I like voting my proxy statements. It makes me feel better about owning stock. I vote against any board member who also serves at another stock I own, against any member who admits to serving on more than 3 boards of major companies, and against the independent auditors, because they're not. I also vote for most shareholder proposals, which are mostly about corporate stuff, like how board members are elected, or how CEO's should be compensated.
Merck is always good for some political shareholder proposals. Last year some nuns wanted to ban stem-cell research (I always read these things, because stuff like this slips in), and there is always a proposal to eliminate testing on animals (this year PETA proposed this to GE), but I jumped when I saw this:
7. STOCKHOLDER PROPOSAL CONCERNING AVAILABILITY OF COMPANY
PRODUCTS TO CANADIAN WHOLESALERS
7. STOCKHOLDER PROPOSAL CONCERNING AVAILABILITY OF COMPANY
PRODUCTS TO CANADIAN WHOLESALERS
Howard J. Bicker, Executive Director, Minnesota State Board of Investment, 60 Empire Drive--Suite 355, St. Paul, MN 55103, owner of at least 2,491,445 shares of Common Stock of the Company, has given notice that it intends to present for action at the Annual Meeting the following resolution:
WHEREAS, current business practices of the company have resulted in a pricing structure that charges United States customers significantly higher prices for the same prescription medicines made available at significantly lower prices in Canada, other developed countries and world markets; and
WHEREAS, governmental agencies and individuals in the United States are demanding affordable drug prices and are taking actions to access lower priced products from Canada and other world markets; and
WHEREAS, according to published reports, the company has cut supplies of its medicines to Canadian wholesalers and companies that it claims allowed its product to be sold to Americans seeking lower prices available in the Canadian market; and
WHEREAS, according to published reports, the company's actions have resulted in lawsuits and threatened lawsuits; and
WHEREAS, the company's actions to limit supply of medicines in Canada may violate local, national and international laws and could result in large settlements, large awards of damages and potential punitive damages which would negatively impact the economic stability of the company and the value of its shares.
Resolved:
Shareholders request the Board of Directors to prepare a report on the effects on the long-term economic stability of the company and on the risks of liability to legal claims that arise from the company's policy of limiting the availability of the company's products to Canadian wholesalers or pharmacies that allow purchase of its products by U.S. residents. The report should be prepared at reasonable cost and
omitting proprietary information, by September 30, 2005.
Notice that Mr. Bicker argues that the cost of lawsuits are bad for the company, which may be part of it, but of course Big Pharma just want the American consumer to line their pockets. Here is Merck's reply:
Board of Directors Statement in Opposition to the Resolution
The products marketed in Canada by Merck subsidiary Merck Frosst Canada & Co. are approved for the Canadian market only. The importation of these products into the United States is a violation of U.S. law, which prohibits the importation of pharmaceuticals into the United States by anyone other than the manufacturer.
Merck supports the U.S. legal prohibition against importation. The Food and Drug Administration has expressed safety concerns about importing pharmaceuticals from outside of the U.S. regulatory system. We share these concerns and believe that allowing the importation of Canadian pharmaceuticals would increase the risk of counterfeit, adulterated or substandard medicines entering the U.S. marketplace. Merck Frosst therefore has reinforced with its customers its terms of sale prohibiting export of Merck Frosst products to purchasers in foreign countries, including the United States.
The proponent has requested that the Board prepare a report on the effect of the Company's practices on the long-term economic stability of the Company and on its risk of liability to legal claims. The Company believes that its practices, which support U.S. law while ensuring an adequate supply of drugs for Canadian patients, further the Company's economic stability and do not raise significant risk of liability.
In the Board's view, the report called for by the proposal is unwarranted and the expenditure of Company resources to prepare the report would not be in the best interests of the Company or its stockholders.
The Board of Directors recommends a vote AGAINST this proposal.
In other words "Legal, Legal, Risky, Legal, Legal, Too Expensive"
Of course, this is all double talk.
- Without the high prices U.S. Consumers pay, Big Pharma would not be making the profits they make.
- The FDA is so screwed up, that even with high prices in the U.S., Merck's stock price is in the basement because of their hiding of bad results with Vioxx.
No consumer of prescription drugs should take a drug that has not been approved outside the U.S. In fact, I try to take only drugs that have been on the market for at least 10 years. If my doctor wanted me to take something new, I would be sure it had been approved by Canada, the E.U., and Japan, at least.