When the U.S. government awarded more than $ 10 billion in contracts and advance purchase commitments to pharmaceutical companies that work with the vaccine and COVID-19 treatments, it did not require government money recipients to agree to offer their products at fair prices. or share intellectual property rights to enable faster production.
Now, two of the companies awarded these contracts – Pfizer and Johnson & Johnson – are trying to prevent shareholders from voting on resolutions to require companies to disclose information about the impact of government funding on access to vaccines.
The US government purchased 200 million doses of the Pfizer vaccine and 100 million doses of the Johnson & Johnson vaccines, for about $ 20 and $ 10 per dose, respectively.
Shareholder resolutions, filed by members of the Interfaith Center on Corporate Responsibility (ICCR), a shareholder activism organization, ask these two companies to inform their shareholders how “receiving public financial support for the development and manufacture of products for COVID-19, or will be taken into account when making decisions that affect access to such products, such as pricing. “
Similar resolutions were also presented at Eli Lilly, Gilead, Merck and Regeneron.
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Both Pfizer and Johnson & Johnson filed “no action requests” with the Securities and Exchange Commission (SEC) in December, asking the agency to determine that companies can withhold shareholder proposals. No company responded to The Daily Poster requests for comment.
“Did you consider government funding?”
In nearly identical records prepared by the same lawyer, both Pfizer and Johnson & Johnson argued that the proposals attempt to “micromanage” companies “by requesting an intricately detailed report”.
Meg Jones-Monteiro, director of health actions at ICCR, called the micromanagement claim “ridiculous”.
The claim that investors are trying to “micromanage” companies comes from a SEC precedent that concluded that certain “common business operations” should not be subject to shareholder supervision. But Jones-Monteiro argues that the question of vaccine prices during pandemics does not fall into this category.
“Anything related to the price of medicines was established as a matter of social policy,” said Jones-Monteiro The Daily Poster, which means that it’s not just ordinary businesses that don’t need shareholder supervision.
She noted that the proposals do not ask about common pricing decisions or ask for intricate details about pricing algorithms. “We are asking in a very general way: did you consider government funding? And how did you consider it?”
Oxfam, an ICCR member who submitted the proposed resolution to Johnson & Johnson, wrote in a statement of support that “JNJ has publicly stated that it will distribute a COVID-19 vaccine on a” non-profit “basis,” adding: “JNJ did not clarify what ‘nonprofit’ means when the government finances a significant portion of research and development costs. “
“We suspect that the price of the vaccine is higher than the cost of production,” said Nicholas Lusiani, a senior consultant at Oxfam who works with the pharmaceutical industry in the United States. The Daily Poster. “We would like to see a drop in the real cost of production.”
Johnson & Johnson subsidiary Janssen received $ 456 million for vaccine development last March, and another $ 1 billion in August in exchange for supplying the federal government with 100 million doses. The company expects to have the American doses ready by April.
Pfizer received an advance purchase commitment from the federal government in July of about $ 2 billion for 100 million doses and signed an agreement to supply an additional 100 million doses for the same amount in December.
Trinity Health, which filed the Pfizer resolution on behalf of the ICCR, wrote in an attached letter: “Although advance purchase commitments do not directly finance the development of the vaccine, they reduce the risk associated with it.”
BioNTech, the company Pfizer worked with to develop its COVID vaccine, also received funding from the German government.
Johnson & Johnson and Pfizer also argued in their request for no action that they have “substantially implemented” shareholder proposals by posting information on vaccine prices on their websites.
This information is not enough, says Jones-Monteiro. “What they are missing is the answer to the question we asked, which is: how do you take government funding into account?” she said.
intellectual property right
While the government financed research and development for COVID vaccines and minimized risks with advance purchase commitments, vaccines also contain fully publicly developed technologies, raising questions about intellectual property rights.
In November, Public Citizen released a report finding that the Pfizer and Johnson & Johnson vaccines were developed using peak protein technology that was discovered by scientists at the National Institute of Health. “Years of public investment fueled the rapid advance of candidate vaccines COVID-19 ”, wrote the surveillance group.
“Already, Janssen’s agreements with [U.S. health officials] were criticized for limiting government intellectual property rights, “wrote Oxfam in his letter to Johnson & Johnson, who said” it could put a stranglehold on mass production commensurate with global needs – increasing the price, lowering the overall supply and preventing universal access. “
SEBASTIEN BOZON / AFP / Getty
Rich countries comprising 16 percent of the global population currently have more than 60 percent of the world’s vaccine doses. Sharing or suspending intellectual property rights would allow increased vaccine production and make it easier for poorer countries to vaccinate their populations.
Under the current agreement, countries whose populations have participated in vaccine testing are facing very inadequate vaccine supplies. And the richest countries in the world have blocked a proposal by the World Trade Organization in India and South Africa to waive vaccine patents to allow for wider production of the vaccine.
“You need enough doses to create global herd immunity and, at the moment, we don’t have enough doses and they are controlled by rich countries, which creates this situation of vaccine imperialism,” said Lusiani, an adviser to Oxfam.
Lusiani said that vaccine pricing issues pose potential risks for investors. “You can imagine the reputation risk of Johnson & Johnson receiving more than a billion dollars in public money and then raising the price once the pandemic reaches astronomical levels,” he said, arguing that it could take investors to leave the company.
So, there are greater risks to the economy created by limited access to vaccines. “Investors want everyone to get the vaccine so that the economy can recover while people get back to work,” he said. The White House Council of Economic Advisers estimates that speeding up vaccination is worth $ 10 billion to the economy every day.
Jones-Monteiro expects the SEC to make a decision on non-action requests this month.