n the latest bid to put a lid on rising drug costs, a coalition of 300 institutional investors has filed shareholder resolutions with 11 big US drug makers to explain and justify all price increases and the risks these may pose to stockholders. At the same time, the Interfaith Center on Corporate Responsibility also wrote six large European companies to schedule talks about transparency around their pricing.

The resolutions ask the companies to issue reports by November that list the rates of price increases for all of their top-selling brand-name medicines between 2010 and 2016, along with the rationale and criteria used to raise prices. The coalition also wants the drug makers to assess the legislative, regulatory, reputational, and financial risks associated with the price increases.

“As long-term investors, these risks threaten the health of these companies and, in turn, our investments,” said Cathy Rowan, director of socially responsible investments for Trinity Health, a not-for-profit Catholic health system operating 86 hospitals in 21 states. “The current business model seems to rely on increasing drug prices, which seems to be happening more and more, but how sustainable is it?


“The R&D costs are pretty opaque. We’ve heard over the years that it costs $1 billion or $2 billion to develop a drug, but does it take into account federal funds that support basic research or university research?” she said. “That’s part of what we’re seeking in asking for transparency. The rationale and criteria are hard to know — what is the true cost of getting a drug to market?”

The shareholder resolutions were filed with AbbVie, Amgen, Biogen, Bristol-Myers Squibb, Eli Lilly, Gilead Sciences, Johnson & Johnson, Merck, Pfizer, Regeneron Pharmaceuticals, and Vertex Pharmaceuticals. Here is a sample. And the letters were sent to AstraZeneca, GlaxoSmithKline, Novartis, Novo Nordisk, Roche, and Sanofi.

The move comes amid rising angst over prescription drug costs, which has become a talking point in the presidential campaign and sparked legislation at the federal and state levels. As many as 8 in 10 Americans believe prices are unreasonable and support various ideas to lower costs, such as enforcing caps on some high-priced medicines, according to a recent poll by the Kaiser Family Foundation.

Whether the ICCR succeeds in having the resolutions placed before shareholders or the extent to which shareholders embrace the proposal remains to be seen. But the coalition carries some clout. The institutional investors in the coalition collectively manage about $200 billion in assets, according to a spokeswoman for ICCR, which has previously coordinated shareholder resolutions that tied increases in drug prices to inflation.

Indeed, employing shareholder activism toward prescription drug pricing is not a new tactic, but shows signs of becoming a more popular tool for confronting drug makers. Last year, the UAW Retiree Medical Benefits Trust squabbled with Gilead and Vertex over proposals that would have required the companies to evaluate the various risks of their pricing policies. Gilead sells the hepatitis C treatments that caused a stir due to their cost, while Vertex markets a pricey cystic fibrosis treatment. Shareholders rejected both resolutions.

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Last week, meanwhile, the National Academy for State Health Policy, which is a collection of people who work for a variety of state governments around the country, issued several proposals for state governments to consider as they seek to control their budgets for medicines, such as leveraging their public pension funds to confront companies over pricing.

The ICCR is also proposing shareholder resolutions to force AbbVie, Johnson & Johnson, Pfizer, and Eli Lilly to provide more disclosure about their lobbying activities. Yet another resolution will be proposed to shareholders of AbbVie, Johnson & Johnson, and Pfizer in hopes of having the chief executive and chairman roles separated.

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