We are committed to participating constructively and responsibly in the political process, and to providing clarifying analysis and information regarding the issues that affect our business and patient care.
A major element of our corporate responsibility approach is our public policy advocacy work and our outreach to stakeholders. Our outreach helps to inform and advocate for public policies that foster research into innovative medicines and that improve access to medicines, vaccines and health care. We believe this engagement is also fundamental to our understanding of—and response to—society’s expectations of our company. Our engagement with stakeholders guides our business strategy and decisions, and strengthens stakeholders’ understanding of—and trust in—our business.
We recognize that our outreach can help highlight and address important issues, leveraging the expertise of all our stakeholders to develop sustainable solutions to such challenges as disease, lack of education, environmental challenges and corruption. We continue to pioneer far-reaching programs and partnerships, the results of which demonstrate that more can be achieved by working together than by individual stakeholders working alone—and can make a sustainable difference.
Government proposals to regulate the health care system may directly affect our business and our incentives for pharmaceutical innovation. Important policy initiatives can also increase patient access to medicines and vaccines and to health care insurance coverage—particularly for patients in disadvantaged communities and regions.
Consequently, the company has chosen to help inform the debate on these issues in the U.S. and other countries. Our participation in the political process is guided by the following principles:
- Improve patient access to health care, including medicines and vaccines
- Encourage innovation by protecting intellectual property rights, advocating for government support of basic research, and supporting efficient and effective regulatory systems, among other issues
Our company’s Executive Committee has overall governing responsibility for our public policy strategy, as guided by the Governance, Public Policy and Corporate Responsibility Committee of the Board of Directors. Our Global Public Policy Leadership Team leads the development and communication of policy positions on major issues. Statements summarizing our position on key public policy issues are posted on our corporate headquarters’ website. Learn more.
HOW WE ENGAGE
We engage in public policy debates primarily by communicating information to government officials and policy makers.
Our U.S. Federal Policy and Government Relations office in Washington, D.C., is responsible for advocacy activities with the U.S. Congress and other bodies of the federal government. Advocacy at the state level is managed by our State Government Affairs & Policy organization. Outside the U.S., advocacy activities are managed at the regional, country or local level, with support from regional and corporate policy staff.
To assist our advocacy and policy analysis work, our company and our affiliates contract with a range of private firms specializing in government affairs advocacy. These firms employ government affairs consultants with particular expertise on issues of importance to our company. Our U.S. Action Network also informs our U.S.-based employees and retirees about important legislative issues, and serves as a conduit through which they can communicate with their representatives in Congress.
All of our employees must abide by our global corporate Code of Conduct “Our Values and Standards,” which applies to our interactions with government officials and to advocacy activities on public policy issues. This code is intended to ensure that all information provided to government entities is complete and accurate to the best of an employee’s knowledge and belief. In the U.S., there are also important federal and state lobbying-registration and disclosure laws with which we comply.
Our corporate policy on ethical business practices includes guidelines conforming to the U.S. anti-kickback laws and Foreign Corrupt Practices Act, making clear that no illegal payments of any kind (monetary or otherwise) are to be offered or made to individuals or entities—including local, state or federal government or political party officials or candidates in the U.S.; government or political party officials or candidates of any other nation; or officials of public international organizations—at any time or under any circumstances.
To improve access to information about our advocacy activities, we disclose costs associated with lobbying in the EU and the U.S. Click here for our 2015 reporting to the EU Transparency Register. Costs reflect the pro rata salary costs of MSD staff and the proportion of employee time and outsourcing spent on initiatives involving interest representation to European institutions.
In the U.S., in compliance with the Lobbying Disclosure Act, we file quarterly reports with the U.S. Congress disclosing the issues we are lobbying about and the amount of money we spend each quarter. These reports incorporate the expenses associated with lobbying the federal government, including those incurred by our U.S. Federal Policy and Government Relations office, and the portion of our trade association dues associated with federal lobbying.
Our Top Lobbying Issues
In the U.S. in 2015, the top issues at the federal level for which our company lobbied were:
- Defense of Medicare Part D
- The 340B drug pricing program
- Comprehensive tax reform
- Implementation of the Affordable Care Act
- Patent Reform
- Trans-Pacific Partnership
In the U.S. in 2015 our company lobbied at the state level for these key issues:
- State implementation of the health benefit exchange component of the Affordable Care Act
- Support for patient access to medicines and vaccines
- Protection of public health immunization policies
- Education on disposal of unused medicines
- Interchangeability of biosimilars
In Europe in 2015, our advocacy focused on:
- Fostering a framework for a sound pricing and procurement regime in and across diverse EU member state economies
- Support for government vaccination, hepatitis and diabetes programs
- Launch dialogue for sustainable models to fund future cancer care
- Standards for health technology assessment and health literacy
- Science-based policies for biological medicines
The company’s advocacy priorities are presented to the members of our Executive Committee and the Governance, Public Policy and Corporate Responsibility Committee of the Board of Directors annually, with periodic updates throughout the year.
Where permitted by law in the U.S., Canada and Australia, our company makes corporate political contributions, primarily to the electoral campaigns of individual candidates.
Our U.S. employees can also participate in the political process by joining a nonpartisan political action committee (PAC), through which they can pool their financial resources to support federal and state candidates. Except for administrative expenses, our company’s Employees Political Action Committee (PAC) is funded completely by voluntary contributions from eligible employees. The PAC supports legislators from both major parties who understand and appreciate the work we do to discover and develop medicines and to make them available to the patients who need them.
Our corporate policy governing corporate and PAC contributions can be found here. In addition, we have developed the Principles Governing Corporate and Political Action Committee Spending. These principles are modeled on provisions in the Model Code for Political Spending, established by the Center for Corporate Political Accountability, and are intended to promote corporate accountability.
Our company achieved a ranking in the top 5 percent on the Center for Political Accountability’s 2015 CPA-Zicklin Index of Corporate Political Disclosure and Accountability. The CPA specifically recognized our company’s internal process for ensuring compliance with our own political spending policies as a best practice.
We have a formal PAC Contributions Committee that makes decisions on spending for the PAC. This committee also makes decisions on our company’s corporate political contributions. The committee is chaired by our executive vice president and general counsel and includes senior managers representing different divisions and corporate functions. The general counsel approves contribution recommendations, following review and approval by the committee.
To ensure compliance with our company policy and federal and state law, outside legal experts provide periodic guidance to our company on required disclosure of its political activities. We also perform periodic audits to assess and enforce compliance with our policy governing our corporate and PAC contributions, and we require those individuals who recommend corporate political contributions in the U.S. to certify their knowledge of and adherence to our corporate Policy and Principles Governing Corporate Political and Political Action Committee Contributions.
As required by our company policy and procedures, our executive vice president and general counsel send an annual report on the company’s corporate political contributions for the previous year to our company’s Board of Directors. The report discloses contributions made in the U.S., Australia and Canada, including the name of each candidate, committee or event and the amount disbursed. It also includes all trade association dues spent on lobbying and political activity in the U.S. that are greater than $25,000. We also submit a midyear report on corporate political contributions to the Board for its review. In addition, our contributions, policies and practices are reviewed and overseen by the Governance Board Committee. We invite comments and questions on both reports, which also describe any changes in our policies.
To improve access to information about our corporate political and PAC contributions in the U.S., we post them semiannually, categorized by state, candidate and amount.
OUR CORPORATE POLITICAL CONTRIBUTIONS
In 2015, we spent a total of $655,500 on U.S. corporate political contributions. These contributions supported the campaigns of candidates for state-level offices in 25 states plus the District of Columbia. They also were used to support state legislative leadership committees of both parties, industry-affiliated PACs, and a number of national organizations representing elected state officials. These organizations meet periodically to discuss policy issues. Two examples are the Republican Governors Association and the Democratic Governors Association. Information on all contributions can be accessed here. Our representatives involved in state-government-affairs activities made the recommendations for specific contributions. These recommendations were reviewed and approved by the Corporate Political Contributions Committee, which mirrors our company’s PAC Contributions Committee in membership and oversight procedures. Outside legal counsel conducted a thorough review of all proposed contributions to ensure that they were permitted under state law. Final approval was provided by the general counsel of our company.
To view a listing of our corporate and PAC contributions made within the U.S. during the first half of 2016, please click here.
We also provide grants to organizations whose role is to represent elected officials in support of public policy advocacy. State Government Affairs & Policy reviews its grants and corporate memberships on an annual basis to decide which of them may be considered for the upcoming calendar year, considering budget constraints and policy priorities. We disclose all public policy grants as part of our general grants disclosure.
The only other countries in which we provide corporate contributions to candidates or political parties are Canada and Australia. These contributions are subject to the same policies and governance procedures discussed above. To view our company’s contributions made in Canada during the first half of 2016, please click here. To view our company’s contributions made in Australia during the first half of 2016, please click here.
Archived corporate political contribution reports are available click here.
Our company is a member of numerous industry and trade groups.
We work with these groups because they represent the pharmaceutical industry and business community in debates led by governments and other stakeholders, and because they help the industry reach consensus on policy issues.
When our trade associations actively lobby on our core business issues, we seek to align their positions with our own. There are times, however, when we may not share the views of our peers or associations—both on issues that are central to our business and on those that, while important, are not directly material to our mission. With representatives on the boards and committees of industry groups and trade associations, we can voice questions or concerns we may have about policy or related activities. We may even recuse ourselves from related trade association or industry group activities when appropriate.
Our executive vice president and general counsel sends an annual report to our company’s Board of Directors on trade association dues greater than $25,000 that were spent in the previous year on lobbying and political activity in the U.S. The Governance, Public Policy and Corporate Responsibility Committee of the Board of Directors has ongoing oversight of the company’s membership in trade associations and grassroots lobbying activities.
For a list of industry and trade groups of which we are a member, and our trade association dues (those greater than $25,000), that are used for political purposes, please click here.
Through our top-three trade associations (listed below), we engaged on the following policy issues in 2015:
- Pharmaceutical Research and Manufacturers of America (PhRMA): Protecting incentives for innovation, defense of Medicare Part D; implementation of the Affordable Care Act; Patent Reform; and the Trans-Pacific Partnership
- U.S. Chamber of Commerce: Defense of Medicare Part D; corporate tax reform; the Trans-Pacific Partnership; and Trade Promotion Authority
- Biotechnology Industry Organization (BIO): Protecting incentives for innovation; defense of Medicare Part D; Patent Reform; and the Trans-Pacific Partnership