Despite opposition from board and management, beginning this week, eleven proposals pressing for governance changes to increase health equity will go to a shareholder vote at top pharma companies.
NEW YORK, NY, MONDAY, APRIL 24, 2023 – Shareholders today announced their slate of eleven proposals for 2023 pharma proxies on the use of patents, pharma lobbying, and pricing and access strategies for COVID-19 medicines have successfully made it onto the 2023 proxies of eight pharmaceutical companies.
In nearly all cases, board and management opposed the proposals and petitioned to have them excluded from their proxies but the SEC denied their requests.
The largest group (seven proposals) requests that companies issue reports on how patents impact patients’ access to medicines. Prescription drugs—and branded specialty medicines in particular—are costly in the U.S.
Three in ten Americans report not taking their medicine as prescribed due to cost. The proposals seek to understand whether access and affordability are being considered in petitions for patent exclusivity extensions – a mainstay sector strategy to block competition and maintain high prices for branded drugs.
Shareholders will vote on this proposal at the annual general meetings (AGMs) of AbbVie (NYSE:ABBV), Eli Lilly (NYSE:LLY), Gilead (NASDAQ:GILD), Johnson & Johnson (NYSE:JNJ), Merck (NYSE:MRK), Pfizer (NYSE:PFE) and Regeneron (NASDAQ:REGN).
Given the high prices their products command absent competition, branded drug makers have a strong incentive to delay generic competition as long as possible. One commonly deployed strategy is to create “patent thickets” — numerous overlapping patents on a drug filed after the primary patent has been granted by the FDA.
This tactic allows branded drug makers to hold off generic competition for several years or more and keep their prices high.
“We support authentic innovation at pharma companies; patent thickets aren’t that,” said Meg Jones-Monteiro, ICCR’s Sr. Program Director for Health Equity. “By the time a pharma company enters a drug into the market, it has already planned its petitions for future secondary and tertiary patents to prolong its exclusivity.
These ‘patent thickets’ are quite elaborate and include things like petitions for exclusivity on the formulations, dosing, or methods of using, administering, or manufacturing a drug, which together conspires to impede primary patent expiration and lower-cost generic manufacturing.”
What is the point of innovation, if only a small percentage of Americans can gain access and afford it?” said Br. Robert Wotypka, Province of St. Joseph of the Capuchin Order, of investors’ decision to file. “Is the average U.S. taxpayer less worthy of life-saving drugs?
Our proposal seeks transparency on a process that determines what Merck considers when applying for a secondary patent after the main patent has been granted. It will not impede innovation.
The report on the ‘process’ will bring light to the covert strategy of keeping drug prices unaffordable and inaccessible to the average U.S. taxpayer.”
A second group of resolutions centers on COVID-19 product access and tech transfer that would facilitate access. COVID-19 continues to cause deaths, long-term health consequences, and economic disruption across the globe.
Johnson & Johnson and Merck shareholders will vote on proposals asking whether the companies’ receipt of government support is considered when they set their product access and pricing strategies.
Moderna and Pfizer shareholders will vote on proposals calling for the companies to share their vaccine IP and technical knowledge with manufacturers in low- and middle-income countries.
“The world is still racked by yawning inequity in accessing lifesaving COVID-19 vaccines and treatments, putting people’s lives, public health, and the global economy at risk,” said Jennifer Reid, Senior Advisor, Health and Vaccine Equity at Oxfam America.
“Meanwhile, public policymakers and the media continue to expose Big Pharma’s corporate greed and sky-high drug pricing.
The only sustainable solution to improve global access, affordability and accountability for lifesaving COVID-19 tools is for Big Pharma to share their technology, boost local manufacturing, and be much more transparent about their drug pricing, public funding, and access decisions.”
A third proposal challenges Eli Lilly and Co ($LLY), on its lobbying spending and activities, and whether they facilitate or impede equitable access to medicines. Pharmaceutical and healthcare companies spent a record $372 million on lobbying at the federal level in 2022, outstripping all other industries.
Said Laura Krausa, System Director Advocacy Programs, CommonSpirit Health, “Pharmaceutical innovation is essential to improving health and well-being, but healthier living is possible only if innovative medicines are accessible and affordable.
We want Lilly to take greater steps towards transparency about how it balances the potentially conflicting goals of access and innovation when it lobbies lawmakers.”
Johnson & Johnson and Pfizer’s AGMs will kick off the pharma AGM season on Thursday, May 27th; Regeneron will close out the pharma AGM season in early June.
To see the full text of the proposals visit our website at this link.
About the Interfaith Center on Corporate Responsibility (ICCR)
Celebrating its 51st year, ICCR is the pioneer coalition of shareholder advocates who view the management of their investments as a catalyst for social change. Its 300-member organizations comprise faith communities, socially responsible asset managers, unions, pensions, NGOs, and other socially responsible investors with combined assets of over $4 trillion.
