What's the rationale behind COVID-19 vaccine and drug prices? You don’t have a need to know—or so say a couple of the leading contenders.
Two major players in the pandemic fight, Pfizer and Johnson & Johnson, are urging the Securities and Exchange Commission (SEC) to forestall shareholder resolutions that would require them to disclose how they set prices on their COVID-19 vaccines.
Several not-for-profit groups are pushing the two companies—along with fellow pharmas Eli Lilly, Gilead, Merck & Co. and Regeneron—for information on their drug and vaccine pricing decisions, citing the federal money all have received, either for supplies, R&D or manufacturing scale-up. Or all three.
The Interfaith Center on Corporate Responsibility (ICCR) said in early December that it had filed shareholder proposals with all six of those companies. The goal of the ICCR according to its announcement was to “learn how the companies will price COVID medicine developed with public monies.”
In similarly-worded letters to the SEC, first reported by Newsweek, Pfizer and Johnson & Johnson both contend that they don't need to put those resolutions to a shareholder vote, saying their “ordinary business operations” should be exempt from shareholder oversight.
The U.S. government has awarded contracts that total more than $10 billion. Pfizer agreed to provide 200 million vaccines for $19.50 per dose, or $3.9 billion. Johnson & Johnson signed on for 100 million doses at $10 each. Nearly a year ago, Johnson & Johnson also won $465 million in federal funding for vaccine R&D—bringing its U.S. funding total to almost $1.5 billion. Regeneron agreed recently to a deal that could bring the company as much as $2.6 billion, depending on how quickly it can produce its antibody cocktail.
ICCR says Pfizer and J&J are making "unsubstantiated" arguments to avoid a shareholder vote on the pricing-information proposals. Access to COVID vaccines "transcends ordinary business," said Meg Jones-Monteiro, health equity director of the ICCR, a coalition of 300 faith communities and other organizations that use investments as levers for social change.
“It’s been proven in past SEC decisions that pricing and access is really a social policy issue," Jones-Monteiro said in an interview. "And in the context of COVID, it’s even more problematic that they’re using that as a reason to exclude this proposal from their proxy."
Both pharmaceutical companies also referred to the shareholder proposal as an attempt to “micromanage,” which Johnson & Johnson characterized as “probing too deeply into matters of a complex nature upon which shareholders, as a group, would not be in a position to make an informed judgment.”
But Jones-Monteiro says ICCR isn't asking for "specific algorithms" or details on how the companies determine pricing. She said she expects a decision from the SEC later this month.
“Our ask is: Have you taken into account the public investment?” she said. "Have you taken that into account and how have you taken it into account?’ When you look at the disclosures both companies have, they don’t reference that.”
Nicholas Lusiani of Oxfam America, a member of the ICCR, stated the case for the public interest group in its proposal announcement. The group doesn't just want info on the companies' rationale, but on what they'll do with the proceeds.
“We want to understand the extent to which any profits derived from the public investment will be reinvested to further critical scientific agenda versus, for example, to pay dividends to shareholders, which doesn’t advance the public health goals these public investments are intended to facilitate," Lusiani said.
Jones-Monteiro said that there’s more to the public investment than the dollar amounts paid by the government. Consider the Pfizer and Moderna vaccines, both developed with the mRNA technology provided by the National Institutes of Health.
“When you think about this concept of public support, it’s not just about the investment in R&D initially, but it’s also the technology that was developed with public support, public funding, academic support.”
This isn't the first time ICCR has demanded sensitive information from top pharma companies. Most recently, the organization put forth proxy proposals that would force disclosures about executive pay. The resolutions, which went up for a vote at annual shareholder meetings, asked the drugmakers whether they use price increases to meet their sales goals, whether boards must approve price hikes and more.