While Americans suffer under the disconcerting rise in prescription drug cost, pharmaceutical companies continue to offer their CEOs egregious salaries, which are then supplemented by stock option grants and cash bonuses.
The rapid increase in drug prices — 10 percent in 2015 — attracted the attention of Congress, which has scheduled two hearings on the issue since December. The U.S. House Committee on Oversight and Government Reform plans to meet on Feb. 4 to discuss the issue and, hopefully, formulate a solution.
Whenever they are questioned on the rising prices of medication, the pharmaceutical industry continually cites research and development as the primary cause. However, an analysis by the Wall Street Journal’s Jonathan Rockoff found that research and development plays no role in the eventual pricing of many drugs.
Moreover, Big Pharma spends 19 times more on marketing than the cited reason for high drug cost.
While the working class struggles to pay for life-altering medications, the CEOs and top executives of these companies are thriving. Vertex is a company which produced two cystic fibrosis treatments, Orkambi (which cost $259,000 per patient annually) and Kalydeco ( $300,000). Meanwhile, Vertex’s CEO, Jeff Leiden, received a $45.8 million pay package, on top of his salary, in 2014. In 2013, the CEO of Regeneron Pharmaceuticals was given a salary of $36.3 million. That same year, the CEO of Celgene, Robert Hugin, made $24.2 million. Those are three of many examples.
This is a uniquely American problem because America operates within a health provider framework that allows for pharmaceutical companies to maximize profits.
The cancer drug Gleevec rings in at $29,000-35,000 per year in most western European countries, a cost that is still unaffordable for most people. However, the price in America is much bleaker — about $106,000. This is not the only case of an international price gap, which can be seen with various other drugs such as Tarceva, Tykerb, Humira, Nexium and Cymbalta.
The ease with which pharmaceutical companies can exploit doctors and patients arises from flaws within our own healthcare system. Abroad, there are fewer private insurance companies with which to negotiate business. By law, our government-run healthcare systems cannot negotiate drug prices.
However, this system is detrimental to both patients and the nation. Medicare’s inability to debate prices with the sellers makes the individual have to spend more out of pocket and increases the amount of the federal budget that must be dedicated to healthcare. Also, there is no system in place for the pharmaceutical industry to be held accountable for equitable distribution of a drug. The Food and Drug Association ensures that the medication works, but there is no regulatory body, like Canada’s health ministry, to ensure fair regulation and sales.
In order to reduce the burgeoning list of atrocities committed by Big Pharma against the very people they claim to help, America must streamline a consolidated health care system, while also generating institutions to fight against exploitation and determine fair drug cost.