Lobbying Expenditures Disclosure

Resolution Text

Whereas, we believe in full disclosure of our company’s direct and indirect lobbying activities and expenditures to assess whether Vertex’s lobbying is consistent with its expressed goals and in shareholder interests.

 

Resolved, the shareholders of Vertex Pharmaceuticals Incorporated (“Vertex”) request the preparation of a report, updated annually, disclosing:

 

1.   Company policy and procedures governing lobbying, both direct and indirect, and grassroots lobbying communications.

 

  1. Payments by Vertex used for (a) direct or indirect lobbying or (b) grassroots lobbying communications, in each case including the amount of the payment and the recipient.

 

  1. Vertex’s membership in and payments to any tax-exempt organization that writes and endorses model legislation.

 

  1. Description of the decision-making process and oversight by management and the Board for making payments described in section 2 and 3 above.

 

For purposes of this proposal, a “grassroots lobbying communication” is a communication directed to the general public that (a) refers to specific legislation or regulation, (b) reflects a view on the legislation or regulation and (c) encourages the recipient of the communication to take action with respect to the legislation or regulation. “Indirect lobbying” is lobbying engaged in by a trade association or other organization of which Vertex is a member.

 

Both “direct and indirect lobbying” and “grassroots lobbying communications” include efforts at the local, state and federal levels.

 

The report shall be presented to the Audit Committee or other relevant oversight committees and posted on Vertex’s website. 

 

Supporting Statement

 

            As shareholders, we encourage transparency in Vertex’s use of funds to lobby, both directly and indirectly. While we commend Vertex on its recently published lobbying policy, disclosure gaps remain. Vertex discloses trade associations receiving more than $25,000 and the amounts used to lobby, including the Biotechnology Innovation Organization (BIO), but its disclosure covers only dues, not other payments, which can be significant. Additionally, this disclosure does not include 501(c)(4) social welfare organizations, such as the Alliance for Patient Access (AfPA). Vertex's undisclosed membership in AfPA poses reputational risks on drug pricing and opioids. The AfPA has been described as a non-profit pharmaceutical industry front group[1] and has attracted negative scrutiny for its role in passing legislation that weakened the Drug Enforcement Administration’s ability to stop suspicious drug shipments by drug distributors, thereby exacerbating the opioid crisis.[2]

 

We are concerned Vertex’s payments to third party groups may be used for undisclosed grassroots lobbying. For example, BIO funds the Alliance to Protect Medical Innovation, described as a front group formed in response to the campaign by Patients for Affordable Drugs.[3] Grassroots lobbying does not get reported at the federal level under the Lobbying Disclosure Act, and disclosure is uneven or absent in states.

Transparent reporting would reveal whether company assets are being used for objectives contrary to Vertex’s long-term interests. We are concerned that Vertex’s lack of indirect lobbying disclosures, and any potential negative publicity for opposing drug price initiatives, may present reputational risks for Vertex.

 

 

[1] https://www.healthnewsreview.org/2017/10/non-profit-alliance-patient-access-uses-journalists-politicians-push-big-pharmas-agenda/

[2] https://theintercept.com/2017/10/22/opioid-lobbyist-left-a-digital-fingerprint-on-a-campaign-by-patient-advocates/

[3] https://www.washingtonpost.com/business/economy/anonymous-ghost-ship-is-among-groups-flooding-drug-pricing-debate/2019/01/22/3d7356a8-1b3b-11e9-8813-cb9dec761e73_story.html

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Lead Filer

Amy Carr
Friends Fiduciary Corporation