RESOLVED that shareholders of Johnson & Johnson (“JNJ”) ask the Board of Directors to report to shareholders, at reasonable expense and omitting confidential and proprietary information, on whether and how JNJ subsidiary Janssen’s receipt of government financial support for development and manufacture of vaccines and therapeutics for COVID-19 is being, or will be, taken into account when engaging in conduct that affects access to such products, such as setting prices.

Janssen has received substantial government funding for research and development related to COVID-19. In February 2020, Janssen entered into a “collaborative partnership” pursuant to which the U.S. Biomedical Advanced Research and Development Authority (“BARDA”) provided $456 million to develop a vaccine candidate for COVID-19,[1] and BARDA agreed to pay $152 million for Janssen and a partner to screen compounds for efficacy in treating COVID-19.[2] BARDA committed $1 billion to Janssen in August to fund expansion of vaccine manufacturing capability; the agreement entitles the federal government to 100 million doses.[3]

JNJ stated publicly that it will distribute a COVID-19 vaccine on a “nonprofit” basis, but that commitment is limited to “emergency pandemic use.”[4] JNJ has not clarified what “nonprofit” means when the government funds a significant portion of the research and development cost. If a COVID-19 vaccine must be readministered regularly to maintain herd immunity, as many experts predict,[5] demand will outlast the pandemic, and the potential market will be vast.  

If JNJ’s vaccine is approved, scaling up production beyond JNJ’s goal of producing 1 billion doses per year[6] will be essential to ensure universal and low-cost vaccine access, which is critical to maintain stability, reignite the global economy and investor returns,[7] and prevent domestic outbreaks.[8] Accordingly, JNJ will face enormous pressure to share intellectual property (including patents) over the COVID-19 vaccines or therapeutics to which public entities such as BARDA are contributing. Already, Janssen’s agreements with BARDA have been criticized for limiting the government’s intellectual property rights,[9] which could place a chokehold on mass production commensurate with global need—increasing price, decreasing overall supply and preventing universal access.  

JNJ’s 2019 Transparency Report—pre-dating COVID-19–describes the factors it considers in pricing: balancing the value of a medicine, the “importance of preserving [JNJ’s] ability to develop future groundbreaking cures and treatments,” and ensuring affordable access.[10] Yet, JNJ does not at present disclose how public financial support factors into its approach to ensuring access over its COVID-19 products. This Proposal seeks to overcome this gap by asking JNJ to explain whether and how the significant contribution from public entities to the COVID-19 products JNJ seeks to commercialize affects, or will affect, its analysis of those factors and of actions, including pricing, that it could take to ensure access.

[1]  https://www.jnj.com/johnson-johnson-announces-collaboration-with-u-s-department-of-health-human-services-to-accelerate-development-of-a-potential-novel-coronavirus-vaccine.

[2]  https://www.reuters.com/article/health-coronavirus-usa-funding/factbox-u-s-pours-billions-into-development-of-coronavirus-vaccines-tests-idINL4N2D32T5.

[3]  https://www.hhs.gov/about/news/2020/08/05/hhs-dod-collaborate-with-johnson-and-johnson-to-produce-millions-of-covid-19-investigational-vaccine-doses.html.

[4]  https://www.jnj.com/johnson-johnson-announces-a-lead-vaccine-candidate-for-covid-19-landmark-new-partnership-with-u-s-department-of-health-human-services-and-commitment-to-supply-one-billion-vaccines-worldwide-for-emergency-pandemic-use.

[5]  See e.g., https://www.nature.com/articles/d41586-020-02278-5.

[6] https://www.jnj.com/johnson-johnson-announces-a-lead-vaccine-candidate-for-covid-19-landmark-new-partnership-with-u-s-department-of-health-human-services-and-commitment-to-supply-one-billion-vaccines-worldwide-for-emergency-pandemic-use.

[7] https://www.wsj.com/articles/covid-19-vaccine-deployment-would-give-global-economy-a-lift-next-year-11601820001.

[8]  See https://www.americanprogress.org/issues/healthcare/reports/2020/07/28/488196/comprehensive-covid-19-vaccine-plan/.

[9]  https://www.keionline.org/wp-content/uploads/KEI-Briefing-OTA-29june2020.pdf, at 4.

[10] See https://jnj-janssen.brightspotcdn.com/19/3f/55f6149249348ab7c64ba881c638/jsn-2019-us-transparency-report-v16.pdf, at 11.