28 May 2013 Free-Market Group Presents Shareholder Proposal to Merck Asking Company to Come Clean on Lobbying Goals and Expenses in Light of Company’s Support for Passage of ObamaCare
Group Also Asks Merck CEO His View of Obama Medicare Plan that Eli Lilly CEO Says Would Lower Private Investment in New Drug Research by $15 Billion Annually
Bridgewater, NJ / Washington, D.C. – At today’s annual meeting of Merck shareholders in Bridgewater, New Jersey, National Center for Public Policy Research Free Enterprise Project Director Justin Danhof, Esq. presented a shareholder proposal asking Merck to prepare an annual report describing the company’s lobbying activities in light of the company’s past efforts lobbying for and promoting ObamaCare.
At the 2012 and 2011 Merck shareholder meetings, Danhof and National Center President David Ridenour asked Merck CEO Kenneth Frazier to tell shareholders how much Merck spent to get ObamaCare passed, but Frazier refused.
Danhof also asked Merck CEO Kenneth Frazier if he agreed with Eli Lilly CEO Dr. John Lechleiter, who has estimated that an Obama Administration Medicare plan to require rebates to the government for so-called “dual-eligibles” would cost the pharmaceutical industry between $100 and $135 billion and reduce industry spending on new drug research by $15 billion.
“Frazier said he was in complete agreement with Dr. Lechleiter. According to Frazier, President Obama’s dual-eligibles plan would distort the market and negatively affect Merck and patients,” noted Danhof. “While not giving specific figures, he said that treating Medicare and Medicaid recipients the same would remove market incentives that allow for risk which leads to innovation and improved patient care. Frazier noted that innovation is the lifeblood of the pharmaceutical industry – a point that he drives home every time he is on Capitol Hill.”
“It seems that on the dual-eligibles issue, the White House has lost some once-staunch allies,” said Danhof. “Perhaps the President used up all of his political capital during the ObamaCare debates, or the industry is having a case of buyer’s remorse. Either way, it is clear that Eli Lilly and Merck strongly oppose President Obama’s Medicare plan, and are working hard to make sure it does not see the light of day.” During the ObamaCare debates, Merck financially and publicly backed ObamaCare.
Merck is a member of the Pharmaceutical Research and Manufacturers of America Association (PhRMA). At the height of the ObamaCare debates, PhRMA teamed up with the White House and dedicated $150 million to promote President Barack Obama’s signature legislation. In an exposé titled “ObamaCare’s Secret History: How a Pfizer CEO and Big Pharma Colluded with the White House at the Public’s Expense,” the Wall Street Journal described PhRMA’s active participation in that legislation as “a story of crony capitalism” and added that it is “clear that ObamaCare might never have passed without the drug companies.”
“Much of PhRMA’s active involvement with the White House was done in secret,” explained Danhof. “If company shareholders were alighted to all of Merck’s activities in promoting ObamaCare, perhaps they could have halted the company’s efforts. Shareholder activism and public sentiment are strong motivators for corporate leaders. And it is clear Merck and other PhRMA companies sought to keep their shareholders and the public in the dark about their ObamaCare blitz. Going forward, such a report to shareholders is of vital national interest as it may help prevent another catastrophe like ObamaCare.”
Merck’s board of directors recommended voting against the National Center’s proposal, claiming that the company already makes its public policy positions clear.
“Nothing could be further from the truth,” said Danhof. “Merck’s website is highly misleading since it claims that the company seeks health care reforms that ‘rely on market-based competition to improve quality, control costs and continue to encourage the innovation that has made the U.S. system so remarkable.’ ObamaCare stands in stark contrast to this stated position. This is why the lobbying report to company shareholders that we sought is so badly needed.”
The National Center has gone to great lengths to ascertain how much Merck and other pharmaceutical companies each spent towards PhRMA’s $150 million ad campaign, but the PhRMA CEOs, including Merck’s Kenneth Frazier, refused to say.
At Merck’s 2011 annual shareholder meeting, National Center President David Ridenour asked Frazier if he would tell Merck shareholders how much Merck shareholder money was spent to fund PhRMA’s ad campaign. Frazier said he would take the issue “under advisement.” At the 2012 shareholder meeting, in response to a question from Danhof, Frazier again refused to say how much Merck money propped up the ObamaCare ads. At that point, the National Center decided to submit a shareholder proposal encouraging Merck’s management to share its lobbying goals and activities with its shareholders.
“Merck has gone to great lengths to cover up the full extent of its involvement with the ObamaCare legislation. The law remains largely unpopular, and a recent Fox News poll indicates that a majority of Americans want to return to the pre-ObamaCare health care system,” noted Danhof. “It is no wonder Merck wants to bury the truth.”
“Even if they cannot count on the company for adequate disclosure, Merck shareholders should take some solace that the National Center will continue to monitor Merck and other pharmaceutical companies, as their public policy positions and actions often have the power to dramatically affect patient care and the delivery of health care,” added Danhof.
Since January 1st, 2013, the National Center has participated in free-market and conservative activism at 30 shareholder meetings. Today’s Merck meeting moves that total to 31.
The National Center’s shareholder proposal can be read on pages 68-69 of Merck’s proxy statement, available here.
The National Center for Public Policy Research is a Merck shareholder.
The National Center for Public Policy Research, founded in 1982, is a non-partisan, free-market, independent conservative think-tank. Ninety-four percent of its support comes from individuals, less than 4 percent from foundations, and less than 2 percent from corporations. It receives over 350,000 individual contributions a year from over 96,000 active recent contributors.
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