Pension fund divests from Lundbeck over concerns on execution drugs

By staff writers
16 May 2011

A pension fund has sold a large share holding in the pharmaceutical company Lundbeck as a result of concerns about the use of their drugs in US executions.

US states are increasingly turning to Lundbeck’s pentobarbital (which is used in the treatment of epilepsy and is known as Nembutal in the US ) to carry out executions by lethal injection, after domestic shortages in supplies of another drug which was until recently widely used in executions.

Lundbeck has claimed it is doing "everything it can" to prevent this from taking place. However, on 12 May,2011, the Danish pension fund Unipension sold shares worth 40m Danish Krone (5.4m Euro), citing Lundbeck’s failure to "engage in a genuine dialogue" over their efforts to ensure their products are not used "in an undesirable way". Unipension's Chief Investment Officer Niels Erik Petersen said Lundbeck had not violated the fund's ethical rules but that its handling of the issue was "inappropriate."

"It has not been possible for Unipension to get a detailed report regarding Lundbeck's efforts to ensure that its products are not used in an unwanted manner," Petersen told Associated Press. "It has been our impression that Lundbeck did not want to engage in a genuine dialogue with us as an investor."

Lundbeck's spokesman Mads Kronborg expressed regret at Unipension's decision and said his company would work to improve its communication with investors. Kronborg added that he did not know whether Unipension was the first pension fund to divest from Lundbeck over the issue.

Denmark’s largest pension scheme, ATP, have said that "there are still things that need clarification" by Lundbeck concerning the issue.

The legal charity Reprieve has asked Lundbeck to investigate a number of possible courses of action to prevent their drugs being used in this way. Reprieve says the firm has so far refused either to adopt these or to explain in any detail why they are not feasible.

The charity says that several investment consultants have recently contacted them to ask about the ethical investment issues concerning the use of Lundbeck’s drugs in executions.

Unipension’s action could raise serious questions for other institutional investors in Lundbeck around the world – such as Norway's Government Pension Fund Global, which at the end of 2010 held a stake in Lundbeck worth around $25 million.

Reprieve Investigator Maya Foa said: “That Lundbeck has refused to adopt any of the strategies available to them to prevent the use of their drugs in executions is baffling. As more evidence comes out about how easy it would be for the company to restrict the distribution of the product, serious questions about the company’s integrity need to be asked.

“Lundbeck’s failure to provide adequate answers has frustrated politicians, doctors, journalists, human rights groups and now investors.

“The moral consequences of being complicit in executions should have been enough to make Lundbeck take action; perhaps now that they are being hit in the pocket, they’ll realise they simply cannot afford to ignore this issue for one day longer.”

[Ekk/4]

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