Big Pharma slammed for executive payouts that nearly match R&D budget

Twenty of the world’s largest pharmaceutical companies made payouts to their executives and shareholders that almost equaled the money they spent on research and development between 2020 and 2022, according to a new analysis that the People’s Vaccine Alliance released ahead of this week’s World Health Summit in Berlin. Using data from SOMO, a Dutch research agency, the alliance calculated that the 20 companies spent $377.5 billion on payouts in the form of executive compensation, distributing dividends, and buying back shares over the three years, compared to $414.6 billion spent on research and development during the COVID-19 pandemic. At the same time, pharmaceutical companies and allied governments maintain that they cannot allow for waivers on the intellectual property and trade secrets for new vaccines and therapeutics during future pandemics because it will discourage innovation. Activists argue that with profits large enough to afford these levels of payouts, which they estimate at $1 million every five minutes, there is room for more flexibility around IP, which they believe could ultimately spur broader production and accessibility in a future pandemic. They are hoping the figures will impact ongoing debates within the World Health Organization over a global pandemic treaty. “We hear that touching incentives would harm innovation, but we see how profitable this sector is,” Piotr Kolczynski, the European Union health policy and advocacy adviser for Oxfam and the alliance, told Devex. “The profit is huge. The return on investment is there. If we’ve got more rules on equitable access, it will not harm the industry’s business case.” When activists confronted Thomas Cueni, the head of the International Federation of Pharmaceutical Manufacturers and Associations, with the numbers during a panel Sunday, he suggested that “the notion that the industry is just profiteering when you look at the $13 trillion in costs of COVID-19” to the economy was misguided. Rather than “blaming and shaming” the industry, he praised companies that were willing to take significant risks by funding efforts like clinical trials for COVID-19 vaccines without any certainty they would gain approval. But he did not dispute the Alliance’s findings and he acknowledged that some steps must be taken to ensure there is greater equity in access to vaccines and therapeutics in future pandemics. The activists’ message resonated on the first day of WHS, where the state of ongoing negotiations around a pandemic treaty was a central topic of discussion. The treaty, which would be adopted by WHO member states, would attempt to create a set of rules to unify future pandemic responses while redressing some of the disparities that have emerged in previous outbreaks. Kolczynski said the alliance is backing calls from the global south for the treaty to make it compulsory to share technology, knowledge, intellectual property, and trade secrets for treatments and diagnostics that could help mitigate a future outbreak. The issue looms as a potential stumbling block for the ongoing negotiations, which are supposed to be resolved by May 2024. María Juliana Tenorio Quintero, a member of Colombia’s permanent mission to the United Nations, has been working to help facilitate ongoing discussions about IP protections in the pandemic treaty. Speaking on a WHS panel Sunday, she said “there is a clear divide between developed and developing countries. That’s the reality. It’s an elephant in the room. The divide is between non-voluntary and voluntary tech transfer.” She said the vast inequities that emerged in access to COVID-19 vaccines made it clear that “voluntary tech transfer is not enough,” though it remained essentially the only mechanism for sharing IP during the pandemic. A push spearheaded by the Indian and South African governments to temporarily remove intellectual property barriers on COVID-19 vaccines, treatments, and diagnostics — known as a TRIPS waiver — was delayed for months. A watered-down version that only applied to vaccines was only adopted by the World Trade Organization in June 2022. Many global south countries are looking for a mechanism that would trigger the removal of those barriers and increase transparency around issues such as pharmaceutical contracts and clinical trials at the outset of an outbreak. “We’re not saying we shouldn’t remove from the spectrum voluntary [transfers], we just need to take a look at different options,” Quintero said. Speaking on the same panel, Francisco Pérez-Cañado, an expert with the European Commission, said compulsory sharing was essentially a nonstarter. Instead, he said European countries are looking at options that might help incentivize voluntary transfers. “We’re not going to go to the false solution and undermine the role of innovation in the pharma industry,” he said. “We’re going to go to a better place.” With a new draft of the pandemic treaty due Monday, the IP discussion remains one of many potential hurdles to a final agreement. The panelists also pointed to issues with the inequitable distribution of global production, which left some countries without swift and guaranteed access to vaccines and treatments, concerns about financing, and the absence of guidance on how to prevent the spillover of diseases from animals to humans. But for the activists at this year’s WHS, securing the sharing of IP and other knowledge remains top of the agenda. “We hope that we will have the agreement by May,” Kolczynski said. “But it must be a strong agreement.”