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/or indirect receipt by Merck of public financial support for development and manufacture of a vaccine or therapeutic for COVID-19 is being, or will be, taken into account when making decisions that affect access to such products, such as setting prices.

SUPPORTING STATEMENT

Merck has announced initiatives to develop vaccines for COVID-19, one in partnership with the International AIDS Vaccine Initiative (“IAVI”) and the other through acquisition of Themis Bioscience. As well, Merck has stated that it is working with Ridgeback Therapeutics to develop an antiviral drug.[1]  

Public funding supported development of the virus vector technology Merck is using for the COVID-19 vaccine it is developing with IAVI. That technology was originally developed by Canadian researchers and the U.S. Army for use in an Ebola vaccine, which Merck licensed and commercialized. The Biomedical Advanced Research and Development Authority provided $175 million to support production and validation of the Ebola vaccine[2] and has agreed to contribute $38 million toward development of Merck and IAVI’s SARS-CoV-2 vaccine.[3]

The Themis vaccine uses a virus vector platform originally developed by the Institut Pasteur,[4] a nonprofit research center that receives substantial funding from the French government.[5] Themis’ collaborators include the Coalition for Epidemic Preparedness Innovations,[6] whose major funders have included the Norway, Germany, Japan and United Kingdom governments.[7]

Unlike Janssen and AstraZeneca,[8] Merck has not committed to provide its vaccine on a nonprofit basis during the pandemic.[9] We believe that charging a price perceived as too high could damage Merck’s reputation and create regulatory risk. An industry publication recently noted that “[v]accine pricing has the potential to be controversial, given the urgent health crisis posed by the pandemic as well as the billions of dollars in government funding supporting coronavirus vaccine development.”[10]

If a Merck vaccine is approved, scaling up production will be essential to ensure universal and low-cost vaccine access, which is critical to maintain stability, reignite the global economy,[11] and prevent domestic outbreaks.[12] Accordingly, Merck would face enormous pressure to share intellectual property covering the product to which public entities have contributed.

The section of Merck’s website addressing drug pricing lists factors it considers in setting prices, but does not address the relationship between investment in a product and pricing.[13] It is unclear, then, how Merck would apply its usual factors 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 Merck makes that could affect access, such as setting prices.

[1]  https://www.merck.com/stories/how-we-are-responding-to-the-global-pandemic-covid-19/

[2]  https://www.statnews.com/2020/01/07/inside-story-scientists-produced-world-first-ebola-vaccine/

[3]  https://www.policycuresresearch.org/covid-19-r-d-tracker

[4]  https://www.trialsitenews.com/flurry-of-merck-deals-to-enter-covid-19-vaccine-therapy-race-will-tap-into-federal-dollars/

[5]  https://www.sciencemag.org/news/2013/05/institut-pasteur-fights-claims-financial-mismanagement

[6]  https://www.trialsitenews.com/flurry-of-merck-deals-to-enter-covid-19-vaccine-therapy-race-will-tap-into-federal-dollars/

[7]  https://www.policycuresresearch.org/covid-19-r-d-tracker#whatdata

[8]  See https://www.usatoday.com/story/news/2020/07/20/covid-19-vaccine-house-hearing-non-profit-low-price-possible/5475329002/

[9]  https://www.reuters.com/article/us-health-coronavirus-usa-vaccines-price/moderna-merck-say-they-will-not-limit-price-of-coronavirus-vaccines-to-company-cost-idUSKCN24M2PP

[10]  https://www.biopharmadive.com/news/moderna-coronavirus-vaccine-price-dose/582947/

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

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

[13]  https://www.pfizer.com/news/featured_stories/featured_stories_detail/how_does_pfizer_price_medicines

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