Shareholder Resolutions May Be Just What the Doctor Ordered(A)
“On this earth there are pestilences and there are victims….I grant we should add a third category: that of the true healers. But it’s a fact one doesn’t come across many of them, and anyhow it must be a hard vocation.” –Albert Camus, The Plague
A hard vocation indeed, but one that is needed around the world more than ever. Particularly in developing nations, a pandemic of deadly diseases are taking an increasing toll. AIDS, tuberculosis and malaria are among three of the gravest global health threats, killing more than six million people a year, more than half of them in sub-Saharan Africa alone. The United Nations estimates that in 2002, three million people died of AIDS, five million were newly infected with the HIV virus that causes AIDS, and the number of people living with AIDS reached 42 million. While it receives far less attention from the Western press, tuberculosis kills approximately two million people a year. Every second someone in the world is newly infected with TB, which is now spreading rapidly among those already suffering from AIDS. Rounding out this “Axis of Illness,” there are more than 300 million malaria cases a year, which cause more than 1 million deaths and leave many millions of children brain damaged.
In addition to the individual cases of human suffering, the social costs of these diseases are staggering. Africa loses an estimated $12 billion in gross domestic product a year just from the effects of malaria alone. A World Bank study found that many children orphaned by AIDS in Africa are joining militia groups, leading to more armed conflicts. According to the Investor Responsibility Research Center, “There is a growing consensus that HIV/AIDS, TB and malaria pose a grave threat to world stability and security and impose obligations on the private sector.”
In particular, pharmaceutical companies face increasing criticism for their focus on developing drugs to combat health problems affecting affluent developed countries and their limited response to the global pandemic of HIV, TB, and malaria. While more than 90 percent of the world’s disease cases are found in developing nations, only 10 percent of the world’s drugs sales occur there. Pharmaceutical companies have also sparked controversy by using the courts and the World Trade Organization to challenge developing countries’ right to produce their own versions of patented drugs to address disease pandemics like AIDS.
To address these issues, religious investors associated with the Interfaith Center on Corporate Responsibility are spearheading shareholder resolutions with major pharmaceutical companies asking them to develop “standards of response to the health pandemic of HIV/Aids, TB and Malaria in developing countries, particularly Africa.” Trillium Asset Management joined religious investors in filing this resolution at Johnson & Johnson, Merck, and Pfizer. Companies’ “standards of response” may include a suite of actions including selling drugs at lower cost in developing countries, easing patent restrictions, increasing research and development for drugs to treat these diseases, and entering new partnerships with governments and non-governmental organizations. To be fair, many pharmaceutical companies have taken some positive steps, particularly in response to the dramatic spread of AIDS in Africa. In June 2001, 39 major drug companies dropped a controversial lawsuit that would have blocked South Africa from manufacturing AIDS drugs to deal with its healthcare crisis. As another example, Merck has contributed $50 million and an unlimited amount of its HIV drugs to fight AIDS deaths in Botswana, in a five-year partnership with the government of Botswana, the Bill and Melinda Gates Foundation, and Harvard University.
However, many advocates believe a far greater effort is necessary, and credit this year’s set of shareholder resolutions with helping pharmaceutical companies recognize that. One of the leading shareholder activists on this issue, Séamus Finn, the Director of the Justice, Peace and Integrity of Creation Office at the Missionary Oblates of Mary Immaculate observed, “With 40 million people infected with HIV, 4 million needing treatment, and 40,000 getting treatment, we’ve finally made pharmaceutical companies recognize the scale of the issue they need to address. And what’s needed goes well beyond the specific pilot projects they currently have.”
Shareholder advocates were able to negotiate enough positive steps at Johnson & Johnson, Merck, and Pfizer that the coalition agreed to withdraw our resolutions before they came to a vote this spring. While specifics vary, the companies generally agreed to increase their disclosure of their efforts to fight infectious diseases like HIV, TB, and malaria; agreed to do more to help large employers in developing countries obtain medical care for their employees and families living with HIV/AIDS, and agreed to further negotiations with shareholder advocates on the difficult issues of patent protections and WTO rules.
Hopefully, growing efforts from across all sectors of society to address the global pandemic of HIV, TB and malaria can affirm the lesson Camus offers at the end of The Plague, “we learn in time of pestilence, that there are more things to admire in men [and women] than to despise.”