Pharmaceutical Distributors: AmerisourceBergen (ABC), Cardinal Health (CAH), McKesson (MCK)
Retailers: CVS, Rite Aid (RAD), Walgreens (WBA), Walmart (WMT)
The Covid-19 pandemic has demonstrated how frontline and essential workers can be exposed to elevated occupational health and safety hazards during public health emergencies.
Investors for Opioid and Pharmaceutical Accountability (IOPA) believe that workers’ rights and protection must always be upheld regardless of changes to conditions. Throughout the Covid-19 pandemic, we have voiced our perspective and listened to numerous healthcare retailers and distributors with frontline and essential workers through online corporate dialogues. Some of that engagement work is detailed below.
Based on our collective experiences and lessons learned throughout this period, we have developed a set of guiding expectations for investors to proactively promote when engaging with companies in the event of future public health emergencies. These expectations are available here.
Below is an outline of our engagements with retailers and distributors which led to the development of this guidance.
First Letter to IOPA Pharma Companies Requesting COVID-19 Response at AGMs
IOPA members sent initial letters to some pharma manufacturers as well as to focus distributors and retailers; the letters requested that the Chairs of the Boards address five key COVID-19 related issues at their annual general meetings (AGM) of shareholders.
Investors expressed appreciation for the unique position of pharmaceutical companies and noted the topics in the letter are consistent with the April 8, 2020, public statement issued by the SEC’s Chair and Director of Corporate Finance, which called on companies to direct their disclosures to reflect measures they are taking to deal with financial and operational issues related to COVID-19.
The five topics investors requested companies address in the upcoming AGMs included:
1) Business and Supply Chain Continuity Plan and Pandemic Planning, including the company’s conformity with CDC, WHO and other various federal and state guidelines; which business units are continuing to function during this crisis and recovery; which business units continue to face challenges; and the overall impact on the firm’s enterprise risk management.
2) Financial Implications, including any guidance on COVID-19’s impact on balance sheet resiliency, revenue, liquidity, capital allocation, executive compensation, and any pressure the company has received from banks to increase prices, as recently reported in the press.
3) Workforce Composition and Adjustments for full-time, part-time and contingent workforce members, including furloughs, layoffs and changes in work schedules and pay, as well as any expected changes to the workforce once stay-at-home orders are lifted.
4) Employee Benefits and Protections, including paid sick leave and any associated qualifying conditions for employees, as well as the company’s policy on no retaliation against whistleblowers or any worker exercising their federally protected rights.
5) Workplace Health and Safety, including measures taken to determine the physical and mental health of the workforce, safety equipment provisions, and measures to enable social distancing.
Second Letter to Focus Companies Requesting Meeting with Shareholders
Over 30 investors signed a second letter to each of the seven companies requesting their boards to take two specific actions related to oversight of COVID-19 related workplace health and safety risks.
First, IOPA signatories urge the Board, if it has not done so already, to undertake a corporate-wide review of the companies’ compensation structures to ensure they do not conflict with the company’s COVID-19 occupational health and safety protocols. IOPA members specifically asked:
- Has the company considered how well production and/or other targets set pre-pandemic are now aligned with a necessary change in health and safety goals/processes (such as to accommodate social distancing) during the pandemic?
- Has there been any formal enterprise-wide review of the company’s compensation structures to ensure they don’t conflict with covid-19 H&S protocols? And if so, was this implemented under the purview of the compensation or other board committee?
Second, IOPA signatories request that the Audit Committee oversee an internal audit of the implementation and effectiveness of the occupational health and safety controls against the Occupational Safety and Health Administration (OSHA) COVID-19 control and prevention guidelines for retail workers and employers (https://www.osha.gov/SLTC/COVID-19/retail.html). Below are questions IOPA members used in engagements with companies on these issues.