Tuesday, July 25, 2017

Big Pharma CEO Pay

Since the Affordable Care Act (ACA) passed in 2010, the CEOs of 70 of the largest U.S. healthcare companies cumulatively have earned $9.8 billion far outstripping the wage growth of nearly all Americans.

 In 2015, when 70 healthcare CEOs collectively made $2 billion. That was an average of about $28.5 million per CEO and a median of about $17.3 million per CEO. The median household income in 2015 was $56,515, which the average healthcare CEO made in less than a day.

John Martin, former CEO of the pharma giant Gilead Sciences pulled in $863 million in the "ACA era."

Despite President Donald Trump's repeated insistence that Obamacare has been a "nightmare" and that the entire system is collapsing, The ACA has not hurt the healthcare industry. Stock prices have boomed, and CEOs took home nearly 11 percent more money on average every year since 2010.

 A gigantic portion of what CEOs make comes in the form of vested stock, and those incentives drive their decision-making. This means that CEOs are incentivized not to take actions that would benefit the healthcare system overall, but rather to inflate stock prices using methods such as repurchasing shares or issuing dividends to shareholders. Such moves lead to higher salaries for CEOs. Stock-heavy pay drives CEOs to do the exact opposite of their buzzword-laden goals of creating a 'patient-centered' health system that focuses on 'value.'

This says it all about the entire capitalist system.


No comments: