11 Mar 2017
A week before his inauguration, Donald Trump said that when it came to drug prices, pharmaceutical companies were “getting away with murder”—and he pledged to take decisive action to reduce the rising cost of medicine. Six weeks into his presidency, though, his government has moved to help drug companies block shareholder initiatives designed to help bring more scrutiny to drug price increases.
With drug prices skyrocketing in the United States, investor groups last year filed shareholder resolutions with 13 drug companies that—if passed—would force their boards to more meticulously detail their price increases for major medicines, and to provide “the rationale and criteria used for these price increases.” Days after Trump met with pharmaceutical industry CEOs at the White House, the Securities and Exchange Commission endorsed drug companies’ moves to block the resolutions from being voted on by shareholders at their annual meetings. The SEC move followed Trump promoting Republican SEC commissioner Michael Piwowar to serve as acting chairman of the agency.
The SEC win for the pharmaceutical industry represents the latest victory for an industry that has been ramping up efforts to stop governments from taking action to lower—or force more disclosure about—drug pricing. Last month, federal lawmakers from both parties helped the industry block Senate legislation to let Americans purchase lower-priced FDA-approved medicines from Canada. Meanwhile, in the last two years, drug companies have been largely successful in their fight against a barrage of price transparency bills. Such legislation has been stymied in all but one state, Vermont.
At the SEC, the recent help for the pharmaceutical industry came in the form of “no action” letters, assuring the companies that regulators would not recommend punishment if the firms omitted the resolutions from their shareholder ballots. In all, the SEC issued 10 “no-action” letters in February, including eight on a single day.
The SEC has not always helped drug companies squelch such shareholder initiatives: Under the leadership of President Obama’s appointees in 2015, the agency told Gilead Sciences and Vertex Pharmaceuticals that the companies were obligated to let shareholders vote on a separate proposal that would have forced the companies to disclose the risks they face from their pricing policies. The companies’ shareholders ultimately voted down the measures.