Press Release: Pharma Companies Block Investor Requests for Greater Transparency on Drug Pricing
Drug companies including J & J, Merck, BMS and Pfizer Seek to Silence Shareholders by Omitting Resolution on Price Transparency from Company Proxies. (Link to ICCR Press Release)
NEW YORK, NY – Thursday, March 2, 2017 – Long-term shareholders in major U.S. drug companies today expressed outrage that their attempts to elicit greater transparency around excessive price increases on critical drugs is being actively thwarted by management.
The investors are members of the Interfaith Center on Corporate Responsibility, a coalition of faith-and values-based shareholders who press for improved corporate social responsibility and have been engaging pharmaceutical companies to foster greater access and affordability of medicines.
Arguing that dramatic price increases are having a serious impact on public health, ICCR members filed shareholder proposals with major drug companies this fall seeking greater transparency about price increases for their top selling branded prescription drugs. The companies have notified the shareholders that they filed “no action” requests with the SEC, to prevent the proposals from appearing on company proxies and being voted on at their annual shareholder meetings.
Said Donna Meyer of Mercy Investment Services, “Skyrocketing drug prices have thrust pharmaceutical companies into the public eye as health care is a growing concern for the public. As shareholders concerned about the long-term prosperity of these companies, we are mystified as to why they are not willing to engage in a more fulsome discussion of pricing strategies. This active obstruction to a simple request for transparency has raised some serious concerns about their commitment to those who rely on these critical drugs versus their commitment to profits.”
The investors cite numerous examples of unethical raises on pharmaceutical prices that have damaged the pharmaceutical industry’s collective reputation and shaken public confidence. A recent Kaiser poll indicated that 74% of the public believes that the pharmaceutical industry puts profits before the needs of people. Charges of price gouging due to the Daraprim, EpiPen and other scandals made their way into the stump speeches of nearly every major presidential candidate this fall, and at least 16 states have introduced legislation calling for greater drug transparency.
Said Sr. Susan Vickers of Dignity Health, “Apart from the obvious risk to public health, we view transparency around how prices are developed as a fundamental tenet of good governance. Investors believe the information to be material, as we see continued secrecy around pricing strategies as a clearlegal, reputational and financial risk to our investments.”
A 1/24/17 article in Advertising Age cited a new multi-year, multimedia campaign launched by the trade association PhRMA said to cost “tens of millions of dollars each year” which will focus on pharma companies’ investments in research and development, a much-used industry counter argument to defend price hikes. Meanwhile, experts note that marketing spends at major pharma companies outpace R & D investments, and research shows a 14% increase in direct marketing for the medicines and remedies category in 2015 to $9.5 billion annually.
Added Meyer, “There is a significant disconnect between the actions and words of the pharmaceutical industry, which we find to be deeply troubling. Industry voices like Allergan’s Saunders and GSK’s Witty, who are explicitly calling for greater transparency around how prices are set, are in the minority and, notably, coming from outside the U.S. We are wondering when a major U.S. pharma will step up and show leadership on this issue.”
The companies that have petitioned the SEC to omit the shareholder proposals from their proxy ballots are AbbVie, Amgen, Biogen, Bristol-Myers Squibb Company, Eli Lilly and Company, Gilead Sciences, Johnson & Johnson, Merck & Co., Pfizer, and Vertex Pharmaceuticals.