Magaziner wants reform at Gilead following Remdesivir price gouging controversy
The proposal would strengthen oversight of the company by requiring an independent Chair of the Board of Directors.
"It's unconscionable for a drug company to price-gouge patients in need of medicine that could help them, particularly during a global pandemic" said Rhode Island General Treasurer Seth Magaziner. "This should not have been allowed to happen. This type of price-gouging is both unethical and unsustainable, and it is time for an independent board chair to be appointed to strengthen oversight of the company."
As noted in the Institute for Clinical and Economic Review's (ICER) cost recovery estimates, a Journal of Virus Eradication study calculated that it costs Gilead approximately $1 to produce a vial of remdesivir, yet the pharmaceutical manufacturer has priced the drug at $520 per vial, or $3,120 per treatment course, for patients with private insurance in the U.S., and $390 per vial, or $2,340 per treatment course, for patients with government insurance.
The development of remdesivir was funded by at least $70 million in U.S. taxpayer dollars beginning in 2015, initially as an antiviral drug against Ebola.
The shareholder proposal, lead-filed by United Church Funds, and co-filed by Pennsylvania State Treasurer Joe Torsella, calls for the pharmaceutical company to strengthen its board oversight by appointing an independent board chair.
"Gilead had the opportunity to provide this treatment equitably and without greed, at a time when the world was defenseless against an unknown virus - claiming lives, shuttering businesses, and bringing the world to a standstill. Nearly a year since the first coronavirus case and months since remdesivir was approved to treat patients, Gilead continues to force families to pay exorbitant prices for a drug that is proven ineffective in reducing fatalities," said Pennsylvania Treasurer Joe Torsella.
An independent board chair eliminates the structural conflicts of interest caused by the CEO of Gilead essentially acting as his own boss and clarifies where the authority of the CEO ends, and responsibility of the independent board members begins.
According to the 2019 U.S. Spencer Stuart Board Index, the number of S&P 500 companies with independent board chairs has more than doubled over the past decade, to now include one-third of the companies. Among the 18 Biotechnology/Pharmaceutical companies, seven have independent chairs, including such companies as Biogen Idec, Regeneron Pharmaceuticals, Perrigo Company and Nektar Therapeutics.
"Balancing commitments to society and investors is an
essential task of corporate leadership. An independent board chair would better
equip Gilead in responding to these commitments," said Matthew Illian,
Director of Responsible Investing at United Church Funds.
This is the latest of several shareholder actions Rhode Island Treasurer Magaziner has taken to strengthen corporate governance in the health care industry in recent years, including voting against excessive CEO pay packages at Cardinal Health and pressuring McKesson Corp., one of the largest pharmaceutical distributors in the United States, to fully disclose the company's lobbying activities and expenditures.
The Office of Rhode Island General Treasurer Seth Magaziner, the Office of Pennsylvania Treasurer Joe Torsella, and United Church Funds are each members of the Investors for Opioid and Pharmaceutical Accountability coalition (IOPA), a coalition of 61 investors representing more than $4.2 trillion in assets.
