NEW YORK, NY, THURSDAY, AUGUST 31, 2023 – Today, investors released a statement voicing deep concern about lawsuits brought by pharma companies and trade groups to block the U.S. government’s ability to negotiate fair drug prices for Medicare beneficiaries.
The investors are predominantly faith-based members of the Interfaith Center on Corporate Responsibility and shareholders in top pharma companies who have long advocated for policies and practices that will expand access and affordability of medicines.
Investors Send A Statement To Pharma Companies
The statement, which was endorsed by 34 institutional investors, is being sent to Astellas Pharma, Inc. (OTCMKTS:ALPMY), AstraZeneca (NASDAQ:AZN), Bristol-Myers Squibb Company (LON:BMS), Johnson & Johnson (NYSE:JNJ), and Merck & Co, Inc. (NYSE:MRK) as well as trade associations PhRMA and the U.S. Chamber of Commerce, which each filed lawsuits against the Department of Health & Human Services (HHS) and the Centers for Medicare and Medicaid Services (CMS).
While the lawsuits highlight a variety of grievances – from “extortion” to “compulsory speech”, they share a common theme: that the government’s attempt to negotiate prices on behalf of millions of Medicare recipients is “unconstitutional”.
Said Christina Dorett of Seventh Generation Interfaith Coalition for Responsible Investment, “These lawsuits run afoul of the mission and values statements of each and every pharmaceutical company. Their mission is to serve the needs of patients with their innovative medicines and vaccines, but these innovative drugs are inaccessible to so many American patients due to patent exclusivities that stifle competition and keep prices exorbitantly high.
The 2022 Inflation Reduction Act requires price negotiation for a limited number of drugs, over a period of years for the benefit of American seniors under Medicare. Every other country in the world negotiates drug prices for the benefit of their citizens, but in the U.S., even though pharmaceutical companies are heavily subsidized by taxpayer dollars, these same taxpayers pay two to three times more for the very same drugs. The claims by pharmaceutical companies in the lawsuits are tactically crafted to mask the continued gaming of the patent system and now, the legal system.”
Americans Are Not Taking Medicine Due To Cost
Research shows that currently, three in ten Americans report not taking their medicines as prescribed due to cost[1]. Over the last decade or more, escalating drug costs for seniors has been a major theme in most presidential elections and there have been numerous hearings and bills introduced in Congress attempting to address the issue, yet it has proven a remarkably stubborn problem to solve through legislation.
This is due in large part to the powerful resistance of the pharma sector and its capture – through expansive and opaque lobbying and political donation campaigns[2] – of our legislative and regulatory systems.
“If these companies truly put patients and society first, then the companies should align their statements with their actions,” said ICCR’s Meg Jones-Monteiro. “The inappropriate use of corporate resources and misuse of the U.S. legal system to file these lawsuits against HHS, the largest purchaser of their products, not only contradicts the companies’ commitment to putting patients first but also undermines customer confidence.
Pharma companies should be focused on creating long-term value for patients, rather than extracting value from the government and taxpayers who have made these scientific discoveries possible.”
The investors cite the considerable press coverage of the lawsuits[3], mainly critical of the plaintiffs for prioritizing the protection of patents and profits over the health of seniors and U.S. taxpayers. They view this as a reputational risk that will undermineshareholder value.
“Every company named in these lawsuits has a public mission statement, purpose, pillars, or foundations built around saving lives and putting patients first. These lawsuits fly directly in the face of those stated values,” said Lydia Kuykendal of Mercy Investment Services. “Working to make medicines more affordable is a laudable goal for the U.S. government and we would hope that drug manufacturers would work with, not against it.
Moreover, these legal actions threaten to exacerbate the already weak reputations of the companies involved in them, therefore underming investors’ long-term value. We strongly urge those involved to reconsider their legal actions and instead look inward to examine why this law was necessary in the first place.”
About the Interfaith Center on Corporate Responsibility (ICCR)
The Interfaith Center on Corporate Responsibility (ICCR) is a broad coalition of more than 300 institutional investors collectively representing over $4 trillion in invested capital. ICCR members, a cross-section of faith-based investors, asset managers, pension funds, foundations, and other long-term institutional investors, have over 50 years of experience engaging with companies on environmental, social, and governance (“ESG”) issues that are critical to long-term value creation.
[1] https://www.kff.org/health-costs/poll-finding/public-opinion-on-prescription-drugs-and-their-prices/
[2] https://www.citizen.org/article/protecting-the-profiteer/; https://www.opensecrets.org/industries/background.php?cycle=2022&ind=h04
[3] https://www.commondreams.org/news/merck-medicare-drug-price-negotiations; https://www.vox.com/2023/6/16/23760650/medicare-big-pharma-prescription-drug-prices-lawsuit
