BOSTON (Reuters) - U.S. shareholder activists are addressing a soaring death toll from opioid drug abuse, asking companies that make and distribute the painkillers to review the risks their businesses could face from their role in the sector.
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 (ABC.N) and Cardinal Health Inc (CAH.N) and manufacturers Johnson & Johnson (JNJ.N) and Insys Therapeutics INSY.O.
In resolutions aimed at annual shareholder meetings to be held in 2018 and in letters to the companies, activists are urging independent directors to review and report on how the boards are managing the legal, financial and reputational risks their enterprises face from 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 Cardinal and Insys did not immediately respond to requests for comment.
Johnson & Johnson spokesman Ernie Knewitz said the company was preparing a response to the investors, and that the company had 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 emailed statement.
In a statement emailed by AmerisourceBergen spokeswoman Keri Mattox, the company said it “welcomes a productive dialogue with all shareholders. The issue of opioid abuse is a complex one that spans the full healthcare spectrum, including manufacturers, wholesalers, insurers, prescribers, pharmacists and regulatory and enforcement agencies.”
The statement said the company worked closely with officials “to combat drug diversion while supporting appropriate access to medications.”
At an 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.
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 and Bernadette Baum