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LAPFF Joins Clinical Trials Disclosure Campaign

4th August 2015 | UK Local Authority Funds add to Investor Pressure for Transparency from Global Pharmaceutical Industry

The Local Authority Pension Fund Forum (LAPFF) has added its voice to growing investor calls for transparency and open disclosure from pharmaceutical companies on test results of new drugs and medications going to market.


The Forum has announced it has joined an international investor group of asset owners and managers partnering with the Alltrials campaign to press for reform around drug trials data disclosure.


“LAPFF supports improved transparency for all investors around clinical trial results. Such results can be a crucial factor in assessing pharmaceutical company valuations and reducing mispricing risks,” LAPFF Chair Kieran Quinn said in a statement issued by the Forum.


The Alltrials campaign is backed by the British Medical Journal in the UK and a host of US based universities and medical organisations and is gathering increasing investor support including BNP Paribas and the Wellcome Trust, Europe’s biggest medical charity.


Major pharmaceutical companies are being requested to retrospectively register past and ongoing clinical trials, and other information including giving independent researchers access to anonymised individual patient data.


“Alongside doctors and their patients, investors also risk being misled, given that an average of around 30 percent of pharmaceutical company valuations directly relates to the results of Phase III clinical trials,” Helena Viñes Fiestas from BNP Paribas told the Financial Times.


Ms Viñes Fiestas is also quoted in the Wall Street Journal saying that fines paid by 21 drug makers for marketing malfeasance between 2007 and mid-2015 reached $US40b , (£26b) and 43% was directly related to minimizing side effects that were identified during clinical trials but not properly reported.


“The lack of complete and unbiased information can mislead decisions made not only by regulators and doctors, but also investors.”


“We think if the companies become more transparent and take the issue around auditing and reports more seriously that the decisions made by analysts can be more closely aligned with reality.


The Economist reports on estimates that results of half of clinical trials undertaken by pharmaceutical companies are never published, echoing the results of this groundbreaking UK HIHR Report from 2010 reviewing previous decades.


The Economist also notes that despite 2007 legislation in the US requiring online publication of trials results within 12 months of completion, the FDA is not active in enforcement of breaches.


The AllTrials FAQ also points to shortcomings in US compliance.


An independent audit in 2012 found that only 22% of clinical trials complied with the US 2007 law. Nevertheless, no fine has ever been levied against any company or researcher.


An exhaustive study undertaken by the New England Journal of Medicine published in March 2015 concluded non-compliance against the US requirements was widespread.


The Financial Times welcomes new EU regulations that will require the registration and publication of trials from 2016 but expresses doubts about “how vigorously it will be monitored and enforced.”


Alltrials is also conducting its own audit of the fifty largest drug companies with its results, scheduled for September 2015 likely to heighten public and investor scrutiny of disclosure practices in global pharmaceuticals.


The LAPFF decision adds additional investor ballast to the coalition, but more importantly, an asset owner voice that represents both significant shareholdings and active profile amongst the FTSE 100 and UK pharmaceutical companies.


“The Forum welcomes the Alltrails initiative and their efforts to improve disclosure in the pharmaceutical sector. We look forward to a positive response by the major players in the industry to the investor engagement on this significant issue,” LAPFF Chair Kieran Quinn signalled in the late July LAPFF statement.


With external voices, from diverse international health, medical science and other  groups to leading asset managers & institutional shareholders increasing their advocacy for reform of disclosure regimes, the onus is now on both regulators and the industry to respond.


The conclusion of a recent FT editorial neatly summarises the wider issue:


“Transparency brings obvious dividends for society as a whole, including avoiding unnecessary repetition of fruitless research and making a treasure trove of existing data available for reanalysis and innovation. But drug companies should also recognise the business case, that clinical openness reduces risk and increases investor confidence.”


“Open data will benefit all, from patients to shareholders.”


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