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Big Pharma Is Urged to Report on Links Between Pricing and Pay

  • ICCR sees compensation that relies on revenue growth as risky
  • Group pushes ballot measures at annual meetings of 5 companies

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Pharmaceutical companies should be required to regularly report whether there’s a link between drug-pricing strategies and executive-compensation plans, according to a shareholder group.

The Interfaith Center on Corporate Responsibility, a coalition of institutional investors with more than $400 billion of assets, said in a statement Wednesday that it submitted proposals for inclusion at the 2018 annual meetings of Abbvie Inc., Amgen Inc., Biogen Inc., Bristol Myers Squibb Co. and Eli Lilly & Co.

“An executive compensation incentive program reliant on revenue growth solely from drug price increases is a risky and unsustainable strategy,” the group said in the statement. “The investors view executive incentive programs as a governance tool designed to ensure adequate oversight of risk and alignment of corporate strategies with mission.”

All of the annual bonuses for the chief executive officers of the five companies were tied in part to revenue and earnings in their most recent fiscal years, proxy filings show. The average awarded pay for the CEOs was about $19.2 million, according to the Bloomberg Pay Index.

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Lauren Zierke, a spokeswoman for Eli Lilly, said the company shares the coalition’s concerns about the price of medications for patients.

The drug maker is working to “identify solutions so medicine is accessible and affordable to those who need it,” she said in an emailed statement. “We have had a productive relationship and dialog with ICCR over time and will continue to engage with them.”

Spokespeople for the other pharmaceutical companies didn’t immediately reply to messages seeking comment.

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