Teamsters: At Annual Meeting, AmerisourceBergen To Face Heightened Calls For Accountability Amid Opioid Crisis From $2.2 Trillion Cohort Of Investors

NAPLES, Fla., March 1, 2018 /PRNewswire-USNewswire/ -- At pill distributor AmerisourceBergen's (NYSE: ABC) shareholder meeting Thursday, the board of directors and top executives will face surging investor demand for precedent-setting reforms aimed at holding the company accountable for its role in fueling the opioid crisis.

Amid mounting scrutiny of AmerisourceBergen and a year of calls for reform from the International Brotherhood of Teamsters, the union along with other members of a growing group of institutional investors with more than $2.2 trillion in assets are pressing shareholders to support measures that would instill rigorous, independent oversight and greater transparency.

The Teamsters and its affiliated pension and benefit funds -- long-term shareholders of AmerisourceBergen -- have been leading a shareholder effort that has been racking up victories at AmerisourceBergen's top competitors McKesson Corporation and Cardinal Health, while the Philadelphia-area company falls behind. The Thursday meeting at a Ritz Carlton in Naples could change the company's trajectory and marks the first time shareholders of any major drug company can institute a comprehensive package of governance changes directly tied to the opioid crisis.

The proposals, filed by the Teamsters and other members of a fast-growing coalition known as "Investors for Opioid Accountability," include:

• A proposal submitted by the Teamsters calling for an independent chairman of the board to assure shareholders that their interests are being safeguarded as the company navigates challenges stemming from its role in the opioid crisis.
• A clawback disclosure proposal submitted by the UAW Retiree Medical Benefits Trust and the Connecticut Retirement Plans and Trust Funds to strengthen the effectiveness of these policies by enhancing transparency.
• A proposal submitted by the Sisters of St. Francis of Philadelphia, Trinity Health, JLens Investor Network and Missionary Oblates OIP Investment Trust requesting a report on how the board is addressing opioid-related business risks.

"What a difference a year makes: when we went to the AmerisourceBergen shareholder meeting last year, the opioid crisis wasn't on the radar of most investors; but after investor revolts at McKesson and Cardinal Health, it is now front and center for AmerisourceBergen shareholders," said Ken Hall, General Secretary-Treasurer of the International Brotherhood of Teamsters. The union, along with state elected officials and recovery groups, kicked off the effort for accountability at the "Big Three" drug distributors at AmerisourceBergen's annual meeting last year. "AmerisourceBergen shareholders can be a force for good and make the company an industry leader rather than a toxin that's holding our nation back and fueling the worst public health crisis of our time. The Teamsters union is proud to stand with shareholders and communities across the country determined to make our voices heard and will continue fighting to hold our nation's healthcare industry accountable."

Hall will present the Teamsters' proposal on the meeting floor, and Tom McCaney of the Sisters of St. Francis in Philadelphia will deliver remarks in support of his organization's proposal as well as the clawback disclosure measure. Additionally, among those slated to speak is Travis Bornstein, president of Teamsters Local 24 in Akron, Ohio, whose son Tyler became addicted to opioids and died of an overdose in 2014 at age 23.

"As Pennsylvania grapples with the nation's fourth-highest overdose rate, AmerisourceBergen is fleeing its home state and running away to Florida to escape the scrutiny," McCaney said. "But that won't stop shareholders from demanding the reforms and culture of accountability desperately needed to address the company's role in fueling the opioid crisis. Together, we have the chance to chart a new course not only for AmerisourceBergen, but for the entire healthcare industry, and I'm proud to stand together with investors of all backgrounds determined to make a difference."

In February, two leading proxy advisory firms, Glass Lewis and Institutional Shareholder Services (ISS) came out in support of the coalition's proposals, with Glass Lewis noting in its report: "we do not believe that the company has sufficiently outlined the governance measures that the company has taken to effectively monitor and manage financial and reputational risks."

Background

After kicking off a year ago with a group of Teamsters, elected officials and recovery groups protesting at AmerisourceBergen's annual meeting, the effort to hold major prescription drug distributors accountable for their role in the opioid epidemic has grown into a winning force in the battle to address the national crisis. In July, McKesson Corporation investors backed the Teamsters' call to reject the board's executive pay proposal, with the company also acquiescing to Teamster-led demands to separate the CEO and chairman positions in the future. Only months later, the Teamsters took its call for stronger accountability and corporate governance to Cardinal Health' s annual meeting, leading the company to announce that its next board chair will be an independent director. In contrast, the response from AmerisourceBergen's Board of Directors to growing shareholder and public scrutiny around the opioid crisis has been relatively mute.

AmerisourceBergen is facing mounting pressure from multiple fronts related to its opioid distribution practices, including regulatory settlements and hundreds of lawsuits filed by public and private parties. Last year, AmerisourceBergen agreed to a potentially precedent setting $16 million settlement with the state of West Virginia relating to its role in distributing opioids.

This week, U.S. Attorney General Jeff Sessions announced the creation of a new task force on opioid distributors and manufacturers and said his department filed a statement of interest in a case involving hundreds of lawsuits related to the distribution of opioid products. AmerisourceBergen has become the subject of an investigation by the House Energy and Commerce Committee, which recently demanded new information on how the country's largest drug distributors authorized the flow of more than 423 million pills into West Virginia over just a six-year period. AmerisourceBergen alone distributed more than 132 million of those doses.  Additionally, the company recently purchased H.D. Smith, a smaller distributor identified by Congressional investigators as having, in a single year, shipped 3,000 hydrocodone pills per day to a West Virginian town with only 1,800 residents.

McKesson, AmerisourceBergen, and Cardinal Health are the three largest wholesale prescription drug distributors in the country. Ranking #5, #12, and #21 on the list of Fortune 500 companies, the "Big Three" have reported more than $480 billion in revenue and $7 billion in net income over the past year.

The three companies are responsible for 85 percent of all prescription drug distribution in the country, and therefore play an outsized role in providing access to prescription opioids across the country.

The Teamsters and its affiliated pension and benefit funds have more than $100 billion in assets invested in the capital markets and are long-term investors in each of the "Big Three" wholesale distributors.

Contact: 
Desmond Lee, (646) 517-1826
[email protected]

SOURCE International Brotherhood of Teamsters

Related Links

http://www.teamster.org