It is time to stop rewarding corporate greedposted Mon, 26 Mar 2012
Pfizer’s new head honcho brought home $25 million in compensation last year. This represents a 44 percent increase over the previous year for Ian Read, a Pfizer veteran who rose to the rank of CEO in late 2010.
What justifies Read’s extraordinary pay bump? He’s developed a new way to squeeze money out of drugs going off patent and he’s cutting costs (and employees) left and right.
Under Read, Pfizer began an unprecedented campaign to hold onto blockbuster drug Lipitor’s market share. The drug recently lost its market exclusivity, which in the past has meant a plunge in sales. Not so under Read’s reign. Despite facing generic competition and against all odds, Lipitor has continued to be profitable.
Pfizer's aggressive campaign aims to prevent consumers from switching to the generic form of the drug. Among other strategies, they are offering consumers coupons that give them dramatic discounts on Lipitor. What consumers don’t realize is that such coupon offers are temporary and result in costs being passed on to insurance companies, who may ultimately increase premiums to compensate.
In the event that consumers do choose to switch to a generic, Pfizer will still make a profit. Until June, only two generic forms of Lipitor are approved for the market. Conveniently, Pfizer is manufacturing one of them in partnership with Watson pharmaceuticals.
In addition to leading a successful scheme to cling to Lipitor’s profits, Read shrewdly slashed Pfizer’s R&D budget—saving over $1 billion. The new, streamlined Pfizer moves away from in-house drug discovery, and instead will outsource clinical research and scale back to focus on disease areas with the “greatest scientific, medical and commercial opportunity," says Read. “Commercial opportunity” seems to be the key phrase here.
Saving the company a billion dollars makes Read look like a prince in the eyes of shareholders. But the hard reality is that his R&D overhaul eradicated 4,200 Pfizer jobs. This pervasive profits over people atmosphere is not new for Big Pharma, or for multinational corporations in general, but it has gotten completely out of hand.
We read the recent op-ed by Greg Smith, former executive at Goldman Sachs, with interest last week. Smith’s piece details a callous corporate culture at Goldman Sachs, one that disregards and disrespects clients and has one exclusive agenda: generating profits.
It was a brave move on Smith’s part. We can only hope that his op-ed will resonate in the hearts of corporate America, spurring individuals to work to change this insidious culture from the inside. We won’t hold our breath, but we’ll continue our efforts to point out pharma’s unfair tactics and to fight for average Americans who can’t afford the steep prices of prescription drugs. And if all else fails, perhaps we can find a disgruntled pharmaceutical scientist to create a pill to fix the problem—a pill to give executives compassion for humanity.