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June 23, 2010
Access to Medicine Foundation Publishes 2010 Access to Medicine Index
    by Robert Kropp

The new index improves upon the 2008 version by including more pharmaceutical companies and by shifting focus from policy to practice.


There is widespread agreement that an essential part of the corporate social responsibility (CSR) of pharmaceutical companies is providing access to medicine for neglected diseases in developing countries.

Yet as recently as 2007, the Global Health Working Group at the Interfaith Center on Corporate Responsibility (ICCR) stated in a study of the CSR practices of Abbott Laboratories, "The most widespread and persistent public campaign against the practices of pharmaceuticals has been the charge that they are violating the human right to health: by failing to address the global health crises predominantly affecting the developing world, by inhibiting universal access to essential medicines, and by prioritizing intellectual property concerns and profit over saving the lives of millions who die from preventable and treatable diseases."

Fortunately, 2008 saw the publication of the first
Access to Medicine Index. Developed with an environmental, social, and corporate governance (ESG) methodology provided by Innovest (now part of RiskMetrics Group), the Index was designed to "help give millions of people on the planet better access to medicines that they urgently need" to help realize the sixth Millennium Development Goal of combating HIV/AIDS, malaria, and other diseases.

Leading up to this week's publication of the updated
Access to Medicine Index 2010, a group of institutional investors representing over $2 trillion in assets under management signed an Institutional Investor Statement indicating their support for transparency by pharmaceutical companies on access to medicine in developing countries.

Among the signatories to the Statement is
Boston Common Asset Management, a Boston-based investment firm which is an associate member of the ICCR. SocialFunds.com spoke with Lauren Compere, Senior Vice President and Director of Shareholder Advocacy at Boston Common, about the support for engagement provided by the Index. Compere participated in roundtable discussions of key stakeholders held in preparation for the 2010 Index.

"The Global Health Working Group at ICCR has been engaging with pharmaceutical companies for years," Compere said. "We've been using the Index at ICCR as a tool to engage pharmaceutical companies on access to medicine issues, and about how they compared to their peers."

"The pharmaceutical companies themselves gave more relevance and importance to the Index," Compere continued. "Speaking from the perspective of Boston Common, I was pleased to see that most of the input from all stakeholders was included in the 2010 Index."

Wim Leereveld, the Chairman of the Netherlands-based Access to Medicine Foundation, founded the organization in 2004. He told SocialFunds.com, "All these actors helped us develop a new and much more robust methodology."

According to the Foundation, "The Index 2010 features important methodological refinements. The Index 2010 covers more companies, more diseases, and more indicators." The ESG methodology for the Index 2010 was provided by RiskMetrics.

The Index 2010 covers more originator companies (20 vs. 17) and generics companies (7 vs. 3) than the 2008 Index, and ranks originators and generics separately. It focuses more on non-communicable diseases and innovations in the sector, while employing more diverse sources of information. The Index 2010 uses 106 indicators, grouped into seven areas, to cover the efforts of the 20 largest originator pharmaceutical companies to address 33 priority diseases in 88 developing countries.

Perhaps most importantly, the Index 2010 improves upon its predecessor by focusing on actual performance as well as policy commitments and transparency. As Compere told SocialFunds.com, "The 2008 methodology was primarily focused on policies rather than practice, and I was excited to see that the emphasis in 2010 was on actual practices."

Leereveld said, "The 2008 Index was more about policy, and in 2010 we're also interested in what is the effect on the ground. How many do you sell over there? What's your performance on the ground?"

"The most important measurements are management practices, patent and pricing issues, and the research and development pipelines of pharmaceutical companies," Leereveld continued.

The response by pharmaceutical companies to the Foundation's publication of the 2008 Index was notable. Companies that had declined to even disclose information to the Foundation in 2008 "put 50 people to work responding to our requests for information for the 2010 Index," Leereveld said.

According to Compere, GlaxoSmithKline, which was ranked first in the 2008 Index, "was concerned that they wouldn't make the top spot again. GSK used the Index as an internal tool to engage employees, which is telling."

In the Index 2010, GlaxoSmithKline was again ranked first. According to the Index 2010, GlaxoSmithKline reduced its prices for patented drugs in developing countries, entered into non-exclusive voluntary licensing agreements with local African manufacturers, reinvested profits into health infrastructure projects in developing countries, and had the highest number of drug donation programs.

The US-based Merck was ranked second in the Index. Along with Novartis, which ranked third, the three top-performing companies "have improved in their transparency, performance and commitments to access to medicine," according to the report.

However, the report continued, "They still have a long way to go to realize their full potential both for improving access and for exploiting the growth opportunities in the Index Countries."

According to the report, "All the companies remain weak in certain disclosure areas, such as public disclosure of marketing activities in the Index Countries, lobbying practices in the Index countries and public disclosure of the terms and conditions of research collaborations."

The US-based Gilead Sciences experienced the most significant improvement in ranking, rising from 15th to fourth in the Index 2010. According to Leereveld, "Gilead rose from 15 to 4 in part on the basis of taking on local partners to ensure the lowest price in developing countries."

The report also found that Gilead has established a Health Policy Advisory Board for stakeholder engagement on ATM issues, and has a high level of transparency in registration information for its HIV/AIDS medications.

However, according to the report, "While Gilead has leading practices in several areas, its public disclosure on policy positions, lobbying and marketing practices in the Index Countries is inferior to that of other highly ranked companies."

The Foundation intends to update its Index every two years. The industry response to the 2008 Index, as well as the involvement of all key stakeholders in the preparation of the Index 2010, strongly suggests that the influence of the Index on the CSR practices of pharmaceutical companies can be expected to grow.

According to Leereveld, the success of the Index suggests further that its methodology can be expanded to address the CSR practices of companies in other industry sectors as well. He told SocialFunds.com, "If our model works for the pharmaceutical sector, it might work for other sectors as well. The financial crisis showed that CEOs of banks did not do a good job of listening to all their stakeholders, but only looked inside their companies. CEOs in other sectors can learn how to listen to their stakeholders from the leaders in the pharmaceutical area."

 

 
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