Today, 23.9% of voting shareholders of AbbVie, a U.S. pharmaceutical company, supported a United Church Funds-led shareholder resolution to report on the “feasibility of incorporating public concern over high drug price into the senior executive compensation arrangement.” The resolution asked the company to assess the extent to which incentive compensation arrangements encourage the public’s trust in AbbVie’s innovation and concern for healthy outcomes.
In the argument on behalf of the resolution, United Church Funds stated that AbbVie’s leadership must demonstrate that there are no occurrences of misaligned incentive pay. Such practices discourage executives from focusing on long-term sustainability rather than the “get rich quick” strategies of drug price increases.
For the second year in a row, a Gallup poll demonstrated that the pharmaceutical industry’s favorability rating is at the lowest among sectors included in the poll. UCF believes this is partially due to drug price management missteps.
Several states have passed legislation addressing pricing-related issues. Many other measures have been introduced at the federal and state level, further demonstrating that public concern has not yet been ameliorated by the industry’s response and by year-by-year pricing commitments.
Responsible investors believe that the coronavirus pandemic provides a particularly sensitive time for AbbVie to make sure that the economic and health hardships that the world is experiencing are not compounded by drug price increases. Now is not the time to exploit the public health’s fragility by raising drug prices or preventing competition.
We are pleased that a large proportion of AbbVie’s shareholders agree that its leadership must consider public concern when setting executive incentives in order to balance financial goals with the goals of creating positive impact on patients’ lives.