SGI Board Elects New Officers

The Seventh Generation Interfaith Board of Directors elected new officers for the 2018 calendar year. Dan Tretow (School Sisters of St. Francis), formally Treasurer, has stepped up to become President. Sister Sue Ernster (Franciscan Sisters of Perpetual Adoration) was elected to take the Treasurer position and Peg Groth (Sisters of the Sorrowful Mother) has agreed to serve as Secretary. The Officers deal with the administrative duties of the coalition and act as a sounding board for the staff. The membership is grateful for these volunteers for their service on behalf of the membership. Please join me in congratulating our new Officers.

The Board is thankful to Mark Peters (Priests of the Secret Heart) and Sr. Ruth Geraets (Presentation Sisters, Aberdeen, SD) who served as President and Secretary for the past two years for their service and commitment to bring good news to the poor.

Frank Sherman, executive director of SGI, wrote this post.

Investors say executive pay packages at pharma may incentivize drug pricing risks

Today, the ICCR published a press release about resolutions filed with five U.S. pharmaceutical companies. SGI members are co-filers on each of the five resolutions. These resolutions are important components of SGI’s activity this year in health. The resolutions can be described as tools to gain insight into how executive compensation aligns with the values, vision, and business strategy of the companies.

This post will be updated with media coverage:

The press release is shared in full below.

Investors say executive pay packages at pharma may incentivize drug pricing risks

DATE:
Dec 13th 2017

In resolutions at five U.S. drug makers, investors request a review of compensation policies that may drive senior execs to ignore the long-term business risks of skyrocketing drug costs.

NEW YORK, NY, Wednesday, December 13, 2017 – Investors today announced they have filed resolutions at five major pharmaceutical companies asking for information about how well executive pay incentives mitigate long-term financial risks associated with mounting public concerns over the affordability of prescription medicines.

The investors are all members of the Interfaith Center on Corporate Responsibility (ICCR), a shareholder coalition that has been engaging the pharma sector for decades on drug access and affordability. In the resolutions, the investors argue that an executive compensation incentive program reliant on revenue growth solely from drug price increases is a risky and unsustainable strategy.

The resolution specifically requests a report on the extent to which risks related to public concern over drug pricing strategies are reflected in executive compensation policies, plans and programs. Read the full resolution text here. The five companies receiving the resolutions are Abbvie, Amgen, Biogen, Bristol Myers Squibb, and Eli Lilly. ICCR members also filed a separate but similar resolution at Pfizer and Vertex requesting a report on the business risks from rising pressure to contain U.S. prescription drug prices.

“As investors in these companies, we are concerned that misaligned incentive pay may encourage executives to sacrifice long-term, organic growth from drug discovery for short-term, ‘quick fix’ strategies that may pose business risks,” said Meredith Miller of the UAW Retiree Medical Benefits Trust.

Public anxiety over drug prices has soared in recent years as millions of Americans struggle to afford the essential medicines needed to maintain their health. Scandals over excessive price hikes at several pharma companies have made the pharma industry the target of Congressional hearings, law suits, denials of coverage from insurers and ballot initiatives in several states which would force manufacturers to negotiate the prices of key medicines with government agencies such as Medicare and Medicaid.

Against this backdrop, the investors say, companies need to prove to their investors and to the public that they are doing everything possible to control drug prices in order to manage business and brand risk. The investors view executive incentive programs as a governance tool designed to ensure adequate oversight of risk and alignment of corporate strategies with mission.

Said Donna Meyer of Mercy Investment Services, “The increased scrutiny around drug pricing and how it is being managed by pharma management has had reputational consequences for the entire industry. Our resolution request is very straightforward: an evaluation of how these concerns are being integrated into corporate governance structures. To the degree that executive incentives reflect a company’s mission and growth strategies, this is clearly a critical and material issue for investors.”

“Our goal is to better understand what oversight these pharmaceutical company boards are exercising when executive incentives are tied so closely to profits,” said Cathy Rowan, who represents Trinity Health as a member of ICCR. “When these profits appear to be derived wholly from price hikes, it raises concerns among those of us who care about access to, and the affordability of, medicines — particularly for vulnerable populations like women, children and seniors.”

Investors are expected to vote on the resolutions at each company’s 2018 annual meeting of shareholders.

SGI Webinar Recording: Navigating the ICCR and SGI Websites

During our November member meeting, we announced our plan to conduct quarterly webinars to educate SGI Members on ICCR issues and processes. At the time, we agreed to start with an orientation of ICCR’s and SGI’s websites. We were fortunate to have Julie Wokaty of ICCR join us to give us a tour of ICCR’s website and Chris Cox to do the same for SGI’s website.

A recording of the webinar can be found here. The slides from Chris’ presentation on using social media for corporate social responsibility are here.

We will maintain an index of webinars and links to the recordings on our Resources page.

Access to Medicine Index: Critical tool for investors

Pharmaceutical companies have been receiving some bad press in the United States for unprecedented price increases of life savings drugs. Given the difficulty for people in this country to afford these medicines, imagine how much more difficult it must be for citizens of nations where even basic medicines are a challenge to obtain. An important tool

The Access to Medicine Foundation, an international nonprofit organization based in the Netherlands, is dedicated to improving access to medicine for people in need. Their award-winning initiative called the Access to Medicine Index (ATMI), launched in 2008 ranks the world’s 20 largest research-based pharmaceutical companies according to their efforts to improve access to medicine in low- to middle-income countries. The 2016 edition of the ATMI can be found here.

2016 ATMI rankings

The ATMI assesses how companies perform in the following areas: management of access to their medicine; market influence and compliance; research and development; pricing, manufacturing and distribution; patents and licensing; capacity building; and product donation. By comparing companies to one another, the ATMI aims to stimulate pharmaceutical companies to play a bigger role in addressing the challenges of access to medicine in developing countries and to offer them insight into the activities of their peers. As well, the ATMI seeks to create a platform for stakeholders from the pharmaceutical industry, governments, investors, civil society, patient organizations and academia to gather and form a common view of how these pharmaceutical companies can make further progress.

For us at SGI, the ATMI, and the work behind it, is incredibly valuable. I was a part of a recent conversation with staff from the Access to Medicine Foundation and can only salute the foundation’s transparency, its openness to input from stakeholders, its solid research, and its contribution to making the pharmaceutical industry better serve the poor. As credible third party research, the ATMI helps us work toward important goals in our dialogues with pharmaceutical companies.

SGI is deeply committed to its work in health. The late Fr. Mike Crosby, O.F.M., Cap. was a pioneer in engagement with tobacco companies. Today, Marty Roers continues the work in tobacco for the Sisters of St. Joseph of Carondolet.  Sr. Judy Sinnwell, O.S.F. (Sisters of St. Francis of Dubuque) engages several pharmaceutical companies on the affordability of medicine. Ann Roberts at Dana Investment Advisors, Inc. and Fr. Robert Wotypka, O.F.M., Cap. (of the Capuchin Franciscan Province of St. Joseph) are also engaged with companies on drug pricing.

To learn more about the ATMI:

An eyebrow raising statistic

 

Annually, Oxfam, in conjunction with Forbes magazine and its global rich list, publishes a report on how many of the world’s wealthiest are needed to match the wealth of the bottom half of the planet. In recent years, as market values have soared and wealth has concentrated evermore increasingly, the number has shrunk from 80 wealthiest in 2015 to just eight men holding the same wealth as the bottom 3.6 billion people in 2017.

Recently, researchers from the Institute for Policy Studies refined the statistics to reflect the U.S. alone. Their conclusions were eyebrow raising:

It can be hard to grasp just how much money is concentrated in just a few hands in our lopsided economy today. But here’s a start: The richest three people in the United States — Jeff Bezos, Bill Gates and Warren Buffett — together have more wealth than the entire bottom half of the country combined.

To put an even finer point on it: That’s three people versus about 160 million people.

To really comprehend just how insane the wealth concentration has become, consider Bezos, the head of Amazon. Worth about $90 billion, he recently was declared the richest man in the world. In October alone, his wealth jumped by $10 billion — or about $4 million per second.

The authors made a particular point that the wealthiest of the group, Jeff Bezos, pays some of his warehouse workers as little as $12.84 an hour.

The report initially appeared in the Los Angeles Times, and more information can be found on the IPS website.

Fr. Mike Crosby receives ICCR Legacy Award

On September 28, Fr. Dan Crosby, O.F.M. Cap., accepted ICCR’s Legacy Award on behalf of his brother and SGI’s founder, Fr. Mike Crosby, O.F.M. Cap., together with Sr. Patricia Daly, O.P., Tri-State Coalition for Responsible Investment.  The event was held at New York’s historic Riverside Church.  Fr. Dan Crosby accepted his brother’s award with humility and gratitude in the same way Mike approached his work. “The corporate executives whom Mike engaged always respected him because he was never trying to attack them,” he said. “He was just trying always to speak the truth in love.”

ICCR informed Fr. Crosby that he was receiving this year’s Legacy Award shortly after he began hospice treatment last June.   Fr. Mike shared at the time, “I want to finish my remarks with a word to the young people in the audience. You are the ones that inspired me to do this work. It was for you and future generations that inspired me. It is now your turn to carry this work forward to bring good news to the poor and God’s creation. God bless you all.”