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 at the federal, state and global levels. We advocate for public policies that foster research into innovative medicines and improve access to medicines, vaccines and health care. We believe this engagement is 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.
The company’s advocacy priorities are presented regularly to the members of our Executive Committee and the Governance Committee of the Board of Directors, with periodic updates throughout the year.
We recognize that our outreach can help highlight and address important issues, leveraging the expertise of 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 that we 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 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.
We engage in public policy debates primarily by communicating information to government officials and policy makers in both Washington, D.C. and state capitals across the U.S. and in the capitals of foreign governments where we operate.
Our U.S. Federal Policy and Global Government Relations office in Washington, D.C., is responsible for advocacy activities with the U.S. Congress and other bodies of the federal government and with foreign embassies. Advocacy at the state level is managed by our State Government Affairs & Policy organization. Additionally, outside of the U.S., advocacy activities are managed at the country level or local level, with support from regional and Global Policy staff.
To assist in our advocacy and policy analysis work, our company and our affiliates contract with a range of private firms specializing in U.S. and global government affairs advocacy. These firms employ government affairs consultants with 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., we also comply with important federal and state lobbying-registration and disclosure laws.
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. For more information, please see our 2018 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 spent 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 2018, the top issues at the federal level for which our company lobbied were:
- Defense of Medicare Part B
- Defense of Medicare Part D
- The 340B drug pricing program
In the U.S. in 2018, our company lobbied at the state level for these key issues:
- Drug price transparency and price controls
- Market-based solutions for access to innovative pharmaceutical, vaccine and biologic products
- Support for a strong immunization infrastructure
- Removal of legislative and regulatory restrictions for animal health products
- Maintaining a strong business environment for U.S. operations in the states
- Product stewardship/take-back of unused medicines
In Europe in 2018, 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
Where permitted by law in the U.S., Canada and Australia, our company makes corporate political contributions.
Our U.S. employees can participate in the political process by joining a nonpartisan political action committee through which they can pool their financial resources to support federal and state candidates. Except for administrative expenses, our 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 our work to discover and develop medicines and to make them available to the patients who need them.
In addition to our corporate policy governing corporate and PAC contributions, we have developed Principles Governing Corporate and Political Action Committee Spending. These principles are modeled on provisions in the Model Code for Spending, established by the Center for Corporate Political Accountability, and are intended to promote corporate accountability.
Our Contributions Committee approves the budgets for PAC and corporate political contributions and provides oversight over such spending. The Committee is chaired by our Senior Vice President and Corporate Secretary and includes senior managers representing different divisions and corporate functions. The Senior Vice President and Corporate Secretary reviews and approves all political contributions.
To ensure compliance with our company policy and federal and state law, outside legal counsel provides ongoing guidance to our company on its political activities and required disclosure. 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 Senior Vice President and Corporate Secretary sends a report twice a year on the company’s corporate political contributions to the Board of Directors. The report discloses every contribution, including the name of each candidate, committee or event contributed to 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. Our contributions, policies and practices are reviewed and overseen by the Governance Committee of the Board of Directors.
We are also highly transparent with the public. We post our corporate political and PAC contributions in the U.S. categorized by state, candidate and amount to this website semiannually.
Our corporate political contributions
In 2018, we contributed a total of $901,300 to support the campaigns of 521 candidates for state-level offices in 23 states plus the District of Columbia. We also supported state legislative leadership committees of both parties, industry-affiliated PACs, and national organizations representing elected state officials that meet periodically to discuss policy issues. Our representatives involved in state-government-affairs activities made the recommendations for specific contributions based on the budget and priorities approved by the Contributions Committee.
- Corporate and PAC contributions made within the U.S. during 2019.
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 Corporate Secretary.
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.
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.
The Corporate Secretary 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 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.
Through our top three trade associations (listed below), we engaged on the following policy issues in 2018:
- Pharmaceutical Research and Manufacturers of America (PhRMA): Defend the Medicare Part D program, Defend the Medicare Part B program, the 340 Drug Discount Program, Defend Intellectual Property Rights and government pricing reforms in Japan and Canada
- U.S. Chamber of Commerce: Defend Intellectual Property Rights
- Biotechnology Industry Organization (BIO): Defend the Medicare Part D program, Defend the Medicare Part B program, the 340 Drug Discount Program and Defend Intellectual Property Rights