Employers and employees beset by fears over what prescription drug price increases are doing to their bottom lines and their health have some unexpected allies.
An asset manager and member of the the Interfaith Center on Corporate Responsibility has submitted drug pricing proposals to Merck & Co. and Gilead Sciences concerning their price increases.
Azzad Asset Management, advisor to the Azzad Funds, along with other members of the ICCR, have filed resolutions this year with 11 major U.S. pharmaceutical companies and sent letters to an additional six non-U.S. companies advocating a reasoned and fair reassessment of pricing policy.
In its most recent action, Azzad’s proposals requested Merck’s and Gilead’s boards of directors to issue a report listing the rates of price increases between 2010 and 2016, including the rationale for the price increases. Stockholders should be able to vote on the proposals during each company’s annual meeting next spring.
As employees wonder whether they’ll be able to afford lifesaving medications, such as the EpiPen, the price of which was hiked at least 400 percent over the last few years, and employers wonder what those increases will do to health care premiums—or consider cutting benefits—there’s increasing scrutiny by both Congress and other entities.
In September, New York City’s pension fund urged Mylan NV (the company producing the EpiPen) to appoint an independent chairman, saying that the uproar over the price of the EpiPen is an example of the board’s failure to oversee risk.
With Azzad’s entry into the controversy over drug prices, that risk is being questioned at other companies.
The cover letter accompanying its proposals to Gilead and Merck reads in part, “ … [M]ore than 40 percent of people in fair or poor health have reportedly not filled a prescription or have reduced or skipped doses because of cost. Risks of patient noncompliance due to the cost of medicines present a grave threat to public health and, in turn, to the economy. The regulatory, reputational, and financial risks associated with an opaque pricing policy threatens the health of your company as well as our investment. We believe that it is in all parties’ interest to set the record straight with respect to pricing and risk assessment.”
Azzad said in a statement that Americans paid $310 billion, after taxes and rebates, for drugs in 2015, and cited the National Patient Advocate Foundations assessment that one in five American families will struggle to pay a medical debt this year.
In addition, a recent McKinsey report found that prescription drugs in the U.S. cost 50 percent more than equivalent products in other Organization for Economic Cooperation and Development nations.
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