Investors ask J&J, Merck and Pfizer how public investments will be factored into access and affordability plans for COVID vaccines and medicines
NEW YORK, NY, MONDAY, APRIL 19, 2021 – Proposals submitted to three pharma companies in receipt of public funding for COVID medicines are set to go to votes at $JNJ, $MRK and $PFE in the coming weeks.
The proposals, sponsored by members of the Interfaith Center on Corporate Responsibility, ask whether and how government financial support is being, or will be, considered by these companies in developing their access strategies, including pricing. Given that taxpayer monies and government contracts significantly supported the R&D, manufacturing and distribution of COVID-19 medicines, and that the public assumed most of the risk, the investors say the proposals are intended as an accountability mechanism to ensure broad and equitable access to them.
As the world first began to grapple with the COVID-19 pandemic, many public health officials foresaw it would not be an equal opportunity virus; in fact, COVID-19 has been quite efficient in exacerbating the systemic inequities that have long plagued marginalized communities, often people of color, where structural racism, discrimination, and the negative impact of the both corporate and social influencers of health have put them at an extreme disadvantage.
At a news briefing of the World Health Organization in January, Director-General Tedros Adhanom Ghebreyesus called the growing inequities in the distribution of COVID 19 vaccines “grotesque” and “another brick in the wall for inequality between the world’s haves and have-nots”. He further said the world was on the verge of “a moral catastrophe[i]”.
“As faith and values investors who have engaged pharma companies for decades to press for greater access and affordability of medicines, this pandemic has underscored how disparities in the delivery of healthcare further drive poverty and suffering,” said Christopher Cox of Seventh Generation Interfaith Coalition for Responsible Investment. “Without a vaccine, the global cost associated with COVID-19 and its economic impact was initially projected to be $3.4 trillion a year. If the vaccines aren’t distributed equitably, that projection jumps to a loss of $9 trillion dollars in wealth[ii].”
While Pfizer and Johnson and Johnson have developed vaccines, Merck has therapeutics under development. As variants continue to infect persons, effective treatments are essential. Both of Merck's therapeutic candidates received public investment, either directly or indirectly, and shareholders bring the same questions about access strategies.
In a recent report on COVID-19, Moody’s stated that “Given the significant public health implications, reputational harm could ensue if prices are perceived to be too high.”[iii] And, in a recent Forbes opinion column, a well-known veteran of the pharmaceutical industry, John LaMattina, wrote: “A sudden, dramatic increase in the cost of the vaccine will certainly damage the industry’s image – almost like the industry would be performing a ‘bait and switch’ operation.”[iv]
As an example of how COVID-19 reputational risks can play out, Gilead Sciences faced a serious public backlash for applying for the exclusive rights an orphan drug designation would provide, “despite calls for solidarity” to face the pandemic. After immense criticism and potential financial damage, Gilead announced that it had asked to rescind the orphan drug designation.[v]
“While people in the U.S. are getting vaccinated at a rate of one per second, more than a hundred countries haven’t gotten to administer a single dose all this time. This is morally unacceptable and economically self-destructive,” said Nicholas Lusiani of Oxfam America, who filed the resolution at Johnson & Johnson. “We are concerned that the race to protect all people will be set back should JNJ price or distribute publicly-funded COVID-19 vaccines or treatments in inaccessible ways now or in the future. This would also pose potentially serious reputational and regulatory risks to the company. What’s more, failure to ensure global access to vaccines now and into the future is widely expected by economists to hinder the global economy’s ability to revive itself, ultimately harming not only people but also the overall portfolios of shareholders.”
BARDA and the Department of Defense awarded nearly $2 billion in funding via an advance purchase agreement for Pfizer and BioNTech’s vaccine as part of the Operation Warp Speed (OWS) program. BioNTech, Pfizer’s partner in the development of the vaccine, received over $444 million from the German government to accelerate vaccine development and expand manufacturing capacity.[vi] Decades of research funded by NIH’s Vaccine Research Center laid the groundwork for the mRNA platform used in the Pfizer formulation.
“The U.S. government often funds basic pharmaceutical R&D and then transfers ownership of the resulting vaccines and medicines to companies,” said Cathy Rowan of Trinity Health. “These ‘no strings attached’ contracts mean companies aren’t obligated to share licenses in order to expand access and can charge whatever price they think the market will bear. While we are all extremely grateful to have these life-saving medicines, we believe the significant public investments in their creation compel these companies to make equitable access and affordability a priority.”
The proponents are urging their fellow shareholders at J&J, Merck and Pfizer to vote their proxies in favor of these proposals.
About the Interfaith Center on Corporate Responsibility (ICCR)
Currently celebrating its 50th year, ICCR is the pioneer coalition of shareholder advocates who view the management of their investments as a catalyst for social change. Its 300-plus member organizations comprise faith communities, socially responsible asset managers, unions, pensions, NGOs and other socially responsible investors with combined assets of over $US 2 trillion. ICCR members engage hundreds of corporations annually in an effort to foster greater corporate accountability. Visit our website www.iccr.org and follow us on Twitter, LinkedIn and Facebook.