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Zembla TV documentary tackles Dutch pension funds over costly pharma treatments

APG responds to report looking at how it voted at drugs firm Gilead

Dutch TV documentary Zembla, which has in the past tackled the country’s leading pension funds on investments in cluster bombs and commodities, has now turned its attention to their stance on pharmaceuticals, specifically a 2014 shareholder resolution at US drugs firm Gilead Sciences relating to a costly Hepatitis treatment.

Zembla’s scrutiny of the Netherlands’ major pension funds dates back to 2007 when it embarrassed some into withdrawing assets from cluster bomb manufacturers. In 2012 it looked at the role of investments in commodity derivatives in global food crises.

Now the programme has drawn attention to a proposal two years ago by the Aids Healthcare Foundation that would have made Gilead CEO’s pay dependent on making its $1,000 dollar-a-pill Sovaldi drug more affordable. Gilead sought to have the proposal excluded on the grounds that it sought to micromanage the firm.

APG, the asset manager for the €344bn Dutch civil servant scheme ABP, voted against the proposal, the programme revealed.

Said an APG spokesman: “There were several reasons for this, the most important being the fact that Gilead already had in place a system linking the non-financial goal of making its medications accessible to determining the remuneration for top management. Zembla presented this differently, to make its story more sensational.”

He added: “APG never interferes with the pricing of individual products of the companies it invests in, and also wanted to avoid taking a position on a political question like the level of pricing of a drug in a given market. That is something that the health care providers and governments have to negotiate with pharmaceutical companies.”APG was not alone in opposing the AHF resolution. Other big investors in Gilead that rejected it, according to voting records seen by RI, were CalPERS, Norges Bank Investment Management and the Florida State Board of Administration.

However, PGGM, which manages the €162bn in assets from Dutch health care fund PFZW, voted in favour of the AHF resolution, Zembla reported.

PGGM said that while Gilead’s board argued that accessibility to medicine was a metric for executive pay, it was not wholly persuaded by the argument. “This metric was unclear in its wording and regarding the performance levels that should be achieved. Asking companies to incorporate ESG factors in their compensation is something PGGM has done for many years.”

AHF’s proposal ultimately failed and cannot be re-submitted at California-based Gilead as the support for it was below the 3% threshold set by the Securities and Exchange Commission (SEC). Gilead declined to comment for this article.

The Solvadi case underscores how accessibility to specialised drugs has become an important ESG issue. According to PGGM, not only Gilead but its US-based peers Vertex and Celgene “are pricing some of their drugs at such high levels that they are at risk of making these medicines too expensive for governments and patients to be able to afford them.” PGGM adds that such an approach is risky, as the increased political and societal scrutiny that ensues may undermine the firms’ ability to sell their products. Link to Zembla documentary (Dutch).