After pressing five pharma companies for answers about how executive pay plays into drug pricing decisions, the Interfaith Center on Corporate Responsibility has generated some interest in the issue among the investor community.
A group of investors at AbbVie, Amgen, Biogen, Bristol-Myers Squibb and Eli Lilly supported first-year resolutions by the faith-based group requesting annual reports about the link between executive pay incentives and U.S. drug prices. ICCR filed its resolutions after seeing a report from Credit Suisse that concluded some pharma companies are generating all of their profit growth from U.S. price hikes.
At each of the five companies, investor support for the resolutions ranged from 21% to 28%, ICCR said. AbbVie's investors generated the lowest tally at 21%, while 28% of Biogen's investors supported the resolution. ICCR pitched the tallies as a win, saying that the votes will allow the group to refile the resolutions next year at the five companies and possibly others. Afterward, the group says several drugmakers reached out for follow-up dialogue.
ICCR filed its resolutions late last year over concerns that pharma executive compensation may be too focused on short-term measures such as EPS and sales growth. Further, ICCR argued, companies relying on price hikes to meet their financial goals face reputational and regulatory risks.
At the time, an Eli Lilly spokesperson said the company shared ICCR's concerns about drug costs.
"We’re working to address concerns and to identify solutions so medicine is accessible and affordable to those who need it," the spokesman said. "We have had a productive relationship and dialog with ICCR over time and will continue to engage with them."
None of the drugmakers immediately responded to requests for comment on the vote tallies.
The executive pay issue isn't the only area where ICCR has gotten involved in pharma's affairs. The group previously asked more than a dozen drugmakers to disclose detailed information about pricing, including increases on individual medicines.
Many companies pushed back by arguing that the issue is complex and that consumers wouldn't understand the information if it were disclosed. Plus, disclosing detailed pricing information could put them at a competitive disadvantage, the companies argued.