Drug Companies Nix Shareholders’ Call for Price Transparency

Ten of 11 firms petition SEC to keep pricing queries off proxy ballots

Several major U.S. pharma companies have given “thumbs down” to an investor group’s campaign aimed at forcing them to provide more information about when and why they raise drug prices, according to an article in the Wall Street Journal.

In October 2016, a group of institutional investors submitted shareholder proposals asking 11 U.S. drug companies, including Pfizer and Merck, to issue reports listing average annual price increases for their top-selling drugs between 2010 and 2016, and to state the rationale for the increases.

But 10 of the companies petitioned the Securities and Exchange Commission (SEC) to omit the drug-price transparency proposals from their proxy ballots on the grounds that they would interfere with “ordinary business,” the Journal reports. In return, the SEC notified the companies that it won’t pursue enforcement actions. The firms included AbbVie, Amgen, Biogen, Bristol-Myers Squibb, Eli Lilly, Gilead Sciences, and Vertex Pharmaceuticals.

The investor group withdrew the transparency proposal it had submitted to the 11th drug company, Regeneron Pharmaceuticals, because the firm said it hasn’t raised the prices of its drugs and has shared information about its approach to drug pricing, according to a spokesperson for the investor group.

The drug industry has faced criticism for escalating drug costs in recent months. In response, some companies have put limits on their price increases for 2017, although the median increase was little changed from last year, at 8.9%, according to the Journal.

Source: Wall Street Journal; March 1, 2017.