The dark side of capitalism when it comes to wall street is inflating what we pay for drugs in the USA according to the NY Times. The high cost of drugs is something we as consumers continue to hear about as our healthcare premiums skyrocket. It is also something we feel as we pay for them with a high deductible plan, as we pay those high prices directly. Few of us still have plans that have a low copayment for prescription medications.
Drug companies claim that most of their profit goes into research, however, it is more likely that is going into advertising, profits which are shared with investors who are paid a dividend and the C.E.O. and the drug company executives. The incentives from wall street to make the quarterly numbers are likely the biggest driver in the high cost of drugs.
We as consumers are simply being had according to the NY Times. The management of drug companies are being rewarded at our expense which has pushed drug company prices ever higher.
We, as consumers are paying the price both for the drug and with ever increasing premiums from our insurers who also profit as they raise our premiums.
Check out this fascinating article from the NY Times
How High Drug Prices Inflate C.E.O.s’ Pay
Pharmaceutical companies say their profits fund research and innovation in new medicines, but they are spending billions to enrich shareholders and executives.
By William Lazonick and Öner Tulum
Drug company executives faced tough questions from Congress on Tuesday as they attempted to explain why, thanks to high drug prices, per capita spending on pharmaceuticals in the United States is double the average of other advanced countries. For decades, American drug makers have justified these high prices by asserting that the higher profits they generate fund research that accelerates the development of new medicines. Our data shows, however, that these companies spend every penny of their profits on distributions to shareholders in the forms of cash dividends and stock buybacks.
Because the greater part of management compensation is linked to stock price, the prime beneficiaries of this abuse of corporate profits are the executives who claim that high drug prices redound to the common good. At the same time, drug giants such as Merck and Pfizer seem to have become focused more on buying companies with successful new drugs rather than developing their own.