Tag: Opioid Epidemic

On opioids, shareholders spoke, companies begin to listen

On opioids, shareholders spoke, companies begin to listen

Chris Cox

Since 2017, SGI has participated in Investors for Opioid Accountability (IOA). This week, the IOA released a two-year progress report detailing landmark agreements with 20 opioid manufacturers, distributors and retail pharmacies implicated in the crisis. 

Between headlines about Democratic debates and Washington feuds, news about lawsuits and proposed settlements have drawn some attention this week. Steadily and purposefully, the IOA has dug down into the crisis and sought ways to address it as shareholders. Specifically, the IOA has engaged opioid manufacturers, distributors, retail pharmacies, and manufacturers of drug treatments.

A few important things to note from the report:

  • A majority (52%) of shareholder proposals led to agreements with the companies;
  • Of the shareholder resolutions filed, seven resolutions at Rite Aid, Walgreens, Mallinckrodt, Mylan, and Assertio Therapeutics received majority votes and an additional two resolutions received majority support at AmerisourceBergen from independent voters, leading to reforms;
  • Twelve companies agreed to conduct risk assessments of opioid-related business practices including governance, compliance, compensation and political lobbying and to report these findings publicly. Two of these companies (Cardinal Health and Assertio) established special board-level committees on opioids;
  • Ten companies agreed to adopt misconduct clawback policies  to recoup executive pay, including the public disclosure of the use of the clawback;
  • Three companies agreed to separate their chair and CEO positions (McKesson, Cardinal Health and AmerisourceBergen), and;
  • Two companies agreed to disclose when they adjusted metrics to exclude legal costs when calculating their executive pay awards. 

Established out of heightened concern that opioid company risks both threaten long-term shareholder value and have profound long-term implications for our economy and society, the IOA uniquely represents influential and diverse funds from across the investing universe including faith-based, sustainability, public, and labor funds as well as comptrollers, treasurers and asset managers that are taking swift and decisive actions to hold manufacturers, distributors, and retail pharmacies’ boards accountable for their role in the opioid crisis. The IOA consists of 54 investors with over $4 trillion in assets under management and is co-led by Mercy Investment Services, Inc. and the UAW Retiree Medical Benefits Trust.

If you wonder what difference shareholders can make, this report spells out in particular detail how attentive and deliberate engagement can achieve results. We are proud of our participation in the IOA. We’d urge our members to examine this report. As you do, keep in heart and mind those who have died in this opioid epidemic, those who struggle with addiction today, families devastated by losses, and communities overwhelmed with the human and material cost of this crisis. If you hold shares in companies outlined in the report, we’d welcome the opportunity to facilitate your support of these engagements. Please, contact our staff for more information.

Additional posts concerning the opioid epidemic and SGI’s efforts are found here:

Opioid Epidemic: What can investors do?

Opioid Epidemic: What can investors do?

Chris Cox

Opioid addiction has become a disease that has destroyed the lives and families of millions of everyday working Americans. The epidemic is not abating.  With increasing frequency, new headlines emerge as the problem grows in scale and the consequences become ever more devastating. New data from the National Institute on Drug Abuse shows there were over 72,000 estimated overdose deaths last year, a 10% increase on the prior year. These estimates mean the problem is more deadly than gun violence, car crashes and AIDS.

In addition to the human cost, the massive economic cost grows daily. For example, the U.S. Center for Disease Control reports that opioids have cost the American workforce the largest portion of labor since the Spanish flu epidemic in 1918. A recent report from Ohio State University also documents that the crisis is costing Ohio more than the state’s annual budget for k-12 education.

Over the last year, SGI has been working with Investors for Opioid Accountability, an initiative that joins ICCR members with other investors to engage corporations who have profited from this epidemic. We engage pharmaceuticals producers, distributors, and retailers. We believe that companies that have acted negligently should be held to account. However, we do not believe that opioid producers and distributors should be the only stakeholders considered when tackling this issue. Opioids are effective pain killers that are commonly prescribed for acute and chronic pain. To fully address the issue, we believe that regulators, pharmacists, insurers, point-of-care providers and users all have a role to play.

In 2018, IOA members filed 35 resolutions at the following 11 companies: Alkermes; Amerisource Bergen (ABC); Cardinal Health (CAH); Depomed; Endo; Insys Therapeutics; Johnson & Johnson (JNJ); Mallinkrodt; McKesson; Pfizer; Walgreens.

Below are outcomes for the resolutions that went to a vote:

  • ABC – 62% of indep. votes for board risk report
  • ABC – 52% of indep. votes for clawback
  • ABC – 49% of indep. votes for indep. chair
  • Pfizer – 25% for indep. chair
  • Pfizer – 33% corporate lobbying disclosure
  • JNJ –17.8% for stop exclusion of legal costs in executive compensation
  • Depomed – 62.5% for board risk report
  • McKesson – 39% corp. lobbying, 34% accelerated vesting, 1% GAAP, 12% withhold Audit chair
  • Rite Aid – 56.7% for board risk report

An additional 13 resolutions were settled:

  • CAH: Cardinal separates chair and CEO ahead of meeting 
  • JNJ: Indep. chair annual review of combined roles
  • ALK: Board agreed to expand corporate lobbying expenditure disclosure
  • CAH: Board published risk report, misconduct clawback and separated chair & CEO
  • DEPO: Board agreed to misconduct clawback
  • ENDO: Board agreed to risk report, misconduct clawback and expand political spending reporting
  • MCK: Board agreed to continued reporting on anti-diversion efforts
  • MNK: Board agreed to misconduct clawback and expand political spending reporting, Board elected to sell opioid business
  • Insys: Board agreed to misconduct clawback

Next year, we will have even more filings regarding this important issue. It is our hope that more SGI members can become involved in this work so critical to many communities across the U.S.