Examples-of-Disclosure

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Moving from boilerplate language to decision-useful disclosure
Quality of disclosure varies by issue, source document and company
No disclosure
Boilerplate Statements
Industry-specific
Metrics
Climate change impacts on human health
[Most companies]
“Climate change is a serious
issue for our planet, and it has the
potential to affect businesses in
many ways (…) climate change
could lead to significant changes
in the global disease burden.
[ABT - CSR report 2012]
Counterfeit Drugs
“The illegal distribution and
sale by 3rd parties of counterfeit
versions of our products or
stolen products could have a
negative impact on our
reputation and business”
[BMY - Form 10-K FY 2012]
“We continue to address the
problem of counterfeit medicines.
In China, we added serial numbers
to 31 products, resulting in a
significant reduction in the number
of reports of counterfeit medicines
[GSK - Form 20-F FY 2012]
Access to low income individuals
“The Company has been
recognized for pricing many of its
products through a differential
pricing framework, taking into
consideration such factors as a
country’s level of economic
development and public health
need.”
[MRK - Form 10-K FY 2012]
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CONFIDENTIAL & PROPRIETARY
“ViiV Healthcare [an independent
company founded by GSK and
PFE focused on improving access
and affordability of HIV medicines]
grew reported turnover by 1% in
2011 to 1.6 billion pounds. (…)
offering royalty-free voluntary
licenses and not-for-profit pricing.”
[GSK – Annual Report 2011]
Disclosure examples on Manufacturing and Supply Chain Quality Mgmt.
In particular, reporting on current Good Manufacturing Practices
No disclosure
Boilerplate
Industry-specific
Metrics
Manufacturing and Supply Chain Quality Management
[Some companies]
“Product quality may be
influenced by many factors
including product and process
understanding, consistency of
manufacturing components,
compliance with current Good
Manufacturing Practice
(cGMP), accuracy of labelling,
reliability and security of the
supply chain, and the
embodiment of an overarching
quality culture (…) noncompliance with cGMP
requirements for US supply could
ultimately result, in the most
severe circumstances, in fines
and disgorgement of profits“
[GSK – Form 20F 012]
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© 2013 SASB™
“Our manufacturing operations
are subject to routine inspections
by regulatory agencies (…) the
FDA conducted a routine
inspection of our San Dimas
manufacturing facility, where we
exclusively manufacture Cayston
and AmBisome. At the conclusion
of that inspection, the FDA issued
Form 483 Inspectional
Observations stating concerns
over: the maintenance of aseptic
processing conditions in the
manufacturing suite for our
AmBisome product;
environmental maintenance
issues in the San Dimas
warehousing facility; batch
sampling; and the timeliness of
completion of annual product
quality reports.“
“(…) We have faced, and
continue to face, significant
manufacturing issues. For
example, in November 2011, we
received a Warning Letter from
the FDA with respect to three of
our Sandoz Division's
facilities—in Broomfield,
Colorado, Wilson, North Carolina,
and Boucherville, Canada. The
Warning Letter raised concerns
regarding these facilities'
compliance with FDA cGMP
regulations (…) In the fourth
quarter of 2012, Sandoz
announced that the FDA
upgraded the compliance status
of its Broomfield, Colorado site.
The division is on track to meet its
remediation commitments for the
other two sites as well“
[GILD – Form 10K 2012]
[NVS – Form 10K 012]
CONFIDENTIAL & PROPRIETARY
Disclosure examples on Product Design and Lifecycle Management
Only a handful of companies have started reporting on the issue
No disclosure
Boilerplate
Industry-specific
Metrics
Product Design and Lifecycle Management
[Most companies]
“We have gathered data to
understand the magnitude of the
global greenhouse gas or CO2
footprint generated not only by
our fuel and electricity use, but
also the products we sell and
our use of supply chains. We
are now working to establish
goals and will start to make
reductions in these emissions.
This includes new ways of
managing our vehicle fleets,
incorporating new
design features into our
products“
“We have re-directed all sales
efforts to our new Class 1 medical
products that are “green,” and
anti-microbial in nature to address
specifically the hospital and clinic
markets “
[NANM – Form 10K 2012]
[MTD – Form 10K 2012]
“In response to the hospital
market’s growing needs to
implement environmentally
friendly, or “green”, products
and to decrease costs to remain
competitive, Masimo developed
the SpO2 ReSposable sensor
system (…) ReSposable sensors
produce 90% less waste and
41% fewer carbon emissions
than disposable sensors, while
recycled sensors only decrease
waste by 34% and actually
increase carbon emissions by
43% compared to disposable
sensors. We expect to go to full
market release in 2012“
[MASI – Form 10K 2011]
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CONFIDENTIAL & PROPRIETARY
Disclosure examples on Pricing and Billing Transparency
Reporting on this issue underlines need for useful and comparable standards
No disclosure
Boilerplate
Industry-specific
Metrics
Pricing and Billing Transparency
[Most companies]
“The healthcare industry is
required to comply with extensive
and complex laws and regulations
at the federal, state and local
government levels relating to,
among other things: hospital
billing practices and prices for
services; relationships with
physicians and other referral
sources; adequacy of medical
care and quality of medical
equipment and services“
“Federal and state government
agencies have increased their
focus on and coordination of civil
and criminal enforcement efforts
in the health care area. The Office
of Inspector General (“OIG”) and
the Department of Justice (“DOJ”)
have, from time to time,
established national enforcement
initiatives, targeting all hospital
providers that focus on specific
billing practices or other
suspected areas of abuse.“
[UHS – Form 10K 2012]
[HCA – Form 10K 2012]
““(…) In March 2009, one of our
hospitals received an information
request from the DOJ regarding
these procedures and, in July
2010, we were notified that seven
additional hospitals were also
under review. (…) We entered
into an agreement with the DOJ in
January 2013 for approximately
$900,000 (which was previously
reserved) to settle claims relating
to the first hospital to receive an
information request. (…) Because
we have not reached agreement
with the DOJ on the appropriate
methodology to review the billing
practices of the remaining five
hospitals under review, we are
unable to calculate an estimate of
loss or range of loss with respect
to those hospitals“
[THC – Form 10K 2012]
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© 2013 SASB™
CONFIDENTIAL & PROPRIETARY
Disclosure examples on Counterfeit Drugs
Only a handful of companies report on this important issue
No disclosure
Boilerplate
Industry-specific
Metrics
Counterfeit Drugs
[Most companies]
“Certain provisions of the federal
Food, Drug and Cosmetic Act
govern the handling and
distribution of pharmaceutical
products. This law exempts many
pharmaceuticals and medical
devices from federal labeling and
packaging requirements as long
as they are not adulterated or
misbranded and are dispensed
in accordance with and pursuant
to a valid prescription“
“The FDA Amendments Act of
2007 requires the FDA to
establish standards and identify
and validate effective
technologies to secure the
pharmaceutical supply chain
against counterfeit drugs. These
standards may include track-andtrace and/or authentication
technologies that leverage data
carriers applied by the
manufacturer to the sellable units
and cases “
“We continue to address the
problem of counterfeit medicines.
In China, we added serial
numbers to 31 products, resulting
in a significant reduction in the
number of reports of counterfeit
medicines. This ‘track and trace’
technology will help us implement
similar initiatives elsewhere in the
world“
[MIT – Form 10K 2012]
[ABC – Form 10K 2012]
* GSK is classified under the Biotechnology and Pharmaceutical industry; it is shown here for illustration purposes
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CONFIDENTIAL & PROPRIETARY
[GSK* – Form 20F 2012]
Disclosure examples on Plan Performance
In particular on the PPACA’s 5 Star Quality Rating System
No disclosure
Boilerplate
Industry-specific
Metrics
Plan Performance
[Most companies]
“PPACA ties a portion of each
Medicare Advantage plan's
reimbursement to the plan's “star
rating” under a five-star quality
rating system administered by
CMS. Star ratings are based on a
plan's performance on a variety of
measures, including quality of
preventative services, chronic
illness management and overall
member satisfaction. (…) if we
are unable to significantly
increase the level of membership
in plans with a rating of 4 stars or
higher for the 2015 payment year,
our results of operations and cash
flows could be adversely affected“
[CVH – Form 10K 2012]
“For the 2014 payment year, our
California and Oregon HMO and
California PPO contracts with
CMS were measured at 3.5 Stars
and our Arizona HMO and
Oregon PPO contracts were
measured at 4.0 Stars under the
Star Ratings system. We are
continuing to make efforts to
improve our Star Ratings and
other quality measures, but a
failure to achieve a 4 Star Rating,
and consequently to receive a
quality-based payment in any
year, would have an adverse
effect on our revenue, income
and reputation, and could hinder
our ability to compete effectively
in the Medicare marketplace“
[HNT – Form 10K 2012]
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© 2013 SASB™
CONFIDENTIAL & PROPRIETARY
“Our average star rating
increased from 3.48 in 2012 to
3.53 in 2013, and for 2013 99%
of our Medicare Advantage
members are in plans rated at
least 3.5 stars. CMS will release
updated stars ratings in October
2013 that will determine the
portion of our Medicare
Advantage membership that will
reside in plans with ratings of four
stars or higher and qualify for
bonus payments in 2015“
[AET – Form 10K 2012]
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