Members of the Interfaith Center on Corporate Responsibility filed shareholder proposals at five U.S. pharmaceutical companies requesting the companies report how rising public concern over drug pricing is integrated into their incentive compensation practices for senior executives, said a news release from the ICCR Wednesday.
Specifically, the investors request that the companies report on "whether incentive compensation arrangements reward, or not penalize, senior executives for (i) adopting pricing strategies, or making and honoring commitments about pricing, that incorporate public concern regarding the level or rate of increase in prescription drug prices; and (ii) considering risks related to drug pricing when allocating capital."
"Our goal is to better understand what oversight these pharmaceutical company boards are exercising when executive incentives are tied so closely to profits," said Cathy Rowan, director of socially responsible investing at Trinity Health, one of the filers, in the release. "When these profits appear to be derived wholly from price hikes, it raises concerns among those of us who care about access to, and the affordability of, medicines — particularly for vulnerable populations like women, children and seniors."
The investors, which includes a mix of asset owners and asset managers, also filed separate but similar resolutions at Pfizer Inc. and Vertex Pharmaceuticals requesting the companies report on the business risks related to the "rising pressure to contain U.S. prescription drug prices," according to the release.
The ICCR is a coalition of 300 faith-based pension funds, universities and other asset owners as well as secular foundations, investment management firms, investment consulting firms and unions, representing more than $400 billion in combined assets. While the coalition has filed shareholder proposals on drug pricing before, it the first time it is filing on executive compensation related to drug pricing, a spokeswoman said in an email. The 11 companies that received proposals last year, which were not voted on, were AbbVie, Amgen, Biogen, Bristol-Myers, Eli Lilly, Gilead Sciences Inc., Johnson & Johnson, Merck & Co. Inc., Pfizer, Regeneron Pharmaceuticals Inc. and Vertex.
"Like ICCR, we are concerned about the price of medications for patients," said a spokeswoman for Eli Lilly & Co. in an email. "We're working to address concerns and to identify solutions so medicine is accessible and affordable to those who need it. We have had a productive relationship and dialog with ICCR over time and will continue to engage with them. We value this relationship and the perspective brought by shareholders on important policy matters."
A Vertex spokeswoman declined to comment. Spokesmen for AbbVie, Amgen, Biogen, Bristol-Myers Squibb and Pfizer could not immediately be reached.