for malpractice insurance than most of us make. The drug companies have to pony up for whole legal departments. The health insurance companies bury the average medical practice and consumer in hours of paperwork. It takes more time to verify coverage and referrals than it does to see a doctor or get a test done. Almost none of it is done electronically which could save millions.
Our representatives have not been ours for some time. Teddy Roosevelt said
When they call the roll in the Senate, the senators do not know whether to answer ‘present’ or ‘guilty’. This apparently was going on long before there were lobbyists. Now it's considered fair game if you want to get elected to something above dog catcher.
Patent protection of 14 years is pretty lousy. Paul McCartney's first tune has better copyright protection than a drug company gets for years of unpaid labor in research and FDA gobbledygook.
[QUOTE=mab52]I think the real problem is that we have layer after layer of bureaucracy in the insurance business, the medical profession and the drug business.
Teddy Roosevelt said
When they call the roll in the Senate, the senators do not know whether to answer ‘present’ or ‘guilty’. This apparently was going on long before there were lobbyists.
Paul McCartney's first tune has better copyright protection than a drug company gets for years of unpaid labor in research and FDA gobbledygook.
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If the real problem is the layer of bureaucracy, then you must be in favor of a single, payer system.
In regards to Teddy Roosevelt, he was one of the first of many Presidents (FDR, Truman) to call for a national health insurance plan which lost momentum once the American Medical Assoc. withdrew their support and the American Federation of Labor failed to support it. Perhaps there were not registered, professional lobbyists back then, but there were definitely powerful, special interest groups.
I don't think its equitable to compare the copyright of a Beatle's tune with the patent on a drug. And if drug companies are unpaid for research, its probably cuz they got that research from a recipient of a National Institute of Health grant or a taxpayers supported public university.
Copyright or patents protect one's original (not merely rehashing something from the public school or government) investment. And they should be treated with the same respect. If those patents lasted longer, say 25 years with a licensing provision to others for generics after say 12 years, I think it would be much more viable for drug companies long term.
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