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Notice of Exempt Solicitation
NAME OF REGISTRANT: Johnson & Johnson (JNJ)
NAME OF PERSON RELYING ON EXEMPTION: Oxfam America
ADDRESS OF PERSON RELYING ON EXEMPTION: 77
North Washington Street, Suite 5-1, Boston, MA 02114
Written materials are submitted pursuant to
Rule 14a-6(g)(1) promulgated under the Securities Exchange Act of 1934. Submission is not required of this filer under the terms of the
Rule, but is made voluntarily in the interest of public disclosure and consideration of these important issues.
We urge shareholders to vote “For”
Item 6 at JNJ’s annual general meeting (AGM) on April 27, 2023.
I. SUMMARY OF RESOLUTION
RESOLVED that shareholders
of Johnson & Johnson (“JNJ”) ask the Board of Directors to report to shareholders, at reasonable expense and omitting
confidential and proprietary information, on whether and how JNJ subsidiary Janssen’s receipt of government financial support for
development and manufacture of vaccines and therapeutics for COVID-19 is being, or will be, taken into account when engaging in conduct
that affects access to such products, such as setting prices.
Supporting Statement
COVID-19 continues to cause deaths, long-term
health consequences, and economic disruption for millions of people. Vaccines and therapeutics are essential tools to reduce mortality
and vaccines can reduce the emergence of more transmissible and vaccine-resistant variants that can prolong the pandemic and further strain
the global economy.
Janssen
received more than $2 billion in US public funding for COVID-19-related vaccine research, development, manufacturing, and advanced purchase
agreements.1 The
government additionally provided $152 million for Janssen and a partner to develop COVID-19 therapeutics.2
The vaccine has brought in more than $4.5 billion in revenues in two years and was among JNJ’s top 10 pharmaceutical products by
revenue in 2022.3
1
https://www.medicalcountermeasures.gov/app/barda/coronavirus/COVID19.aspx
2
https://www.reuters.com/article/health-coronavirus-usa-funding/factbox-u-s-pours-billions-into-development-of-coronavirus-vaccines-tests-idINL4N2D32T5
3
https://johnsonandjohnson.gcs-web.com/static-files/ca8c3ac2-15ab-4f8d-9693-f604d50be358
JNJ
has been distributing its COVID-19 vaccine on a “nonprofit” basis, but that commitment is limited to “emergency pandemic
use,” without clarification on how the end of emergency pandemic use will be determined.4
JNJ has not clarified what “nonprofit” means when
the government has funded a portion of the research and development costs, nor what prices the company will charge and which access measures
will be applied post-emergency pandemic if people continue to need vaccines and boosters. This Proposal asks JNJ to explain how the contribution
from public entities affects its actions, including pricing determinations, that impact access to COVID-19 products.
JNJ’s current approach, which provides no
transparency for how it factors in public funding in its access decisions, could lead to reputational risks for the company and risks
increased government regulation and oversight. Shareholders should be given the opportunity to understand how JNJ is accounting for public
funding in its current and future pricing and access strategies for its COVID-19 products. We urge shareholders to vote FOR this proposal.
II. ARGUMENTS IN FAVOR OF A FOR VOTE
| 1. | JNJ’s approach to access to its COVID-19 vaccine has already and could continue to generate reputational
risks for JNJ and its investors. |
JNJ faces reputational risk with respect to how
the company has managed pricing and access, particularly given the scale of public funding and the public attention to COVID-19 vaccines.
JNJ has already faced significant criticism during this pandemic when The New York Times reported that the company had transferred
COVID-19 vaccine doses bottled and packed at Aspen Pharmaceutical in South Africa to the European Union, even as there was a significant
shortage of vaccine doses in South Africa (and on the African continent), inadequate vaccination of the population, and a worsening pandemic.5
According to the news report, at least 32 million doses of vaccine were exported from South Africa to the European Union. The decision
to export these doses was met with outrage from African governments, the World Health Organization (WHO), and public health organizations
and activists around the world who “rebuked” and “slammed” the company for the move, as media coverage notes.6
JNJ has also attracted negative media attention with The New York Times reporting JNJ is “locked in a bitter dispute”
with Gavi, the Global Vaccine Alliance “over payment for shots that Gavi told the company
months ago it would not need, but which the company produced anyway” after failing to supply doses in a timely way.7
Other reports detail similar experiences for South Africa, further noting that of the doses that were delivered, some arrived thawed with
shorter-than-expected shelf life.8 These concerns
create a significant reputational risk for both JNJ and its investors.
4
https://www.jnj.com/johnson-johnson-covid-19-vaccine-authorized-by-u-s-fda-for-emergency-usefirst-single-shot-vaccine-in-fight-against-global-pandemic
5
https://www.nytimes.com/2021/08/16/business/johnson-johnson-vaccine-africa-exported-europe.html
6
https://www.usnews.com/news/world/articles/2021-08-19/eu-says-import-of-j-j-vaccines-from-south-africa-is-temporary;
https://apnews.com/article/europe-africa-business-health-coronavirus-pandemic-9996bb1487e1197580070eaa44f3f420. The company has also been
harshly criticized for taking “the only plant making usable batches of the vaccine”
offline for up to six months after delivering only 40% of projected doses last year. “We really needed their doses in 2021, and
we were counting on them,’ Dr. Berkley [of Gavi, the Vaccine Alliance, on behalf of COVAX], said. ‘They didn’t deliver.
So we had to find other doses to meet the countries’ needs.’” https://www.nytimes.com/2022/02/08/business/johnson-johnson-covid-vaccine.html;.
7
https://www.nytimes.com/2023/02/01/health/covid-vaccines-covax-gavi-prepayments.html
8
https://www.devex.com/news/j-j-delays-could-leave-south-africa-paying-for-covid-19-vaccine-doses-104154
The company has not stated how public funding
affects price and has also refused to disclose the vaccine’s cost and eventual “commercial” price, which will likely
vary from country to country. While the company has stated it will distribute a vaccine on a “non-profit” basis, the commitment
is limited to “emergency pandemic use.”9
JNJ committed to an external audit of its non-profit pricing while testifying to Congress in July 2020, but JNJ has not yet fulfilled
that commitment.10 The New York Times
has reported that federal officials estimate the production of the drug substance itself costs only 30¢,
with the rest of the $10 emergency price the company has been charging the US government attributed to “fill and finish.”11
JNJ has reportedly sold its shots for between $5 and $10.12
At $10 per dose, JNJ’s price is double to triple the reported price of another nonprofit vaccine
produced by AstraZeneca that was publicly funded.13
If and when JNJ does eventually increase the price
of its COVID-19 vaccine “post-emergency,” which WHO has said may end this year,14
both the company and its investors could face significant reputational risks for charging a high price for a vaccine for which research,
development and manufacturing has been publicly funded.
The
failure of JNJ to share its US government-funded technology could also become a reputational risk. For example, while several governments
including the US shared COVID-19 technologies with the WHO’s COVID-19 Technology Access Pool (C-TAP), including vaccine technologies,
JNJ has resisted calls to do the same.15
| 2. | JNJ faces increased regulatory risks during and after the COVID-19 pandemic due to its failure to be
transparent about the role of public funding in vaccine pricing and access. |
JNJ’s lack of pricing transparency and accounting
for public funding for its product risks potential increased regulation and oversight from governments.
In recent years, US policymakers have increased
their scrutiny of the role public funding plays in medicine pricing throughout the development pipeline.16
Public funding is already a factor in the government’s price negotiation process under the recently passed Inflation Reduction Act.17
International stakeholders are also seeking more information about the role of public funding and considering measures to improve access
to current and future pandemic tools. The “zero draft” of the WHO’s “Convention, Agreement or Other International
Instrument on Pandemic Prevention, Preparedness and Response” also proposes greater transparency of public funding of pandemic response
products, measures to promote access to the results of publicly funded research, and other measures to improve access to pandemic products,
including references to more flexible IP rules.18
The World Trade Organization has already adopted changes to IP rules for vaccines during the pandemic in an attempt to better balance
IP with access,19 despite strong pharmaceutical
company opposition.20
9
https://www.bloomberg.com/news/videos/2021-07-21/j-j-cfo-not-for-profit-vaccine-price-likely-to-end-in-2021-video
10
https://www.congress.gov/116/meeting/house/110926/witnesses/HHRG-116-IF02-Wstate-DouoguihM-20200721.pdf
11
https://www.nytimes.com/2021/03/26/us/biden-coronavirus-vaccine.html
12
https://www.biopharmadive.com/news/johnson-johnson-vaccine-not-for-profit-price/608477/;
https://www.nytimes.com/2021/03/26/us/biden-coronavirus-vaccine.html
13
https://www.pharmaceutical-technology.com/features/covid-19-vaccine-pricing-varies-country-company/
14
https://www.who.int/director-general/speeches/detail/who-director-general-s-opening-remarks-at-the-media-briefing---17-march-2023
15
https://www.warren.senate.gov/oversight/letters/warren-colleagues-call-on-pfizer-moderna-and-johnson-and-johnson-to-expand-access-to-covid-19-vaccines-across-the-globe
16 https://oversight.house.gov/sites/democrats.oversight.house.gov/files/DRUG%20PRICING%20REPORT%20WITH%20APPENDIX%20v3.pdf;
https://aspe.hhs.gov/sites/default/files/private/aspe-files/263451/2020-drug-pricing-report-congress-final.pdf
17
https://www.congress.gov/bill/117th-congress/house-bill/5376/text
18
https://www.keionline.org/wp-content/uploads/WHO-zero-draft-pandemic-treaty-1Feb2023.pdf
19
https://www.wto.org/english/news_e/news22_e/trip_08jul22_e.htm
20
https://www.ifpma.org/resource-centre/pharmaceutical-industry-expresses-deep-disappointment-with-decision-on-waiving-intellectual-property-rights-adopted-at-the-world-trade-organization-ministerial-conference/
If corporations do not voluntarily cooperate with
governments to make their lifesaving products sustainable, equitable, and timely in access, government regulation may be more likely and
more costly. For example, in response to public outcry over the high prices of medicines, the US passed the Inflation Reduction Act enabling
price negotiations for certain medicines under Medicare. Moody’s warns that the $100 billion in savings the US government will generate
over 10 years by negotiating prices will be “generally borne by the industry.”21
By acting proactively, JNJ can be a leader in modeling transparency and may prevent a situation in which governments regulate and oversee
the company in a manner that affords the company less independence and control and threatens shareholder interests.
III. CONCLUSION
JNJ has not explained whether and how receipt
of federal funding is accounted for in its access strategy. Receipt of such funds should be accompanied by transparency, so that investors
can gauge the material risks of receiving this public money while failing to ensure broader public vaccine access. The company has continued
to decline to be transparent on this issue following several years of engagement with investors, in contrast to Pfizer and Moderna, where
investors withdrew similar pricing transparency proposals after the companies agreed to disclose more information about how government
funding factored into pricing and access decisions.
We urge shareholders to vote “For”
Item 6.
For more information, please contact Jennifer
Reid at jennifer.reid@oxfam.org.
21
https://www.fiercepharma.com/pharma/us-drug-pricing-reform-here-effects-wont-be-felt-some-time-analysts
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