Preventable Surprises is pleased to share the second Corporate Lobbying Alignment Project (CLAP) discussion note, this time focusing on the healthcare sector. With coronavirus raising systemic risk concerns in the healthcare sector, the new note offers potential forceful stewardship responses by institutional investors. We will discuss these in our online roundtable on 24 September 2020, with Wendell Potter from the Center for Health and Democracy, Meg Jones-Monteiro from ICCR, and more sector experts.
The pandemic has removed any lingering doubts about the systemic nature of risk in national and global health system dysfunction. Our note describes how these risks extend through the pharmaceutical and medical equipment value chains, from manufacturing sites in China and India all the way to the regulatory structure of retail markets and procurement systems in G20 economies. Alongside reputational and litigation risks for corporations involved in aggressive lobbying, the risk of health system failure is bad for society and for investors.
To kick-off the 2020s, the world’s largest investors – asset owners and managers – should be supporting robust public policy formulation and execution, free from corporate control and overt corruption in healthcare supply chains and procurement processes. Investors have not yet engaged in a meaningful way to address the global impact and associated risks of excessive lobbying by the largest companies in the global health system. Healthcare sector lobbyists follow a script cribbed from the tobacco industry in their efforts to capture scientific expertise and policy making outcomes; define the role of public insurance in health systems and drug price controls, particularly in the United States; and assert control over the structure of a specific product market or an entire market segment.
Beyond market architecture, individual companies and trade associations may seek to use market power to inflate drug prices and profits, leading to short-term windfalls and longer-term litigation risks. Recent corporate lobbying efforts have focused on:
- resisting government-run healthcare (in the US);
- pushing for privatisation of existing public health systems;
- increasing access to public research funds and associated tax subsidies;
- accelerating the approval process for new drugs and products; and
- strengthening intellectual property protections for patented medicines and health products.
The roundtable discussion will bring together investor leaders to debate the steps institutional investors can take to respond to policy capture in the healthcare sector, including the following options flagged in the discussion note:
- Preparing to bring shareholder resolutions on corporate lobbying alignment in a systematic way to support systematic disclosure across the transport sector. These could be similar to the resolution filed at Pfizer in 2020, and be brought at the 10 largest companies in the sector by revenue.
- Asking for a global roadmap for universal health insurance coverage in line with the WHO’s Roadmap for Access to be published at the G20, with support from the Business Twenty (B20) corporate lobby group.
- Engaging their own in-house legislative affairs teams to develop a deeper understanding of corporate lobbying practices and how to push investee companies in the healthcare sector to limit negative lobbying on drug pricing, access to affordable care and other key issues, and to ensure trade associations do the same. In the case of the largest asset managers such as BlackRock, they both invest in and provide consulting and investment services to healthcare companies, so understand the business model and the areas where lobbying contributes to political dysfunction and systemic risk.
Register your interest in joining the roundtable here.
Healthcare (Thursday, 24 September 2020)
Fossil fuels & mining (Thursday, 29 October 2020)
Power utilities (Thursday, 19 November 2020)
Materials – petrochemicals & agrochemicals (Thursday, 10 December 2020)
Finance (Thursday, 21 January 2021)
Financial regulators & policymakers (Thursday, 25 February 2021)
Final Online Dialogue & index launch (Dates TBC, March 2021)