May 29, 2019 - Health

Shareholders' transparency proposals for Big Pharma executive pay flop

Small groups of pharmaceutical industry shareholders have pushed for companies to disclose whether higher drug prices fuel lavish bonuses for top executives. But those proposals were handily defeated.

The bottom line: The industry and its largest stockholders are not about to start self-regulating when it comes to drug prices and incentive pay packages.

Driving the news: The shareholder proposals failed by large margins at AbbVieJohnson & JohnsonPfizer and Vertex. Each company vigorously opposed them.

  • Top executives receive cash bonuses based on meeting certain targets, like revenue and earnings per share. Hitting those numbers usually requires companies to sell more drugs, raise prices or both.
  • The proposals would have urged companies to create reports detailing "the extent to which risks related to public concern over drug pricing strategies" are part of executives' bonuses, if at all.

Between the lines: The drug pricing reports would not have been required, and companies would not have been forced to make any changes to bonuses — and the proposals still failed.

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