The FDA has been talking about holding pharma executives personally liable when their companies stray outside the law. The idea hasn't gained much traction, and one high-profile attempt--remember Forest Labs CEO Howard Solomon?--met a high-profile end.
But what if pharma's top executives lost their pay instead? That's what some shareholders want, according to the Wall Street Journal. Under pressure from investors, several major drugmakers have adopted new compensation policies that include clawbacks from misbehaving executives.
Eli Lilly ($LLY), Bristol-Myers Squibb ($BMY), Merck ($MRK) and Amgen ($AMGN) have expanded their powers to recoup compensation from executives, the WSJ reports. Johnson & Johnson ($JNJ) has agreed with the principle of clawbacks but hasn't worked out the details yet. The idea is to deter misconduct and punish executives who behave unethically--and even, in some cases, those who fail to stop others' misbehavior.
The clawback provisions come after years of off-label marketing settlements, many of them involving criminal fines of hundreds of millions of dollars. Lilly, Bristol-Myers, Amgen and Merck all settled up with the Justice Department, agreeing to pay hefty criminal and civil penalties for their marketing shenanigans. J&J's settlement remains pending.
Indeed, these settlements are among shareholders' beefs with pharma pay. Investors have also complained about pay packages that seemed out of whack with company performance. Institutional investors pow-wowed with these 5 drugmakers to hammer out the new clawback provisions. Pfizer ($PFE) also participated in the talks, the WSJ notes. All of the participating companies have seen their top executives on FiercePharma's highest-paid executives lists.
- read the WSJ piece
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