RESOLVED: shareholders of Merck & Co, Inc. (“Merck”) ask the Board of Directors to report to shareholders, at reasonable expense and omitting confidential and proprietary information, on whether and how the direct and indirect receipt of public financial support for development and manufacture of a therapeutic for COVID-19 is being, or will be, taken into account when making decisions that affect access to such products, such as sharing intellectual property through voluntary licenses or setting prices.

SUPPORTING STATEMENT

Merck is seeking emergency use authorization for molnupiravir, an antiviral medicine, to treat COVID-19.1 Molnupiravir was developed at Emory University using up to $35 million in US government funding from 2013 through 2020.2 Emory was responsible for non-clinical testing, which enabled Ridgeback, during its short period of managing the drug, to receive FDA approval for human testing.3 After the drug was licensed to Ridgeback in March 2020, Ridgeback entered into a collaboration with Merck, which has taken over clinical development and manufacturing.4

US government funding is responsible for the discovery and development of molnupiravir.5 The government also maintains ‘march-in’ rights under the Bayh- Dole Act to grant patent licenses to other producers.6

Merck has promised to make the medicine widely available. Specifically, Merck states that ‘global access has been a priority’ for the company.7 However, Merck’s commitments have not been matched by the demand that the COVID-19 pandemic requires worldwide, nor shed light on how public support factors into decisions that affect access. Failure to meet delivery commitments and setting inaccessible prices could jeopardize the company’s reputation, and ultimately harm investor returns.

While Merck has signed bilateral licensing agreements and an agreement with the Medicines Patent Pool, those only cover an estimated half of the world’s population and exclude most upper-middle income countries most severely affected by COVID-19, including Brazil and Mexico.8 Merck is likely to apply a tiered pricing strategy for countries not included in the voluntary license.9 Tiered pricing for small molecule medicines usually results in unaffordable prices, especially for middle- income countries.10

Nor does Merck’s domestic pricing strategy reflect significant public support: producing molnupiravir costs an estimated $20 per course,11 while the company charges up to $712 per course in the US, more than 35 times the cost of production.12

Merck does not explain how it addresses the relationship between investment in a product and its pricing and licensing strategy.13 It is unclear whether Merck could modify its pricing and licensing strategy in the context of a pandemic in which public support has contributed significantly to the development and commercialization of products. This Proposal seeks to fill this gap by asking Merck to explain whether and how the significant contribution to its products by public entities affects, or will affect, decisions that could affect access, such as setting prices or setting the scope of its voluntary licenses.

1 https://www.merck.com/news/merck-and-ridgebacks-investigational-oral-antiviral-molnupiravir-reduced-the-risk- of-hospitalization-or-death-by-approximately-50-percent-compared-to-placebo-for-patients-with-mild-or-moderat/

2 https://www.wabe.org/emory-researchers-think-they-have-a-drug-to-fight-the-new-coronavirus/; https://www.washingtonpost.com/business/2020/06/11/coronavirus-drug-ridgeback-biotherapeutics/; https://www.keionline.org/36648

3 https://www.washingtonpost.com/business/2020/06/11/coronavirus-drug-ridgeback-biotherapeutics/ 4 https://www.businesswire.com/news/home/20200526005229/en/

5 https://www.keionline.org/36648

6 https://www.keionline.org/36648

7 https://www.merck.com/news/merck-and-ridgeback-statement-on-positive-fda-advisory-committee-vote-for- investigational-oral-antiviral-molnupiravir-for-treatment-of-mild-to-moderate-covid-19-in-high-risk-adults/

8 https://msfaccess.org/license-between-merck-and-medicines-patent-pool-global-production-promising-new-covid- 19-drug

9 https://www.merck.com/news/merck-and-ridgeback-statement-on-positive-fda-advisory-committee-vote-for- investigational-oral-antiviral-molnupiravir-for-treatment-of-mild-to-moderate-covid-19-in-high-risk-adults/

10 https://www.researchgate.net/publication/51712884_A_win- win_solution_A_critical_analysis_of_tiered_pricing_to_improve_access_to_medicines_in_developing_countries 11 https://scholar.harvard.edu/melissabarber/publications/estimated-cost-based-generic-prices-molnupiravir- treatment-covid-19

12 https://www.nytimes.com/2021/10/27/health/covid-pill-access-molnupiravir.html

13 https://www.merck.com/wp-content/uploads/sites/5/2021/08/Merck-Access-to-Health-Principles_Update- 2021.pdf