COVID-19 Pandemic Challenges Traditional Pharma Model

From the beginning one thing was clear: the COVID-19 pandemic will end only when everyone, everywhere has access to vaccines and life-saving treatment. Even as we struggle here in the U.S. to vaccinate people of color and those who are reluctant, billions of people elsewhere have been suffering through a pandemic with no access to vaccines, even as there are significant surpluses here and elsewhere in the world.

To be fair, the pharmaceutical industry deserves praise for producing safe and effective COVID-19 vaccines so quickly. Developing a vaccine takes an average of 10 years — if it works at all. Despite decades of well-funded research, there are still no vaccines for HIV or malaria. We now have multiple, highly effective COVID vaccines, all developed in less than a year.

These vaccines are the product of innovative research dating back several decades, spurred by unprecedented public investment. Operation Warp Speed has provided more than $10 Billion in support of vaccine makers for the development and expansion of manufacturing capacity. Another $825 million has been given in support of monoclonal antibody therapies. As of March, U.S. commitment to the CT-Accelerator stood at $6 billion. In April, President Biden pledged another $2 billion to the international COVAX effort.

Amid such vast public investment, pharma companies pursued monopolistic deals with the fruits of taxpayer-funded innovation, rather than volunteering to share their know-how for the next great task facing humanity: getting those vaccines to everyone, everywhere, at the lowest cost possible, as quickly as possible. This traditional business model based on public funding followed by IP protected monopolistic practices is finally facing financial, legal, and reputational risks.

Alongside other ICCR members, SGI members participated in a campaign to challenge companies to disclose how public investment into COVID-19 vaccines and therapeutics figured into global pricing & access strategies. This is important, because drugs don’t work if people can’t afford them. The increasing trends of the rise of coronavirus variants combined with our collective failure to mask up and maintain social distance suggests that Covid-19 will become an endemic condition, much like the flu. Billions of us likely will need the vaccine each year.

This is not an issue that only rests with governments. Corporations have an important role to play in ensuring equitable access to affordable, quality care. Recent shareholder resolutions asked pharma companies to account for their role in our collective fight against the Coronavirus. Many other shareholders agreed yielding votes in excess of 30%. As a recent article in Responsible Investor asked: “[S]hould middle/low income countries have to rely on the paternalism of well-meaning NGOs and donors when the pharmaceutical industry has it within its power to play a pivotal role in ending this global scourge?”

Essential Workers: COVID-19 and Racial Equity

On February 19th, SGI’s quarterly member webinar examined how the engagement season will be shaped by the pandemic and racial justice issues. We are grateful that Corey Klemmer of Domini Impact Investments and Hanna Lucal of Open MIC joined us to enrich our conversation. We had some great interaction in the question and answer period, and we added some resources that were shared in the webinar’s chat feature to a final slide in the slide deck.

At the start of the COVID-19 pandemic, many Americans were shocked at the sight of empty shelves in stores as global supply chains sputtered to keep up with the demand for a variety of products. The fragility of these supply chains has suddenly become evident to a lot of Americans who expect them to always operate seamlessly. Global supply chains connect people worldwide, from garment workers in Bangladesh to consumers in the United States. They are built to be ruthlessly efficient, manufacturing and delivering goods exactly when and where they are needed. The ability to move quickly and seamlessly across the globe also helps companies find cheaper labor or other opportunities to make products more cheaply. While this system may be good for corporate owners and supply chain managers, it takes a toll on workers. In the face of COVID-19, poultry workers literally put their life on the line every time they punch in to work. The opportunity of 2021 is to place worker dignity at the center of supply chain transformation plans.

The Black Lives Matter movement has also created an unprecedented urgency for a more genuinely diverse and inclusive workforce. The COVID-19 pandemic has inflicted devastating effects on the U.S. economy, with job losses, especially concentrated among women, minorities, and low-wage workers. It illustrates the systemic racism that lives in our financial institutions. Corporations are making statements in support of Black Lives Matter, but statements are easy. Ensuring that People of Color are hired, paid, promoted, and retained equitably is less so. We cannot allow the corporate response to be merely words. Together, we can compel action.

Again, we are very grateful for the presence of Corey and Hannah in this webinar, for their commitment to this work, and their generosity in sharing their wisdom and experience with us. As always, we welcome your feedback via a confidential evaluation found here. Slides are available here.

COVID-19 and Racial Justice: Pharmacy Deserts

We know that our healthcare system does not work well for those who are poor. Studies report that socioeconomic disparities in health care are significantly worse in the U.S. than in other wealthy countries. These disparities have daily real-world implications. Over the last ten months, we’ve seen how those who are poor are more likely to be infected with COVID-19 and, ultimately, to die from it, especially people of color.

The pharmaceutical industry deserves praise for producing safe and effective COVID-19 vaccines so quickly. However, drugs don’t work if people can’t afford them. Those pharma companies have been pursuing monopolistic deals with the fruits of taxpayer-funded innovation, rather than volunteering to share their know-how to get those vaccines to everyone, everywhere, at the lowest cost possible and as quickly as possible. This is why SGI members joined other investors in asking pharma companies to take into account public financial support for development and manufacture of vaccines or therapeutics for COVID-19 when making decisions on access and prices.

Similar to the term “food deserts,” research has also disclosed a phenomena of “pharmacy deserts” in the journal Health Affairs. Frankly, it is foreign to my experience. I live within ten blocks of four pharmacies: a CVS, two Walgreens, and an independent pharmacy. Meanwhile, neighborhoods in cities like Chicago increasingly are places where people are unable to fill medical prescriptions locally because their drugstores have closed or will not accept Medicaid. A pharmacy desert is the result of basic economics: because pharmacies get the lowest reimbursements for filling Medicaid prescriptions, companies are more likely to close stores in low-income, minority neighborhoods and open them in wealthy ones.

According to new research published this month in the Journal of the American Medical Association, racial disparities in mortality are not improving despite an increasing awareness of the problem and a focus on social determinants of health. Apart from COVID-19, Black mortality remains far higher than white mortality in America’s 30 largest cities. Add in COVID-19, and Axios reports that, in the U.S., 22,000 Black and Latino Americans would still be alive today if their coronavirus mortality rates were the same as white people.

Systemic racism has found its way into vaccine distribution as well. To address these concerns, Dallas County, Texas aimed to prioritize COVID-19 vaccine doses to “the county’s most vulnerable ZIP codes, primarily in communities of color.” The plan drew the ire of state officials who threatened to cut off the county’s vaccine supply, and county officials quickly retreated. In Dallas, as in other major Texas cities, distribution sites are more commonly located in white neighborhoods, and early data showed that Dallas County had distributed most of its shots to residents of whiter, wealthier neighborhoods.  Black and brown people who are disproportionately affected by the coronavirus are also least likely to get vaccinated. There are lots of reasons why, but access to the internet to sign up for shots, and access to pharmacies and hospitals to receive the shots, are significant issues.

To beat this virus as quickly as possible, the Biden administration, state and local governments, and corporations must work collaboratively to prioritize the distribution of the vaccine to those communities most at-risk, especially people of color. 

Thanksgiving Blessings and Prayers for Those Without

After reading this morning’s headlines (“Dow Cracks 30,000 for First Time“), I went for a run. I had heard the 1 minute press conference yesterday where President Trump referred to this milestone as a “sacred number”.

In a contrast that has defined this year, I listened to the NYT The Daily podcast: A Day at the Food Pantry during my run. A Times journalist described her visit to a food pantry in Brooklyn a few weeks ago. In pre-Covid days, this pantry served 60 people a week and is now dealing with a line of over a thousand. The journalist interviewed people in line, most of which had never visited a pantry before the pandemic hit. “This is my worst nightmare.” The journalist even shared a bit of her own past, growing up on food stamps and sharing a frozen burrito with her sister. Although painful to listen to, I highly recommend you take the 36 minutes to listen to it. 

The pandemic has exacerbated food insecurity that already existed in the U.S. The crisis has revealed the dysfunction of our food system and how structural inequalities contribute to the growing number of food insecure and hungry across the nation. Job losses from the pandemic overwhelmingly affected women, low-wage earners, and minority workers the most. As a result, one in six adults were food insecure two months into the COVID-19 recession. Feeding America reports that, among children, the projected food insecurity rates for 2020 range from 15% (North Dakota) to 32% (Louisiana and Nevada). You heard that right: one third of the children in the richest country of the world go to bed hungry!

So as I sit down to our Thanksgiving turkey tomorrow, perhaps feeling a little sorry for myself for not being surrounded by our typical family gathering, I will count my blessings and pray for those without.

Happy Thanksgiving to all of you… 

How did you respond to the Coronavirus pandemic?

By Frank Sherman

As some hard hit cities start to report a slowing of COVID-19 cases and express hope that we’ve indeed reached the much anticipated peak, our federal and state government leaders are struggling with the challenge of reopening the economy. The same debates on balancing public health and economic pain are playing out in corporate boardrooms and at small business owners’ kitchen tables. The slow response and lack of leadership at the federal level has not only shifted decision-making to states and local levels, they force the private sector to face the dilemma of when and how to bring back their employees, supply chains, and customers.

As faith communities, we recognize that the pandemic has put a spotlight on economic inequalities and a fragile social safety net leaving vulnerable communities to bear the economic brunt of the crisis (Human Rights Watch, March 19, 2020). In the U.S., four decades of income and wealth disparity was partly hidden by record low unemployment but is now exposed in unemployment insurance and food pantry lines. While many Americans were already knee-deep in debt pre-pandemic, half of households have no emergency savings at all (WSJ, April 15, 2020). Nearly 30 million children who count on schools for free or low-cost breakfast, lunch, snacks and sometimes dinner are now at home (NPR, March 20, 2020). Thankfully Congress has shifted most of the disaster relief to the workers and individuals this time rather than solely to companies as done in 2009.

As companies start to report their first-quarter financials, the message is clear: this recession is going to be bad! What will be the corporate response to these unprecedented times? The pandemic and impending recession have created an urgent opportunity for CEOs and corporate leaders to put the promise of purpose-driven leadership and stakeholder capitalism into practice (Just Capital).

I certainly noticed a change in the tone and focus of corporate communications, both internal and external. Instead of productivity and new product launches, companies are talking about employee and customer safety, corporate values, and community support. Examples such as Walmart’s enhanced paid sick leave, McDonald’s free meals for students and seniors, GM and Ford retooling auto assembly lines for ventilators (WAPO, April 4, 2020), Amazon prioritizing shipments of medical supplies and household staples (WSJ, March 17, 2020), and Thank You For Not Riding Uber (YouTube, April 8, 2020) appear to be empathetic. The public perception of whether these corporate responses are authentic or ‘COVID washing’ may depend on whether the company was purpose-driven before the crisis.

At the end of the day (…and there will be an end to this crisis), employees, consumers and society in general will ask these companies and their leaders one simple question: How did you respond to the Coronavirus pandemic? And when the corporate marketing machine restarts, let’s hope we have long memories.