New Study Sees Financial Benefit of Lower Drug Prices to Institutional Investors-Even if They Hold Drug Company Stocks Themselves
Trillium Asset Management and ICCR Co-Author Research on "Universal Investing"

BOSTON, MA///April 28th, 2007 ///Broadly-diversified institutional investors-sometimes referred to as "universal investors"-can seek higher long-term portfolio returns by prompting pharmaceutical companies (or even lobbying policymakers) to lower drug prices, according to a provocative new study in the May issue of the peer-reviewed journal Corporate Governance: An International Review.

Pension funds, endowments and other institutional investors with diversified portfolios-even if those investments include pharmaceutical companies-would obtain better long-term returns if drug prices decreased, according to the study's authors from Trillium Asset Management Corporation, one of the nation's leading socially responsible investment firms, and the Interfaith Center on Corporate Responsibility (ICCR), an association of 275 faith-based institutional investors who advocate for corporate social responsibility.

In 2005, U.S. demand for pharmaceuticals was $223.5 billion, with private insurance footing half the bill. Overall, healthcare spending is 16 percent of the U.S. gross domestic product, with prescription drug prices consistently among the fastest-growing segments, the study notes.

"Health care costs are spiraling out of control, creating long-term pressure on corporate profitability and worker productivity-and high drug prices are a major reason why," says Adam Seitchik, Ph.D., CFA, chief investment officer at Trillium Asset Management Corporation and one of the study's three co-authors. "Moderation in drug prices would put some pressure on suppliers, but the buyers of prescription drugs benefit much more. Cost savings on healthcare, combined with productivity benefits, translate into higher profits and stock prices in a broad range of industries, creating a net benefit for institutional investors with diversified holdings in the U.S. stock market."

In addition to boosting corporate profits by lowering employer health care costs, lower drug prices will save consumers money and expand access to prescription drugs, according to the study. This will lead to more income for consumers and increase their spending, as well as create a healthier, more productive workforce, the authors note.

"Too many investors are focused on each of the companies they hold in isolation, missing the big-picture implications. The performance of any one company or industry only matters in the context of their overall portfolio's performance," says Steve Lippman, vice president of social research and advocacy for Trillium Asset Management and another of the study's co-authors. "This study shows that investors following conventional diversification strategies should jeer not cheer sharply rising drug prices. The narrow benefits of higher drug prices will likely be swamped by costs elsewhere in the portfolio."

The study also dispels a common refrain from drug companies: that lower drug prices will lead to cuts in research and development, stifling the discovery of new drugs and ultimately harming patients.

The authors cite five counterpoints, including statistics showing little correlation between drug prices and profits on the one hand, and pharmaceutical company research spending and productivity on the other. In addition, the study points out that drug company profits were 16 percent of revenues compared with 5 percent for all Fortune 500 companies, suggesting that drug companies can moderate prices while maintaining healthy profit margins and allocating ample resources for R&D.

The authors encourage investors to pursue shareholder advocacy, targeting engagement on companies that suffer economically from spiraling health care costs. They also call for investors to take public policy positions on the issue - emphasizing the widespread harm across the board to American business from high drug prices.

"Universal owners-including the faith-based pension funds at ICCR-will not be able to maximize long-term shareholder value unless the U.S. workforce has cost-effective access to healthcare, including critical prescription drugs," says Daniel E. Rosan, program director for public health at ICCR and a co-author of the study.

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About Trillium Asset Management Corporation

Founded in 1982, Trillium Asset Management Corporation (www.trilliuminvest.com) is a pioneer in shareholder activism and has a long track record of helping clients balance their financial and social objectives through socially responsible investing. The majority employee-owned firm caters to high-net-worth individuals and families, and to foundations, endowments, religious institutions and the entertainment industry. TAMC, the subadvisor of the Green Century Balanced Fund, has four offices in Boston, San Francisco, Durham, N.C., and Boise, Idaho, and manages over $1 billion in client assets.

About ICCR

The Interfaith Center on Corporate Responsibility is a 35-year-old international coalition of 275 faith-based institutional investors including denominations, religious communities, pension funds, healthcare corporations, foundations and dioceses with combined portfolios worth an estimated $110 billion. ICCR seeks to build a more just and sustainable society by integrating social values into corporate and investor decisions. ICCR is one of the foremost shareholder advocacy organizations in the world. More detailed information about shareholder resolutions is available from ICCR's Ethvest, the comprehensive, on-line, subscription-based, ethical investor database, and at www.iccr.org.

Note to Editors

Shareholder resolutions may be filed by any shareholder holding $2000 worth of company stock for a period of one year. Companies who feel resolutions are not appropriate may ask the staff of the SEC for permission to exclude or omit the resolution from their shareholder ballots. The SEC grants such permission if the resolution is false and misleading, deals with a personal grievance, deals with the ordinary business of the company, or for a number of other reasons.

CONTACT: Dean Mayer, 925.247.0836 (Mayer.Dean@yahoo.com) or Mari Edlin, 707.939.7121 (MLEdlin@comcast.net)

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