California Public Employees Retirement System Sends Letter Questioning Antiretroviral Drug Pricing to GlaxoSmithKline
The California Public Employees' Retirement System, known as CalPERS, yesterday sent a letter to GlaxoSmithKline questioning the pharmaceutical company's pricing of its antiretroviral drugs, Reuters reports (Reuters, 4/15). According to Dow Jones News Service, CalPERS, the largest U.S. pension fund, owns 20.2 million shares of GSK stock valued at nearly $760 million (Gryta, Dow Jones News Service, 4/15). CalPERS, which has a "history of being an activist -- and influential -- shareholder," decided to send the letter at the suggestion of the Los Angeles-based AIDS Healthcare Foundation, the Raleigh News & Observer reports. The letter requests that GSK reevaluate its antiretroviral drug pricing for developing countries and look into licensing for generic antiretrovirals for humanitarian purposes (Ranii, Raleigh News & Observer, 4/16). On April 7, the California Senate Public Employee Retirement System Committee approved 3-2 a concurrent resolution (SCR 11) encouraging CalPERS to use shareholder resolutions to influence pharmaceutical companies that develop HIV/AIDS medicines, such as GSK, to ensure that the drugs are affordable to developing countries (Kaiser Daily HIV/AIDS Report, 4/9). The CalPERS Investment Committee on Monday voted 13-0 to send the letter to GSK (AIDS Healthcare Foundation release, 4/15).
The CalPERS letter commends GSK's humanitarian efforts, saying, "We recognize that [GSK] has established effective humanitarian programs. We found an attitude within key constituencies related to your company that both recognized the positive steps the company has taken as well as a desire for continued and additional support. ... We would like to emphasize that we are supportive of continued and additional humanitarian efforts at Glaxo." However, the letter expresses concern that GSK's response to the AIDS epidemic has the potential to damage the company's reputation, adding, "How the company handles this risk is important to its long-term shareowners." In light of this risk, the letter says, "We request that Glaxo's Corporate Responsibility Committee immediately and continually evaluate the company's humanitarian efforts in light of a changing environment, including its response to the AIDS epidemic. We believe this should include continued evaluation of the means by which GSK can offer the lowest possible price on its AIDS therapies without long-term harm to the company and in recognition of the balance you must strike between economics and reputational costs" (CalPERS letter, 4/15). According to a GSK release, the CalPERS board voted to send the letter after unanimously rejecting a proposal supported by AHF to sell its GSK shareholdings (GSK release, 4/15). However, an AHF release states that GSK's claim is false, and neither the letter nor the vote to approve the letter referenced divestiture (AHF release, 4/15).