Investor call for ethical activity during COVID-19 fight

Investor group calls on biopharma sector to put ethics over competition in fight against COVID-19

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A group of mostly Dutch investors is calling on the biopharma sector to proactively collaborate and act responsibly in the fight against COVID-19. Companies that don’t comply risk divestment.

While the group is actively monitoring an undisclosed set of companies, they have not set clear metrics of bad behavior or thresholds that would trigger divestiture. And the vast majority of biopharma companies involved in developing solutions for the pandemic are already meeting most, if not all, of the principles the investors laid out in a letter to companies published on April 16.

The investors felt compelled to work together to head off potential unethical behavior due to early rumors of nationalistic behavior and the sector’s reputation of aggressive pricing policies. They want biopharma companies to know that they stand behind prioritizing medical countermeasures over near-term profits.

The letter, which was issued by coordinating investor Achmea and co-signed by 53 other investors, 27 of which are Dutch, notes that the investors manage a combined €2.6 trillion ($2.9 trillion) in assets. It does not specify how much of that capital is currently invested in the biopharma sector.

The principles

The one-page document outlines a set of principles the investors expect biopharma companies to adhere to as they respond to the COVID-19 crisis.

Near the top, the authors acknowledge the uniqueness of the situation, stating that “short-term financial considerations should come second to the global challenge of getting COVID-19 under control.”

According to Arjan Ruijs, senior investment officer at Actiam Asset Management, one of the signatories of the letter, the comment has two principal messages. First, biopharma companies should prioritize COVID-19 countermeasures over near-term misses in revenues or expenditures; second, companies should not set unethically high prices for COVID-19 vaccines or therapies.

“If you are the one that finds a solution, do not use that advantage to immediately set prices too high.”

Arjan Ruijs, Actiam

“On the one side do everything you can that’s in your power to help find a solution,” Ruijs told BioCentury. “But on the other end if you are the one that finds a solution, do not use that advantage to immediately set prices too high.”

It appears that nearly all companies in a position to have an impact are complying with number one. Within days of the SARS-CoV-2 virus sequence being released, seven vaccine and three mAb programs were already under way. And the list has rapidly grown. BioCentury is now tracking over 550 preclinical and clinical programs in its COVID-19 Resource Center, and over 200 trials for the disease have primary completion dates by the end of summer (see “Over 200 Trials Nearing Completion”).

How the therapies will be priced is still an unknown. Gilead Sciences Inc. (NASDAQ:GILD) has so far given away all its manufactured doses of remdesivir, the antiviral with the strongest clinical data against COVID-19 to date, although its effect size is modest. Remdesivir received Emergency Use Authorization to treat COVID-19 on May 1 and is not marketed in any other indication.

Gilead is now looking to invest up to $1 billion in manufacturing for the antiviral, and there’s been rampant speculation and debate over what will be and should be the therapy’s price.

Ruijs said the sector’s history of aggressive pricing was reason enough to include the warning in the letter. The warning extended to several behaviors that should be put aside to prioritize the industry’s obligation to come up with solutions for the crisis.

“Enforcing patents, excessive price setting, not disclosing relevant findings or securing extended market exclusivity through, for example, orphan drug designation should not run counter to this responsibility,” the investor group wrote.

Other principles called for include proactive collaboration across the sector, and fair distribution of both existing medicines and new ones to treat COVID-19 across countries.

In some cases, companies have moved in line with the investors’ demands on these points.

Gilead, for instance, granted non-exclusive licenses last month to five generics manufacturers to distribute remdesivir across 127 low and low-middle income countries (see “Gilead Secures Global Access”).

There has also been an unprecedented level of collaboration among pharmas through the 15 plus-member COVID R&D consortium, as well as two other major consortia (see “Sorting Out COVID-19 Consortia”).

One principle the group is calling for goes beyond COVID-19 to tackle the broader issue of resistance to antimicrobials.

The investors said in the letter that it is “crucial that large research-based pharmaceutical companies re-engage and re-invest in R&D programs for infectious diseases.”

Ruijs acknowledged it likely won’t be possible to know whether this will materially change biopharma’s interest in infectious disease R&D until after the acute phase of the pandemic passes.

Rubber meets the road

It is not clear how the investor group will know if companies are complying with the principles they’ve set out.

Ruijs admitted that they have not defined metrics. “It is difficult to put this in a quantitative figure,” he said.

Instead, each investor has been assigned an undisclosed number of biopharma companies to engage with and monitor regarding the stated principles. The investors meet once a month to discuss their findings.

According to Actiam investment officer Tessa Eerenberg, any consequences would be considered on a case-by-case basis.

“We don’t see it as something where if nothing happened from the sector, we’d exclude the whole sector,” she said.

But she did say that if a company exhibits unethical behavior or acts contrary to the principles laid out, the investors could ultimately decide to divest any current position and exclude that company from future investments.

Achmea did not respond to a request to comment.

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