Drug Pricing
/Polling has found that nearly 30% of Americans say they haven’t taken their medication as prescribed due to high drug prices and research estimates that more than 1.1 million Medicare patients alone could die over the next decade because they cannot afford to pay for their prescribed medications.
For decades, members of the Interfaith Center on Corporate Responsibility (ICCR) have pressed drug companies for greater disclosures on pricing structures as a way to promote greater access to medicines, including asking companies to disclose the rates of year-to-year price increases of their top-selling branded prescription drugs and to disclose the rationale and criteria used for these price increases.Excessive drug company executive pay packages are a major contributing factor to prescription drug costs. Since the 1990s, shareholders have used shareholder proposals to urge companies such as Warner-Lambert, Eli Lilly, Bristol-Myers Squibb and Celgene Corporation selling high-priced pharmaceuticals to reduce executive compensation and take other actions to bring prices down to benefit consumers and prevent excessively high prices. Investors have also expressed concern about pharmaceutical companies’ governance structures and their boards’ ability to proactively mitigate risk related to high drug prices, such as the risks from unsustainable business models that rely on price increases for growth, or strategies to extend patents without any meaningful new science.
Patent practices of pharmaceutical companies are also a corporate tool to artificially maintain high drug prices at the expense of consumers. In 2022, a shareholder proposal filed at Gilead Sciences asked for an evaluation of how the company’s patenting policies that extend exclusive rights and prevent generic competitors impact patient access and cause higher consumer drug prices. The proposal earned 39.6% voting support from investors. Similar proposals were also filed at nine other pharmaceutical companies, including proposals at Bristol Myers Squibb and Amgen that were withdrawn due to productive dialogue, and proposals that were voted on and received significant investor support at Pfizer (30.2% vote FOR) and at AbbVie (29.5% vote FOR).
To learn more, refer to ICCR and Mercy Investment Services for detailed coverage of investor engagement with healthcare and pharmaceutical companies.