Senator Calls Tying Drugmaker CEO Pay to High Drug Price ‘Problematic’

February 27, 2019, 1:22 PM UTC

AbbVie CEO Richard Gonzalez found himself getting grilled by a Senate panel on Tuesday about executive compensation and the price of the blockbuster drug Humira.

You’ve likely heard of it, as stumbling across television commercials for Humira is easy. Pharmaceutical manufacturer AbbVie, a 2013 spin-off from Abbott Laboratories keeps them running on a regular basis, touting its effectiveness for rheumatoid arthritis, colitis, and psoriasis.

It’s also a major factor in whether the top five executives at AbbVie get a bonus. They did in 2018: 175% of their annual base pay.

“This strikes me as problematic,” said Senator Ron Wyden (D-Ore.) when questioning Gonzalez. “Would you make a smaller bonus if you dropped the price of Humira?”

Gonzalez said that the sales were “one element of a set of financial factors that were evaluated as part of my compensation.”

Humira has been the highest-selling prescription drug for years and, at this point, odds-on favorite to remain so through 2024, according to Pharmaceutical Manufacturing. Its 2017 sales were $18.3 billion, making 65% of the company’s $28.1 billion in revenue.

One secret to its success is that Humira has gained ten different approved uses from the Food and Drug Administration, including orphan drug status, as an AbbVie press release stated. The tactic of addressing a relatively rare disease gives the company additional exclusive selling time reducing competition and enabling higher prices.

A one-year course of Humira runs $60,000. That’s up from its initial $19,000 in 2012, according to the New York Times. The price tripled over six years. Overall, prescription drug prices were up 3.3% between 2017 and 2018.