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Investors call for reports and due diligence processes to determine whether company policies and practices are hindering equitable access to medicines.
NEW YORK, NY, THURSDAY, DECEMBER 14, 2023 – Shareholders in seven of the world’s largest pharma companies announced that they have submitted proxy proposals requesting information that would help them understand the impacts of company policies on patients’ access to their branded medicines.
The shareholders are members of the Interfaith Center on Corporate Responsibility (ICCR) who have made increasing access to medicines a focus for corporate engagements with the pharma sector. In their proposals, the investors point to several studies including an analysis by the Rand Corporation, which concluded that U.S. prices for branded drugs were nearly 3.5 times higher than prices in 32 OECD member countries[1], and a study by the Kaiser Family Foundation that “consistently found prescription drug costs to be an important health policy area of public interest and public concern.”[2]
One strategy often employed by pharma companies is the use of patent extensions to block generic manufacturers from bringing lower-cost versions of the same drug to market. For example, AbbVie has raised the price of Humira, its top-selling drug, 27 times since its launch. One hundred and thirty patents, most of them secondary patents, have been granted for Humira, extending its exclusivity period by 19 years.[3]
ICCR members submitted proposals at AbbVie ($ABBV), Ely Lilly ($LLY), Gilead ($GILD), Johnson & Johnson ($JNJ), Merck ($MRK) and Pfizer ($PFE) asking the Board of Directors to establish and report on a process by which the impact of extended patent exclusivities on product access would be considered in deciding whether to apply for secondary and tertiary patents.
Said Cathy Rowan of Trinity Health who led the filings with Pfizer and Eli Lilly, “There is a big difference between the legitimate use of patents designed to protect the rights of the maker of an innovative medicine and the misuse of the patent system to delay the introduction of generic drugs, which allows the name-brand drug companies to increase the prices of existing drugs. It is shameful that in our wealthy country, one in three people say they do not take their medicines as prescribed due to costs.[4] We need to see how pharma companies are taking access concerns into account when they seek additional patents on their drugs.”
Three additional proposals seek to understand whether the business model of pharma companies may pose human rights risks. Numerous international conventions including the Universal Declaration of Human Rights, the UN Sustainable Development Goals, and the UN Guiding Principles on Business and Human Rights (UNGPs) underscore the right to quality and affordable health care as a fundamental human right. Yet, the investors argue that the current business model of the pharmaceutical sector, which in many instances prioritizes profitability over patient health, often infringes on these rights. Given pending legislation in the EU that would mandate human rights due diligence as called for in the UNGPs, the investors argue that companies undertaking human rights due diligence will be ahead of the curve. In their Pharmaceutical Equity Expectations, ICCR members ask that companies center a respect for human rights at the heart of their business.
“Access to insulin is a human right,” said Elizabeth Pfiester, Executive Director of T1International. “For too long, Eli Lilly and other insulin manufacturers have kept their insulin prices too high, which means that countless people worldwide are denied their right to health and right to life. It’s time that Eli Lilly puts people over profits and prioritizes the right to health for people with diabetes globally.”
A proposal at Pfizer requested the development of a human rights impact assessment arguing that “conducting HRDD would also enable Pfizer to identify impacts of its own operations, such as shortcomings in programs aimed at fulfilling Pfizer’s commitment to access and affordability.”
“Your life expectancy should not be determined by your address, gender, race, religion, or any other status,” said Lydia Kuykendal of Mercy Investment Services, who filed the proposal at Pfizer. “The right to the highest attainable standard of physical and mental health, as defined by the World Health Organization, has been recognized by international human rights organizations for decades. Drug manufacturers have a responsibility to operationalize a business model that promotes this right worldwide. If, as all companies in this industry state, patients are indeed the most important part of their business, this should be an achievable task and we look forward to working with them to make it a reality.”
Shareholders filed additional proposals requesting a human rights policy at Bristol Myers Squibb and Eli Lilly urging the board of directors to adopt a comprehensive human rights policy, referencing internationally recognized human rights standards, that applies to both its own operations and its suppliers that includes the right to health and establishes a process to identify, prevent, mitigate, and remedy adverse human rights impacts, above and beyond supplier audits.
“As the year comes to a close, pharmaceutical leaders are called upon to reflect on the missions of their organizations and assess whether their business practices are consistent with those visions,” said Christina Dorett of Seventh Generation Interfaith Coalition for Responsible Investment. “Might their business practices create systemic risks that exacerbate existing health inequities? When people can’t afford their medicines, they may not be able to work or take care of their families. Workplaces, families, and communities suffer a resulting economic impact – and that redounds to investors who are broadly invested in the markets. Companies need to reckon with and take responsibility for these impacts, which is why we have called for deeper business reviews.”
The investors remain open to dialogue with the companies about the main proposal requests. Meanwhile, the proposals are expected to go to a vote at annual meetings in the spring.
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. ICCR members engage hundreds of corporations annually to foster greater corporate accountability. Visit our website www.iccr.org and follow us on Twitter/X (@iccronline), LinkedIn, and Facebook.
[1] https://www.rand.org/news/press/2021/01/28.html
The post 2024 Shareholder Proposals at Pharma Companies Cite Strategies to Keep Drug Prices High as Potential Human Rights Risks first appeared on Interfaith Center on Corporate Responsibility.