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 Leaders of a 30-fund group that includes state pension officials and
religious and labor organizations plan to reveal on Monday they have
begun filing shareholder resolutions at 10 companies, including
distributors AmerisourceBergen Corp and Cardinal Health Inc and
manufacturers including Johnson & Johnson and Insys Therapeutics.
In resolutions aimed at annual shareholder meetings to be held in
2018 and in letters to the companies, activists are calling for
independent directors to review and report on how the boards are
managing the legal, financial and reputational risks their
enterprises face as a result of their involvement with opioids.
They also seek corporate-governance reforms such as allowing more
grounds to claw back pay from executives who inappropriately promote
the drugs, or creating independent board chairs to provide better
oversight.
Representatives of AmerisourceBergen, Cardinal and Insys did not
immediately respond to requests for comment.
Johnson & Johnson spokesman Ernie Knewitz said the company is
preparing a response to the investors, and that the company has
acted responsibly.
"Opioid abuse is a serious public health issue that must be
addressed, and doing so will require collaboration among many
stakeholders, and our company is committed to working with federal,
state and local officials to help find meaningful solutions," he
said in an e-mailed statement.
At its annual meeting on Nov. 8, Cardinal Health will face a
resolution calling for an independent board chair in order to
improve oversight.
"These considerations are especially critical at Cardinal given the
potential reputational, legal and regulatory risks Cardinal faces
over its role in the nation's opioid epidemic, including its history
of compliance challenges concerning the distribution of controlled
substances," the resolution's sponsors, including the International
Brotherhood of Teamsters, said in a supporting statement. The
statement cited Cardinal's payment of tens of millions of dollar to
settle various federal and state charges related to opioids.
In a securities filing Cardinal calls the change unnecessary, noting
it already has an independent lead director and "state-of-the-art
controls" over its pain medications.
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Officials at all levels of government in the United States are
struggling to respond to a surge in deaths from opioid abuse, which
hit 33,000 in 2015, the last year for which there is complete
federal data.
In many cases patients prescribed opioid painkillers become addicted
to them and then move on to acquiring the drugs illegally, or turn
to heroin or fentanyl, a highly potent synthetic opiate.
U.S. President Donald Trump on Thursday declared the opioid epidemic
a national public health emergency.
State attorneys general have also taken on opioid manufacturers,
with lawsuits charging that deceptive marketing practices helped
fuel an epidemic of abuse. Federal prosecutors on Thursday charged
the founder of Insys, John Kapoor, with participating in a scheme to
bribe doctors to prescribe a particularly potent opioid.
A lawyer for Kapoor said in a statement that Kapoor is innocent and
will fight the charges.
Shareholder activists said healthcare providers may have
underestimated how addictive the drugs were, but said the crisis
points to a need for stronger oversight within drugmakers.
"We believe these companies have played an important role in this
epidemic," said Donna Meyer, director of shareholder advocacy for
Mercy Investment Services, an investment fund for Roman Catholic
nuns. It is leading the resolutions push along with the UAW Retiree
Medical Benefits Trust, which oversees benefits for about 700,000
retirees of the United Auto Workers.
(Reporting by Ross Kerber; Editing by Leslie Adler)
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