The 2018 Pharma Resolutions and List of Filers

Senior Executive Incentives - Integrate Drug Pricing Risk

2018 – AbbVie

Read the Proxy Solicitation 

RESOLVED, that shareholders of AbbVie Inc. (“AbbVie”) urge the Compensation Committee (the “Committee”) to report annually to shareholders on the extent to which risks related to public concern over drug pricing strategies are integrated into AbbVie’s incentive compensation policies, plans and programs (together, “arrangements”) for senior executives. The report should include, but need not be limited to, discussion of 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. 

Supporting Statement: As long-term investors, we believe that senior executive incentive compensation arrangements should reward the creation of sustainable long-term value. To that end, it is important that those arrangements align with company strategy and encourage responsible risk management. 

A key risk facing pharmaceutical companies is potential backlash against high drug prices. Public outrage over high prices and their impact on patient access may force price rollbacks and harm corporate reputation. Legislative or regulatory investigations regarding pricing of prescription medicines may bring about broader changes, with some favoring allowing Medicare to bargain over drug prices. (E.g., https://democrats-oversight.house.gov/news/press-releases/cummings-and-w... https://democrats-oversight.house.gov/news/press-releases/cummings-and-w...)           

We applaud AbbVie for committing not to increase prices by more than 10%. We are concerned, however, that the incentive compensation arrangements applicable to AbbVie’s senior executives may undermine that commitment. A September 2017 analyst report stated that AbbVie was considering revisiting the pricing pledge, which the report suggested could improve sales of Humira. (http://www.fiercepharma.com/pharma/abbvie-thinks-humira-biosims-are-year...) AbbVie later promised to adhere to the pledge through 2018. (http://www.fiercepharma.com/pharma/abbvie-sticks-pricing-pledge-denies-r...

AbbVie uses net revenue, income before taxes and Humira sales as metrics for the annual bonus and earnings per share (EPS) as a metric for certain long-term incentive awards to senior executives. (2017 Proxy Statement, at 35) A recent Credit Suisse analyst report stated that “US drug price rises contributed 100% of industry EPS growth in 2016” and characterized that fact as “the most important issue for a Pharma investor today.” The report identified AbbVie as a company where price increases accounted for at least 100% of EPS growth in 2016. (Global Pharma and Biotech Sector Review: Exploring Future US Pricing Pressure, Apr. 18, 2017, at 1) 

In our view, excessive dependence on drug price increases is a risky and unsustainable strategy, especially when price hikes drive large senior executive payouts. For example, media coverage of the skyrocketing cost of Mylan’s EpiPen noted that a 600% rise in Mylan’s CEO’s total compensation accompanied the 400% EpiPen price increase. (See, e.g., https://www.nbcnews.com/business/consumer/mylan-execs-gave-themselves-ra... https://www.wsj.com/articles/epipen-maker-dispenses-outsize-pay-1473786288; https://www.marketwatch.com/story/mylan-top-executive-pay-was-second-hig...

The disclosure we request would allow shareholders to better assess the extent to which compensation arrangements encourage senior executives to responsibly manage risks relating to drug pricing and contribute to long-term value creation. We urge shareholders to vote for this Proposal.

  • Trinity Health, Cathy Rowan
  • Mercy Health, Donna Meyer
  • Mercy Investment Services, Donna Meyer
  • Sisters of Providence, Mother Joseph Province, Judy Byron, OP
  • Sisters of St. Francis of Philadelphia, Tom McCaney
  • UAW Retiree Medical Benefits Trust, Meredith Miller
  • United Church Funds, Kathryn McCloskey
  • Religious of the Sacred Heart of Mary, Western American Province, Catherine Minhoto RSHM
  • Sisters of St. Joseph of Orange, Sr. Bernadette McNulty
  • Zevin Asset Management, Pat Tomaino

 

Senior Executive Incentives - Integrate Drug Pricing Risk

2018 – Amgen Inc.

Read the Proxy Solicitation

RESOLVED, that shareholders of Amgen Inc. (“Amgen”) urge the Compensation Committee (the “Committee”) to report annually to shareholders on the extent to which risks related to public concern over drug pricing strategies are integrated into Amgen’s incentive compensation policies, plans and programs (together, “arrangements”) for senior executives. The report should include, but need not be limited to, discussion of 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. 

Supporting Statement: As long-term investors, we believe that senior executive incentive compensation arrangements should reward the creation of sustainable long-term value. To that end, it is important that those arrangements align with company strategy and encourage responsible risk management. 

A key risk facing drug companies is potential backlash against high prices. Public outrage over drug prices and their impact on patient access may force price rollbacks and harm corporate reputation. Investigations regarding pricing of prescription medicines may bring about broader changes, with some favoring allowing Medicare to bargain over drug prices. (E.g., https://democrats-oversight.house.gov/news/press-releases/cummings-and-w... https://democrats-oversight.house.gov/news/press-releases/cummings-and-w...) Amgen has been criticized for price hikes on Enbrel, often timed close to increases by AbbVie on competing drug Humira. (https://www.washingtonpost.com/news/wonk/wp/2016/11/07/the-bizarre-reason-two-competing-drug-prices-rose-in-tandem/?utm_term=.987248414e13

We are encouraged by Amgen’s willingness to experiment with outcomes-based pricing for Repatha, its new cholesterol-lowering drug. (http://www.wbur.org/commonhealth/2017/05/03/amgen-repatha-refund-promise...) We are concerned, however, that the incentive compensation arrangements applicable to Amgen’s senior executives may not encourage them to take actions that result in lower short-term financial performance even when those actions may be in Amgen’s best long-term financial interests. 

Amgen uses revenue and non-GAAP net income, along with product-related goals, as metrics for the annual bonus, and earnings per share as one of the metrics for long-term incentive awards. (2017 Proxy Statement, at 58, 62) A recent Credit Suisse analyst report stated that “US drug price rises contributed 100% of industry EPS growth in 2016” and characterized that fact as “the most important issue for a Pharma investor today.” The report identified Amgen as a company where net price increases accounted for at least 100% of net income growth in 2016. (Global Pharma and Biotech Sector Review: Exploring Future US Pricing Pressure, Apr. 18, 2017, at 5) 

In our view, excessive dependence on drug price increases is a risky and unsustainable strategy, especially when price hikes drive large senior executive compensation payouts. For example, coverage of the skyrocketing cost of Mylan’s EpiPen noted that a 600% rise in Mylan’s CEO’s total compensation accompanied the 400% EpiPen price increase. (See, e.g., https://www.nbcnews.com/business/consumer/mylan-execs-gave-themselves-ra... https://www.wsj.com/articles/epipen-maker-dispenses-outsize-pay-1473786288;https://www.marketwatch.com/story/mylan-top-executive-pay-was-second-highest-in-industry-just-as-company-raised-epipen-prices-2016-09-13

The disclosure we request would allow shareholders to better assess the extent to which compensation arrangements encourage senior executives to responsibly manage risks relating to drug pricing and contribute to long-term value creation. We urge shareholders to vote for this Proposal.

 

  • Dana Investment Advisors, Ann Roberts
  • Mercy Investment Services, Donna Meyer
  • Sisters of St. Francis Charitable Trust, Sr. Judith Sinnwell, OSF
  • Sisters of St. Francis of Philadelphia, Tom McCaney
  • Trinity Health, Cathy Rowan
  • UAW Retiree Medical Benefits Trust, Meredith Miller
  • Friends Fiduciary Corporation, Kate Monahan
  • Monasterio Pan de Vida, Rose Marie Stallbaumer, OSB
  • Benedictine Sisters of Mount St. Scholastica, Rose Marie Stallbaumer, OSB


Senior Executive Incentives - Integrate Drug Pricing Risk

2018 – Biogen, Inc.

RESOLVED, that shareholders of Biogen Inc. (“Biogen”) urge the Compensation Committee to report annually to shareholders on the extent to which risks related to public concern over drug pricing strategies are integrated into Biogen’s incentive compensation policies, plans and programs (together, “arrangements”) for senior executives. The report should include, but need not be limited to, discussion of 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. 

Supporting Statement: As long-term investors, we believe that senior executive incentive compensation arrangements should reward creation of sustainable long-term value. To that end, it is important that those arrangements align with company strategy and encourage responsible risk management. 

A key risk facing pharmaceutical companies is backlash against high drug prices. Public outrage over high prices and their impact on patient access may force price rollbacks and harm corporate reputation. Legislative or regulatory investigations regarding pricing of prescription medicines may bring about broader changes. (E.g., https://democrats-oversight.house.gov/news/press-releases/cummings-and-w... https://democrats-oversight.house.gov/news/press-releases/cummings-and-welch-propose-medicare-drug-negotiation-bill-in-meeting-with

Biogen was publicly criticized in 2017 for the $750,000 first-year price tag, and $375,000 annual cost thereafter, for new spinal muscular atrophy treatment Spinraza. (E.g., https://www.npr.org/sections/health-shots/2017/08/01/540100976/drug-puts...) Congressional attention has also recently focused on the price of drugs for multiple sclerosis, including those sold by Biogen. (https://www.investors.com/news/technology/biogen-teva-slip-after-democra...

We are encouraged by Biogen’s improved transparency on pricing. We are concerned, however, that the incentive compensation arrangements applicable to Biogen’s senior executives may not encourage senior executives to take actions that result in lower short-term financial performance even when those actions may be in Biogen’s best long-term financial interests. 

Biogen uses revenue and earnings per share as metrics for the annual bonus (together with strategic goals), and revenue and free cash flow as the metrics for the cash settled performance units program. (2017 Proxy Statement, at 38-41) A recent Credit Suisse analyst report found that “US drug price rises contributed 100% of industry EPS growth in 2016” and characterized that fact as “the most important issue for a Pharma investor today.” The report identified Biogen as a company where U.S. net price increases accounted for at least 100% of 2016 EPS growth. (Global Pharma and Biotech Sector Review: Exploring Future US Pricing Pressure, Apr. 18, 2017, at 1) 

In our view, excessive dependence on drug price increases is a risky and unsustainable strategy, especially when price hikes drive large senior executive payouts. For example, media coverage noted that a 600% rise in Mylan’s CEO’s total compensation accompanied the 400% EpiPen price increase. (See, e.g., https://www.nbcnews.com/business/consumer/mylan-execs-gave-themselves-ra... https://www.wsj.com/articles/epipen-maker-dispenses-outsize-pay-1473786288; https://www.marketwatch.com/story/mylan-top-executive-pay-was-second-highest-in-industry-just-as-company-raised-epipen-prices-2016-09-13

The requested disclosure would allow shareholders to assess the extent to which compensation arrangements encourage senior executives to responsibly manage risks relating to drug pricing and contribute to long-term value creation. We urge shareholders to vote for this Proposal.

 

  • Azzad Asset Management, Joshua Brockwell
  • Sisters of St. Francis Charitable Trust, Sr. Judith Sinnwell, OSF
  • Trinity Health, Cathy Rowan
  • UAW Retiree Medical Benefits Trust, Meredith Miller
  • Mercy Investment Services, Donna Meyer
  • Northwest Women Religious Investment Trust, Judy Byron, OP
  • Boston Common Asset Management, Lauren Compere
  • Oblate International Pastoral Investment Trust, Rev. Seamus Finn
  • Domini Impact Investments LLC, Mr. Adam Kanzer

Senior Executive Incentives - Integrate Drug Pricing Risk

2018 – Bristol-Myers Squibb Company

Read the Proxy Solicitation:  

RESOLVED, that shareholders of Bristol-Myers Squibb Company (“BMS”) urge the Compensation and Management Development Committee (the “Committee”) to report annually to shareholders on the extent to which risks related to public concern over drug pricing strategies are integrated into BMS’s incentive compensation policies, plans and programs (together, “arrangements”) for senior executives. The report should include, but need not be limited to, discussion of 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. 

Supporting Statement: As long-term investors, we believe that senior executive incentive compensation arrangements should reward the creation of sustainable long-term value. To that end, it is important that those arrangements align with company strategy and encourage responsible risk management. 

A key risk facing drug companies is potential backlash against high prices. Public outrage over drug prices and their impact on patient access may force price rollbacks and harm corporate reputation. Investigations regarding pricing of prescription medicines may bring about broader changes, with some favoring allowing Medicare to bargain over drug prices. (E.g., https://democrats-oversight.house.gov/news/press-releases/cummings-and-w... https://democrats-oversight.house.gov/news/press-releases/cummings-and-w...) The high prices of some BMS cancer drugs have stirred controversy. (E.g., http://www.businessinsider.com/r-the-cost-of-cancer-new-drugs-show-succe...)           

A recent Credit Suisse analyst report stated that “US drug price rises contributed 100% of industry EPS growth in 2016” and characterized that fact as “the most important issue for a Pharma investor today.” The report identified BMS as having the “greatest risk of future pricing pressures” of major pharmaceutical firms. (Global Pharma and Biotech Sector Review: Exploring Future US Pricing Pressure, Apr. 18, 2017, at 3)      

We are concerned that the incentive compensation arrangements applicable to BMS’s senior executives may not encourage them to take actions that result in lower short-term financial performance even when those actions may be in BMS’s best long-term financial interests. BMS uses revenue and non-GAAP earnings per share, along with a pipeline goal and individual performance factors, as metrics for the annual bonus, and revenue and non-GAAP operating margin as metrics for performance share unit awards. (2017 Proxy Statement, at 43-44, 47) 

In our view, excessive dependence on drug price increases is a risky and unsustainable strategy, especially when price hikes drive large senior executive compensation payouts. For example, coverage of the skyrocketing cost of Mylan’s EpiPen noted that a 600% rise in Mylan’s CEO’s total compensation accompanied the 400% EpiPen price increase. (See, e.g., https://www.nbcnews.com/business/consumer/mylan-execs-gave-themselves-ra... https://www.wsj.com/articles/epipen-maker-dispenses-outsize-pay-1473786288; https://www.marketwatch.com/story/mylan-top-executive-pay-was-second-hig...

The disclosure we request would allow shareholders to better assess the extent to which compensation arrangements encourage senior executives to responsibly manage risks relating to drug pricing and contribute to long-term value creation. We urge shareholders to vote for this Proposal.

 

  • Boston Common Asset Management, Lauren Compere
  • Catholic Health Initiatives, Ms. Colleen Scanlon, RN, JD
  • Daughters of Charity, Province of St Louise, Donna Meyer
  • Mercy Health, Donna Meyer
  • Mercy Investment Services, Donna Meyer
  • School Sisters of Notre Dame Cooperative Investment Fund, Ethel Howley, SSND
  • Sisters of St. Francis of Philadelphia, Tom McCaney
  • Trinity Health, Cathy Rowan
  • UAW Retiree Medical Benefits Trust, Meredith Miller
  • Monasterio De San Benito, Rose Marie Stallbaumer, OSB
  • American Baptist Home Mission Society, David L. Moore Jr.
  • Friends Fiduciary Corporation, Jeffery Perkins
  • Congregation of Divine Providence - San Antonio, Texas, Sr. Patricia Regan, CDP

Senior Executive Incentives - Integrate Drug Pricing Risk

2018 – Eli Lilly and Company

Read the Proxy Solicitation.  

RESOLVED, that shareholders of Eli Lilly and Company (“Eli Lilly”) urge the Compensation Committee (the “Committee”) to report annually to shareholders on the extent to which risks related to public concern over drug pricing strategies are integrated into Eli Lilly’s incentive compensation policies, plans and programs (together, “arrangements”) for senior executives. The report should include, but need not be limited to, discussion of 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. 

Supporting Statement:  As long-term investors, we believe that senior executive incentive compensation arrangements should reward the creation of sustainable long-term value. To that end, it is important that those arrangements align with company strategy and encourage responsible risk management. 

A key risk facing pharmaceutical companies is potential backlash against high drug prices. Public outrage over high prices and their impact on patient access may force price rollbacks and harm corporate reputation. Legislative or regulatory investigations regarding pricing of prescription medicines may bring about broader changes, with some favoring allowing Medicare to bargain over drug prices. (E.g., https://democrats-oversight.house.gov/news/press-releases/cummings-and-w... https://democrats-oversight.house.gov/news/press-releases/cummings-and-w...) An October 2017 report indicated that five states and federal prosecutors are investigating insulin makers, including Eli Lilly, for anticompetitive practices related to pricing. (https://medcitynews.com/2017/10/insulin-prices-soar/)           

We applaud Eli Lilly for improving transparency on drug pricing and supporting alternative pricing approaches. We are concerned, however, that the incentive compensation arrangements applicable to Eli Lilly’s senior executives may not encourage senior executives to take actions that result in lower short-term financial performance even when those actions may be in Eli Lilly’s best long-term financial interests. 

Eli Lilly uses revenue and earnings per share (EPS) as metrics for the annual bonus and EPS growth as the metric for performance awards. (2017 Proxy Statement, at 41-42) A recent Credit Suisse analyst report stated that “US drug price rises contributed 100% of industry EPS growth in 2016” and characterized that fact as “the most important issue for a Pharma investor today.” The report identified Eli Lilly as a company where price increases accounted for at least 100% of EPS growth in 2016. (Global Pharma and Biotech Sector Review: Exploring Future US Pricing Pressure, Apr. 18, 2017, at 1) 

In our view, excessive dependence on drug price increases is a risky and unsustainable strategy, especially when price hikes drive large senior executive payouts. For example, media coverage of the skyrocketing cost of Mylan’s EpiPen noted that a 600% rise in Mylan’s CEO’s total compensation accompanied the 400% EpiPen price increase. (See, e.g., https://www.nbcnews.com/business/consumer/mylan-execs-gave-themselves-ra... https://www.wsj.com/articles/epipen-maker-dispenses-outsize-pay-1473786288; https://www.marketwatch.com/story/mylan-top-executive-pay-was-second-hig...

The disclosure we request would allow shareholders to better assess the extent to which compensation arrangements encourage senior executives to responsibly manage risks relating to drug pricing and contribute to long-term value creation. We urge shareholders to vote for this Proposal.

 

 
  • Catholic Health Initiatives, Ms. Colleen Scanlon, RN, JD
  • Daughters of Charity, Province of St Louise, Donna Meyer
  • Mercy Health, Donna Meyer
  • Mercy Investment Services, Donna Meyer
  • Trinity Health, Cathy Rowan
  • UAW Retiree Medical Benefits Trust, Meredith Miller
  • Sisters of St. Francis Charitable Trust, Sr. Judith Sinnwell, OSF
  • American Baptist Home Mission Society, David L. Moore Jr.
  • Oblate International Pastoral Investment Trust, Rev. Seamus Finn
  • Friends Fiduciary Corporation, Kate Monahan

Drug Pricing

2018 – Pfizer, Inc.

This resolution was challenged and omitted from the proxy.

RESOLVED that shareholders of Pfizer Inc. (“Pfizer”) ask the Board of Directors to report to shareholders by December 31, 2018, at reasonable cost and omitting confidential or proprietary information, on the risks to Pfizer from rising pressure to contain U.S. prescription drug prices, including the likelihood and potential impact of those risks as applied to Pfizer, the steps Pfizer is taking to mitigate or manage those risks and the Board’s oversight role. The report should address risks created by payer cost-effectiveness analysis, patient access concerns, outcomes-based pricing, and price sensitivity of prescribers, payers and patients. 

Supporting Statement: Prescription drug pricing is an urgent and high-visibility public policy issue. National media outlets tell stories of patients delaying treatment or ending up homeless due to drug costs. (E.g., http://www.npr.org/sections/health-shots/2017/03/15/520110742/as-drug-co... https://www.consumerreports.org/drugs/cure-for-high-drug-prices/) Outrage greeted Turing Pharmaceuticals’ massive increase in the price of an older AIDS drug and Mylan’s skyrocketing EpiPen price tag. (http://money.cnn.com/2016/08/25/news/economy/daraprim-aids-drug-high-pri...)      

In a 2017 Kaiser Family Foundation poll, “lowering the cost of prescription drugs” was identified as a top health care priority for the President and Congress by over 60% of Democrats and Republicans, and 58% of independents. (https://www.kff.org/report-section/kaiser-health-tracking-poll-late-apri...) In October 2017, California began requiring companies to notify regulators when they intend to raise the price of a drug by 16% or more over two years and explain why the increase is necessary. (http://www.npr.org/sections/health-shots/2017/10/04/551013546/california...)      

A recent Credit Suisse report identified Pfizer as a company where price increases accounted for at least 100% of EPS growth in 2016. (Global Pharma and Biotech Sector Review: Exploring Future US Pricing Pressure, Apr. 18, 2017, at 1) In our view, excessive dependence on drug price increases is risky and unsustainable because the impact of price increases could harm Pfizer’s reputation with the public and provoke a backlash from insurers, prescribers and regulators.      

Pfizer’s price hikes have sparked negative press attention. The press reported that Pfizer had twice raised the U.S. price of nearly 100 of its drugs in 2017 by an average of nearly 10%. (See, e.g., https://www.ft.com/content/b2e0dd80-47ab-11e7-8519-9f94ee97d996; http://thehill.com/blogs/blog-briefing-room/336161-pfizer-hikes-price-on...)      

Attention has focused on Pfizer’s subsidiary, Hospira, for raising the price of naloxone, a drug used increasingly by first responders to save lives by reversing opioid overdoses, from $9.20 for 10 one-millimeter vials in 2005 to over $200 for the same quantity in 2013. A House subcommittee held hearings on naloxone pricing in September 2016 and two Senators requested information from Pfizer about naloxone pricing. (https://www.cnbc.com/2017/01/04/as-opioid-epidemic-worsens-the-cost-of-w...)      

Pfizer’s pricing strategies have also caused problems with regulators. In late 2016, Britain’s Competition and Markets Authority fined Pfizer $106 million for hiking the price of a generic epilepsy drug by 2600%. (https://www.usatoday.com/story/money/2016/12/07/pfizer-fined-106m-2600-p...) The Authority said there was “no justification” for the price increase, given the age of the drug. (https://www.gov.uk/government/news/cma-fines-pfizer-and-flynn-90-million...)       

The disclosure requested by this Proposal will allow shareholders to better assess the risks created by Pfizer’s pricing strategy in the current environment. We urge shareholders to vote for this proposal.

 

  • Trinity Health, Cathy Rowan
  • Mercy Investment Services, Donna Meyer
  • Adrian Dominican Sisters Portfolio Advisory Board, Judy Byron, OP
  • Sisters of the Holy Names of Jesus and Mary, US Ontario Province, Judy Byron, OP
  • Sisters of Providence, Mother Joseph Province, Judy Byron, OP
  • Ursuline Sisters of Tildonk, US Province, Sr. Valerie Heinonen, o.s.u.
  • Sisters of St. Dominic of Caldwell, NJ, Sr. Patricia Daly, OP
  • Catholic Health Initiatives, Ms. Colleen Scanlon, RN, JD
  • Dignity Health, Donna Meyer
  • United Church Funds, Kathryn McCloskey
  • UAW Retiree Medical Benefits Trust, Meredith Miller
  • American Baptist Home Mission Society, Cathy Rowan
  • Miller/Howard Investments, Patricia Karr Seabrook

Drug Pricing

2018 – Vertex Pharmaceuticals Incorporated

RESOLVED that shareholders of Vertex Pharmaceuticals (“Vertex”) ask the Board of Directors to report to shareholders by December 31, 2018, at reasonable cost and omitting confidential or proprietary information, on the risks to Vertex from rising pressure to contain U.S. prescription drug prices, including the likelihood and potential impact of those risks as applied to Vertex, the steps Vertex is taking to mitigate or manage those risks and the Board’s oversight role. The report should address risks created by payer cost-effectiveness analysis, patient access concerns, outcomes-based pricing, and price sensitivity of prescribers, payers and patients. 

Supporting Statement: Prescription drug pricing is an urgent and high-visibility public policy issue. National media outlets tell stories of patients delaying treatment or ending up homeless due to drug costs. (E.g., http://www.npr.org/sections/health-shots/2017/03/15/520110742/as-drug-co... https://www.consumerreports.org/drugs/cure-for-high-drug-prices/) Outrage greeted Turing Pharmaceuticals’ massive increase in the price of an older AIDS drug and Mylan’s skyrocketing EpiPen price tag. (http://money.cnn.com/2016/08/25/news/economy/daraprim-aids-drug-high-pri...)      

In a 2017 Kaiser Family Foundation poll, “lowering the cost of prescription drugs” was identified as a top health care priority for the President and Congress by over 60% of Democrats and Republicans, and 58% of independents. (https://www.kff.org/report-section/kaiser-health-tracking-poll-late-apri...) In October 2017, California began requiring companies to notify regulators when they intend to raise the price of a drug by 16% or more over two years and explain why the increase is necessary. (http://www.npr.org/sections/health-shots/2017/10/04/551013546/california...)      

In July, Vertex increased the price of its combination drug Orkambi by five percent, costing $273,000 before discounts. (https://www.bizjournals.com/boston/news/2017/07/13/vertex-inks-another-r...)  Some business analysts have noted that the pricing practices of rare disease drug manufacturers may be facing more pushback as some payers are limiting coverage of high-cost medicines from other pharmaceutical companies. (https://www.biopharmadive.com/news/vertex-orkambi-price-increase-list-co...)      

As an example, the Toronto Globe and Mail reported that the “Canadian Agency for Drugs and Technologies has recommended, on two occasions, against public funding for Orkambi, saying there is not enough evidence of a significant clinical benefit weighed against the cost of the twice-a-day tablet regime". (https://www.theglobeandmail.com/news/british-columbia/provinces-reject-p...)      

The disclosure requested by this Proposal will allow shareholders to better assess the risks created by Vertex’s pricing strategy in the current environment. We urge shareholders to vote for this proposal.

 

  • Trinity Health, Cathy Rowan
  • Benedictine Sisters of Mount St. Scholastica, Rose Marie Stallbaumer, OSB

 

 

 

 

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