By supporting a nonprofit that favors rationing health care, biotech giant Johnson & Johnson appears to violate its founding principles, a conservative shareholder activist says.
The activist brought this contradiction to the attention of the corporation’s CEO at a shareholder meeting last month, in what he hopes will become a model practice for other conservatives.
Conservatives can be effective in challenging liberals’ efforts to move major corporations to the left if they simply acquire some stock and speak up with facts, David Almasi, vice president of the National Center for Public Policy Research, said in a phone interview with The Daily Signal.
In recent weeks, Almasi and fellow activists also politely confronted executives of four other major U.S. corporations—AT&T, Bank of America, Amazon, and Twitter—at shareholder meetings.
“Often these days, corporate America has become a muscle and piggy bank for the left,” Almasi told The Daily Signal. “Sometimes executives do this for reasons of public relations, but in most cases, they are not helping consumers or their investors.”
“We’re the ones yelling stop during these meetings and asking them to think about what they are doing and to ask themselves if they are giving a fiduciary benefit to their investors and customers.”
In the past four years, the Free Enterprise Project of the National Center for Public Policy Research, a conservative think tank based in Washington, has made its voice heard in more than 100 shareholder meetings.
Amazon and Twitter, in separate shareholder meetings, this week rejected the Free Enterprise Project’s formal proposal that their boards reflect “true diversity.”
The full text of the proposal, on page 33 of Amazon’s proxy statement, specifies “ideological diversity” on the board as well as diversity based on race and gender.
Twitter rejected the idea Monday and Amazon did so Wednesday. The same diversity proposal is up for consideration at Facebook’s May 30 shareholder meeting and at Salesforce’s June 6 meeting.
“We believe that boards that incorporate diverse perspectives can think more critically and oversee corporate managers more effectively,” the Free Enterprise Project said in a statement supporting the proposal.
Prepared remarks at the Twitter and Amazon meetings by Justin Danhof, director of the Free Enterprise Project, are available here.
Amazon defended current policy in a statement recommending that shareholders vote down the proposal:
Diversity is a cornerstone of our continued success, and we are proud of the diversity of experience and perspectives represented by our directors and our employees. … Our Board composition reflects the robust nominating processes that we already have in place, which address much of what this proposal requests.
A Twitter spokesman, responding to Danhof’s remarks, said during the meeting:
For the reasons detailed in … our proxy statement, our board of directors believes that this proposal is not in the best interests of Twitter or our stockholders and recommends a vote against this proposal.
Questioning Johnson & Johnson’s CEO
Initiated in 2007, the Free Enterprise Project aims to advance free market ideals in corporate America on subjects including health care, energy, taxes, subsidies, regulations, religious freedom, food policies, media bias, gun rights, and workers’ rights
Almasi showed up for Johnson & Johnson’s shareholder meeting April 25 in New Brunswick, New Jersey, where the multinational medical device, pharmaceutical, and consumer goods company is headquartered.
During a question-and-answer session, Almasi asked CEO Alex Gorsky whether the company’s support for a Boston-based nonprofit, the Institute for Clinical and Economic Review, aligned with values expressed in the Johnson & Johnson credo.
Because the institute is “working to replicate” Great Britain’s health care rationing plan in the U.S., it puts Americans at risk of being placed on waiting lists to receive vital services or being denied access to certain drugs, Almasi warned Gorsky and other company officials.
“Johnson & Johnson has a fairly large meeting, and they really put on a show and run commercials and talk about profits and losses, and they are very open to investors,” Almasi told The Daily Signal. “I raised the fact that they started a relationship with a group that supports health care rationing.”
Robert Wood Johnson, the company’s former chairman and part of its founding family, drew up the Johnson & Johnson credo in 1943 to set the tone for its values and business practices.
The credo states, in part, that Johnson & Johnson’s “first responsibility is to the patients, doctors and nurses, to mothers and fathers and all others who use our products and services … We are responsible to the communities in which we live and work and to the world community as well. We must help people be healthier by supporting better access and care in more places around the world.”
The credo also says the company’s “final responsibility” is to shareholders, and that the business must turn a profit.
“What I said [to Johnson & Johnson’s Gorsky] is that you are part of a group and are giving money to a group that doesn’t want the patient to come first and instead wants a policy of health care rationing,” Almasi recalled in the interview.
“So, I brought this up and the CEO said he wasn’t aware of it, and I’ll take him at his word. But after the meeting, I had a discussion with [Johnson & Johnson’s] government affairs head, and we’re supposed to have another meeting in the next few weeks.”
Rationing Care, Denying Drugs
Almasi’s statement during the shareholder meeting, available here, ends with his asking Gorsky whether he could explain “how funding ICER benefits Johnson & Johnson, and whether this funding fits within the company’s credo.”
The Institute for Clinical and Economic Review describes itself as an organization “that objectively evaluates the clinical and economic value of prescription drugs, medical tests, and other health care and health care delivery innovations.”
Steven Pearson, the institute’s founder and president, previously was a senior visiting fellow with Great Britain’s National Institute for Health and Care Excellence, a government agency.
Almasi told Johnson & Johnson’s Gorsky that guidelines set by the National Institute for Health and Care Excellence were responsible for putting British citizens on waiting lists to receive health care.
“A lot of companies join groups because they want a seat at the table,” Almasi told The Daily Signal, and in the case of Johnson & Johnson he’d like to see the company “advance their credo” and oppose “the rationing of American health care.”
In the interview, Almasi also expressed concern that the Institute for Clinical and Economic Review’s partnership with the CVS retail pharmacy chain could result in denying prescription drugs to needy Americans based on highly subjective “quality of life” calculations.
Drug industry reporter Ed Silverman wrote in August that CVS set a “threshold of $100,000 per QALY, or quality-of-life years, a benchmark that measures both the quantity and quality of life generated by providing a treatment or some other health care intervention.”
In practice, this means the Institute for Clinical and Economic Review can call the shots on whether a CVS customer receives certain prescription drugs, Almasi warns.
“So, essentially this is like setting up an Obamacare death panel in the private sector,” he said. “We pointed this out to Johnson & Johnson, and we were able to do this by just by owning a couple of shares of stock and going into the room and asking questions. Now Gorsky may reevaluate the company’s relationship with ICER.”
How Those Questioned Respond
Johnson & Johnson did not respond to The Daily Signal’s request for comment as of publication time.
However, David Whitrap, vice president of communications and outreach for the Institute for Clinical and Economic Review, provided a statement countering the criticism.
“ICER’s mission is to help all Americans gain affordable access to high-value health care. Period. And we believe the best way to achieve this mission is to strive toward a system that achieves fair pricing of prescription drugs, fair access for patients, and financial incentives for future pharmaceutical innovation,” Whitrap said, adding:
We don’t determine a drug’s price, nor do we determine whether or not it should be covered by an insurance company, but we do provide a detailed, public and transparent assessment of new therapies so that all stakeholders—pharmaceutical companies, payers, patients, and physicians—can be better informed when they’re making critical decisions around the time of FDA [Food and Drug Administration] approval.
Michael DeAngelis, a senior director in corporate communications for CVS Health, told The Daily Signal in an email that the corporation is committed to “develop innovative tools” for clients of its pharmacy benefits manager, CVS Caremark, who he said include large employers, health plans, and unions.
Those tools, DeAngelis said, include plan designs “that will connect price, value, and coverage” and “help to influence manufacturer pricing on new drug launches.” He added of the Institute for Clinical and Economic Review’s role:
ICER is a well-respected, independent organization which utilizes a rigorous process to assess the value of drugs, including convening regional independent appraisal committees for public hearings on each report and publishing a final evidence report. These benefit design options for our PBM [primary benefits manager] clients are not discriminatory and, in fact, improve the chances that patients with disabilities and serious illness will be able to get the treatments they need at a price they and the health system can afford.
‘Muscle and Piggy Bank for the Left’
The Free Enterprise Project’s presence at shareholder meetings doesn’t mean that conservatives have leveled the playing field with liberal counterparts who have a longer history of shareholder activism, Almasi cautions.
He would like to see many more shareholders with stakes in the free market system become organized and aware of the influence they can exert.
“Often these days, corporate America has become a muscle and piggy bank for the left,” Almasi said, adding:
Sometimes executives do this for reasons of public relations, but in most cases, they are not helping consumers or their investors. We’re the ones yelling ‘Stop’ during these meetings and asking them to think about what they are doing and to ask themselves if they are giving a fiduciary benefit to their investors and customers.
The more active we can be, the more effective we can be. We need more conservatives to be on board.
What the Free Enterprise Project has been able to achieve in recent weeks on limited resources suggests that the field is wide open for conservatives to become shareholder activists, Almasi told The Daily Signal.
In some instances, corporate leaders may not be aware of practices that are offensive to some shareholders and potentially counterproductive to their financial goals, he said.
Bank of America and Planned Parenthood
In another example, the Free Enterprise Project’s Danhof spoke up about Bank of America’s support for Planned Parenthood during a April 24 shareholder meeting in Charlotte, North Carolina.
Danhof made use of research by 2ndVote, a conservative watchdog for corporate activism. Users of its online app, available on Google Play and Apple’s iTunes, have access to hundreds of corporate profiles.
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During the meeting, Danhof provided Bank of America executives with documentation from 2ndVote showing the bank had been a consistent sponsor of Planned Parenthood’s annual gala in New York City.
This matters because Bank of America long had said it supports Planned Parenthood only through an employee matching-grant program. But 2ndVote’s research, available here, shows otherwise.
Danhof questioned Bank of America CEO Brian Moynihan about the bank’s relationship with Planned Parenthood, and the audio of the back and forth is available in an online press release.
Danhof called on the bank to “correct the record” and publicly acknowledge it donates directly to Planned Parenthood.
Neither Bank of America nor the Planned Parenthood Federation of America responded by publication time to The Daily Signal’s requests for comment.
“We’ve had a great partnership with 2ndVote because they’re interested in the same corporate activism we are,” Almasi said. “They’re doing some great research, and they are going to the grassroots and getting information out there through scores and tweets.”
“When we went to Bank of America, we went with the information they found,” he said of 2ndVote. “This is a great example of how groups on the right are working together to get information out there.”
Connecting With AT&T
During AT&T’s shareholder meeting April 26 in Dallas, Texas, CEO Randall Stephenson told Danhof that he didn’t know employees in AT&T’s digital advertising department were blocking conservatives from accessing certain online platforms.
Their discussion centered on AT&T’s 2018 acquisition of AppNexus, a major online advertising platform with a history of excluding conservatives, according to a press release from the National Center for Public Policy Research.
AppNexus had not discontinued that practice, Danhof told AT&T’s Stephenson. In the press release, he said he expects Stephenson to “move decisively” to end any efforts at AT&T to muzzle conservatives.
The Daily Signal sought comment from AT&T, which responded through its advertising company, Xandr.
“Xandr regularly reviews the policies that govern our platform to ensure we are creating a safe advertising ecosystem for publishers, advertisers, and consumers,” a spokesperson said in an email. “Political ideology is not a category we consider in the course of content elimination decisions.”
Ken McIntyre contributed to this report.