After years of acting with impunity, drug companies are starting to feel pressure from their financial enablers to do something about the opioid crisis. This pressure might lead to changes because it is coming not from patients, not doctors, not families of overdose victims, and not Congress or the Justice Department — but from the drug companies’ investors, as in the major institutional investors whose shares can make or break an industry.
There is some serious money to be made marketing prescription pain pills — so much money that it’s worthwhile buying a congressman and flooding, for example, West Virginia with 780 million doses of prescription opiates. But contributing to an ongoing public health disaster also carries some risk.
Major publicly traded companies are happy to see you buy a few thousand shares, but what they really want is investment from massive players, interested in a hundred million dollars’ worth of shares or more. Think university endowments and public-employee pension funds.
As Reuters reported this week, a group of more than 30 such funds — including labor unions concerned about their members’ retirement accounts — has started sending letters to the boards of big pharmaceutical companies.
These investors are demanding to know what the firms will do to reduce their exposure to risk from their roles in the crisis — and have informed the companies that they plan to spend upcoming shareholder meetings pushing “shareholder resolutions.” Big Pharma is on notice to concoct a plan to recover from legal penalties already incurred and to figure a plan for moving forward.
They’re also on notice to punish, with loss of salary, or to start supervising executives in charge while the crisis was mounting.
Such pressure can only come from massive investors with the clout to make a company’s stock price drop by double-digits with a massive divestment. But, true to Adam Smith-like principles, this is not an altruistic move. Pension funds and endowments need to retain their value, and pharmaceutical companies are at great risk of losing that value.
In May, Ohio Attorney General Mike DeWine filed suit against five major drug manufacturers, including OxyContin maker Purdue Pharma, blaming them for their role in fueling the drug overdose epidemic, which is killing up to 14 people a day in Ohio.
“They made this problem. The drug companies created this problem,” DeWine said. “We have to target the people who created it. These drug companies did it. They knew what they were doing.”
That’s the ultimate rub: Did they? It will take DeWine years of litigation to be able to even present such a theory in court. Proving it is another matter entirely, which is why he’s unveiled a plan to allow pharma companies to settle out of court and start atoning. They could start paying for drug-treatment programs.
It may sound cynical, but how proactive companies will be depends almost entirely on how their bottom line is threatened. And if they take seriously the threat of a massive revolt from their institutional investors, they’ll step to before the next trade can be made.
TELL US, have you used cannabis for pain?