Home ESG Big Pharmas Age Problem – Advance ESG

Big Pharmas Age Problem – Advance ESG

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Age discrimination is “one of the last socially acceptable prejudices” in the U.S., according to the American Psychological Association (APA). In fact, discriminating against people based on inaccurate and negative stereotypes about age is so ingrained in our workplace and broader culture in the US that it often goes unnoticed or ignored. While most large companies combat racial and gender bias with DEI policies and training, “age bias is seldom on the radar,” according to the APA.

The problem seems to be most acute in the sales departments of many well-known pharmaceutical companies, where youthful good looks are still considered the key to unlocking the door and closing the sale at doctors’ offices across the country.

Companies that discriminate against older job applicants and employees interested in promotions not only face reputational risks that can affect stock prices, they also are exposed to significant legal risks—both of which are important risks for ESG investors to be aware of. The U.S. Age Discrimination in Employment Act of 1967 designates people over the age of 40 as a protected class, with certain exceptions for the physical demands associated with some occupations, and authorizes the Equal Employment Opportunity Commission (EEOC) to sue employers on behalf of affected workers. But financial compensation is usually limited to back pay and attorney fees. Many employees are required to sign agreements requiring disputes to be resolved in binding arbitration, thereby waiving their right to sue in court.

The good news is that on June 14th a bipartisan group of U.S. senators and representatives introduced legislation that would invalidate forced arbitration clauses in much the same way other lawmakers are attempting to do away with mandatory noncompete agreements. The Protecting Older Americans Act of 2023 (S.1979) is sponsored by Rep. Nancy Mace (R-SC), and U.S. Senators Lindsey Graham (R-SC), Kirsten Gillibrand (D-NY), and Dick Durbin (D-IL).

If it is approved and enacted into law, the elimination of forced arbitration could be especially helpful for older workers in the pharmaceutical industry.

Last September, the EEOC filed a lawsuit against the pharmaceutical giant Eli Lilly, alleging that the company intentionally screened out older workers when hiring sales representatives from April of 2017 to 2021. According to the EEOC’s complaint, Lilly’s senior vice president for human resources and diversity told employees at a company meeting that Lilly’s workforce was composed mainly of older workers, announced plans to hire more millennials, and intentionally under-hired older candidates for sales positions in favor of younger candidates. The company denied the allegations but agreed to pay $2.4 million to settle the matter this June.

Six months later, a veteran sales manager at Lilly filed suit against the company, claiming that she was turned down for a promotion that was given instead to a 27-year-old employee with less than two and a half years of sales experience. And in September of 2021, two job applicants claimed the company “systemically excluded” older candidates for sales positions, instead hiring interns. Lilly also denied these claims.

The list of pharmaceutical companies accused of age bias is long and it reads like a Who’s Who of the industry’s most prominent names.

AstraZeneca was accused of trying to lower the average age of its workforce by firing older workers who refused COVID-19 vaccines on religious grounds. USA Today reported that, “the fired workers cited a 2021 presentation by an AstraZeneca director of sales in which he claimed the company’s average employee age was around 48 and indicated that was too high.” The former workers were all over the age of 40 and were among a group of roughly 200 employees terminated after claiming religious exemptions from COVID vaccine requirements.

In January of this year, GlaxoSmithKline was sued by a chemist who alleges that she and other employees over the age of 50 were systematically fired to make room for employees under 40 years old.

In June of 2022, Novo Nordisk was sued by the EEOC, which claimed the company denied a transfer request from a 62-year-old employee in favor of a less-qualified 33-year-old. Novo Nordisk’s rationale was that the younger employee could fill the position “long term,” the EEOC alleged. The lawsuit was dismissed because it didn’t meet the district court’s “serious and tangible” criteria, according to Bloomberg.

This rigorous burden of proof, which is designed to prevent frivolous claims from disgruntled workers, is a common and recurring problem for plaintiffs. Therefore, the U.S. Supreme Court has been asked to clarify exactly what types of actions are “serious and tangible” enough to support a claim under federal anti-discrimination law.

In the meantime, ESG investors might want to review their portfolios for pharmaceutical (or other) companies that have expressed an interest in beefing up the number of millennials at their firms. These types of statements could simply be coded messages indicating that the company actually wants to weed out their most experienced and highly paid workers. That’s bad for business, worse for employees, and terrible for shareholders focused on long-term sustainability. 

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