Trillium Asset Management Releases Study on Drug Pricing(A)
As part of our long-standing efforts to promote affordable and accessible healthcare, Trillium Asset Management and the Interfaith Center on Corporate Responsibility have collaborated to produce an analysis of “Why Lower Drug Prices Benefit Institutional Investors”. (To see a copy of the paper, click here.)
The paper finds that falls in pharmaceutical company profits resulting from price cuts would be largely if not fully offset by a combination of health plan cost-savings and increases in consumer spending power. Furthermore, falling drug prices benefit investors through the dynamic benefits from a healthier workforce with greater access to prescription drugs. We conclude that, from the perspective of the broadly diversified universal investor, support for lower drug prices is consistent with their fiduciary duty to seek attractive long-term returns at the portfolio level.
While this paper has a specific focus on pharmaceutical pricing, we believe it provides a case study that is broadly applicable to many other environmental and social issues. It provides a model to consider fiduciary duty at the portfolio level rather than at each individual holding in isolation, which may lead large institutional investors to support measures that could hurt individual holdings but lead to higher total returns across their portfolio.We are currently circulating the paper broadly among institutional investors and also to experts in healthcare reform. We’re hoping to publish the paper in a financial journal to gain a wide audience for our analysis.