Gilead Should Disclose Risks of High-Priced Drugs, ISS Says

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Investors should push Gilead Sciences Inc. to disclose more information about how the drugmaker sets prices for some of its costly treatments, an influential advisory firm said.

Institutional Shareholder Services Inc., which advises major stockholders, backed a proposal from the union group UAW Retiree Medical Benefits Trust that calls for Gilead to tell shareholders about risks related to pressure to lower the price of high-cost drugs in the U.S.

Such treatments include Gilead’s hepatitis C cures Harvoni and Sovaldi, which are priced at $1,000 or more a day. They are on track to become among the best-selling drugs of all time, as well as some of the most expensive.

“The company does not disclose sufficient information about how it is managing the risks associated with its pricing of specialty drugs,” ISS said in the April 23 report.

ISS noted that Gilead faces legal action and government investigations over the drugs’ pricing. In addition, their higher price in the U.S. relative to other countries has drawn negative attention to the drugmaker, ISS said.

The union trust has made similar proposals at drugmakers Celgene Corp. and Vertex Pharmaceuticals Inc. Vertex’s board said shareholders should vote down the measure, while Celgene hasn’t yet filed its 2015 proxy statement.

Gilead said in its March 27 proxy filing that the union proposal isn’t in shareholders’ best interest and they should vote against it.

Too Expensive

“We believe that preparing and issuing a formal report of the type requested in the proposal would require substantial time and expense,” Gilead said. “Our board therefore recommends a vote against the proposal.”

Gilead already discloses information about pricing and efforts to help patients afford the drugs, the board said. Amy Flood, a Gilead spokeswoman, declined to comment beyond the filing.

Gilead’s annual shareholder meeting is scheduled for May 6 in Millbrae, California, near San Francisco.

ISS also said shareholders should ask the company to create an independent chairman role and push for a report on sustainability efforts. Gilead opposes both of those proposals.

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