Company Name: Medco Health Solutions, Inc.
Public Availability Date: January 24, 2008
Document Sections:
INQUIRY LETTER
APPENDIX 2
INQUIRY LETTER
STAFF REPLY LETTER
[INQUIRY LETTER]
January 18, 2008
VIA COURIER
U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of Chief Counsel
100 F Street, N.E.
Washington, DC 20549
Re: Securities Exchange Act of 1934 - Section 14(a); Rule 14a-8(i)(10) Omission
of Shareholder Proposal - Universal Healthcare
Ladies and Gentlemen:
Medco Health Solutions, Inc. ("Medco" or the "Company") has received the
shareholder proposal attached as Exhibit 1 (the "Proposal") from the Benedictine
Sisters (the "Proponent") for inclusion in the Company's proxy statement and
form of proxy (together, the "proxy materials") for its 2008 Annual Meeting of
Shareholders. Medco intends to omit the Proposal from its proxy materials
pursuant to Rule 14a-8(i)(10) (substantially implemented). We respectfully
request the concurrence of the staff of the Division of Corporation Finance (the
"Staff") that no enforcement action will be recommended if the Company omits the
Proposal from its proxy materials.
In accordance with Rule 14a-8(j) of the Exchange Act, enclosed are six copies of
this letter and the attachments to this letter. By copy of this letter, Medco
notifies the Proponent of its intention to omit the Proposal from its proxy
materials. Also pursuant to Rule 14a-8(j), this letter is being filed with the
Securities and Exchange Commission (the "Commission") no later than 80 calendar
days before Medco intends to file its definitive proxy materials with the
Commission. Medco agrees to promptly forward to the Proponent any Staff response
to Medco's no-action request that the Staff transmits to Medco by facsimile.
The Proposal
A copy of the Proposal is set forth in Exhibit 1. (A copy of a letter from a
co-Proponent, withdrawing the proposal on behalf of the Province of St. Joseph
of the Capuchin Order, is attached as Exhibit 2). The resolution is as follows:
"RESOLVED: shareholders urge the Board of Directors to adopt principles for
comprehensive health care reform (such as those based upon principles reported
by the Institute of Medicine):
1. Health care coverage should be universal.
2. Health care coverage should be continuous.
3. Health care coverage should be affordable to individuals and families.
4. The health insurance strategy should be affordable and sustainable for
society.
5. Health insurance should enhance health and well being by promoting access to
high-quality care that is effective, efficient, safe, timely, patient-centered,
and equitable)."
Reason for Omission: Substantial Implementation/Mootness
(Rule 14a-8(i)(10))
Rule 14a-8(i)(10) authorizes a company to exclude a shareholder proposal if the
company has "substantially implemented" the action requested. According to the
Commission, the exclusion provided in Rule 14a-8(i)(10) "is designed to avoid
the possibility of shareholders having to consider matters which have already
been favorably acted upon by the management." Exchange Act Release No. 34-12598
(July 7, 1976). Shareholder proposals have been substantially implemented within
the meaning of Rule 14a-8(i)(10) when the company already has policies,
practices and procedures in place relating to the subject matter of the proposal
or has implemented the essential objective of the proposal. See, for example,
Tellular Corp. (December 5, 2003); Cisco Systems, Inc. (August 11, 2003); The
Talbots, Inc. (April 5, 2002).
Medco has gone beyond substantial implementation; the Company has fully
implemented the Proposal. On January 11, 2008, Medco's Board of Directors
adopted the following resolutions, which are posted on Medco's website at
www.medco.com under the Investors Tab:
WHEREAS, the Board of Directors of the Corporation has determined that it is in
the best interests of the Corporation to adopt health care principles as
outlined by the Institute of Medicine; and
WHEREAS, the Board of Directors of the Corporation recognizes that these
principles are general and is supportive of the Corporation taking such
principles into account in operating its business;
NOW, THEREFORE, BE IT:
RESOLVED, that the Board of Directors determines that it is in the best
interests of the Corporation to adopt the following principles:
1. Health care coverage should be universal.
2. Health care coverage should be continuous.
3. Health care coverage should be affordable to individuals and families.
4. The health insurance strategy should be affordable and sustainable for
society.
5. Health insurance should enhance health and well-being by promoting access to
high-quality care that is effective, efficient, safe, timely, patient-centered,
and equitable.
Since Medco has fully implemented the Proposal, the Company respectfully submits
that the Proposal should be excluded pursuant to Rule 14a-8(i)(10).
Conclusion
For the foregoing reasons, please confirm that the Staff will not recommend any
enforcement action to the Commission if the Proposal is omitted from Medco's
2008 proxy materials.
If the Staff has any questions with respect to the foregoing, or if for any
reason the Staff does not agree that the Company may omit the Proposal from its
2008 proxy materials, please contact me at (201) 269-5869. I also may be reached
by facsimile at (201) 269-2880 and would appreciate it if you would send your
response to me by facsimile to that number. The primary sponsor of the Proposal
may be reached by contacting Rev. Michael Crosby at (414) 271-0735 or Sr. Susan
Mika at (210) 348-6704 and by facsimile at (414) 271-0637 and (210) 348-6745,
respectively.
Very truly yours,
/s/
Lori B. Marino
Cc:
Benedictine Sisters
285 Oblate Drive
San Antonio, TX 78216
Attn: Sr. Susan Mika
Fax: 210-348-6745
Attn: Rev. Michael Crosby
Fax: 414-271-0637
David B. Snow, Jr. (Medco Health Solutions, Inc.)
David S. Machlowitz (Medco Health Solutions, Inc.)
EXHIBIT 1
[APPENDIX 1]
December 12, 2007
DAVID B. SNOW, JR. - CHAIR & CEO
MEDCO HEALTH SOLUTIONS, INC.
100 PARSONS POND DRIVE
FRANKLIN LAKES, NJ 07417
Dear Mr. Snow,
On behalf of the Benedictine Sisters Charitable Trust, I write to give notice
that pursuant to the 2008 proxy statement of Medco Health Solutions, Inc. and
Rule 14a-8 under the Securities Exchange Act of 1934, the Trust intends to
co-file the attached proposal with Province of St. Joseph of the Capuchin Order
(Midwest Capuchins) at the 2008 annual meeting of shareholders. The Benedictine
Sisters Charitable Trust is a beneficial owner of 1,000 shares and has held
these shares for over one year. In addition, the Trust intends to hold the
shares through the date on which the Annual Meeting is held.
Rev. Michael Crosby will be our representative regarding this resolution and can
be reached at 414-271-0735.
Sincerely,
/s/
Sr. Susan Mika, OSB
Director, Corporate Responsibility
Enclosure
[APPENDIX 2]
Health Care Reform Principles - Pharma 2008 - Medco Health Solutions, Inc.
The overriding domestic policy concern of U.S. citizens involves some form of
universal health care. Besides the Iraqi war, the greatest public policy issue
in the 2008 presidential campaign has been universal health care reform.
Most citizens want their government to "guarantee health insurance for all
Americans," particularly children. They say they'd pay higher taxes to make this
possible, although they disagree about how to achieve this.
Given such findings, health care reform has become an overriding public policy
issue for the health care industry, including our company. Its paid lobbyists
seek to influence elected leaders regarding the company's position. Often this
occurs in less-than-transparent ways and, at times, against the interests of its
stakeholders.
In 2006, the health sector spent $351.1 million to lobby the federal government.
This represents 13.8% of all spending on lobbying. It nearly equals similar
spending by the financial sector. Within the health sector, manufacturers of
drugs, medical devices, and other health care products spent the most. Between
1998 and 2006, the AMA, the American Hospital Association, AARP, and PhRMA
spent, respectively, the second, fourth, sixth, and seventh most on lobbying.
Although contributions from the health sector to presidential and other federal
candidates may increase, they are projected to be dwarfed by the overall amount
the health industry spends to lobby. Most of this occurs without shareholder
consent and that of other stakeholders whose public policy interests may be
opposed to those of our company.
Currently, there is broad support across most sectors of the United States for
"fundamental changes in" or "completely rebuilding" the health care system. Our
company can no longer hide behind any veil or secrecy or argue that its lobbying
to affect public policy is "ordinary business," especially when polls show that
the goals of such lobbying may be diametrically opposed to the stated interests
of ordinary citizens such as its consumers.
Existing law demands companies reveal the amount they spend on lobbying but not
what they lobby for. Because such lobbying by the health care industry,
including that of our company, actually may counter the underlying interests of
its shareholders, therefore,
RESOLVED: shareholders urge the Board of Directors to adopt principles for
comprehensive health care reform (such as those based upon principles reported
by the Institute of Medicine:
1. Health care coverage should be universal.
2. Health care coverage should be continuous.
3. Health care coverage should be affordable to individuals and families.
4. The health insurance strategy should be affordable and sustainable for
society.
5. Health insurance should enhance health and well being by promoting access to
high-quality care that is effective, efficient, safe, timely, patient-centered,
and equitable).
Supporting Statement
As shareholders, we believe publicly-held companies should be accountable to the
public on their positions on critical public policy issues, such as universal
health care. This is especially urgent for those in the health care industry. We
urge the Board to report annually about how it is implementing such principles
and ask fellow shareholders to support this resolution.
[INQUIRY LETTER]
January 23, 2008
VIA OVERNIGHT DELIVERY
U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of Chief Counsel
100 F Street, N.E.
Washington, DC 20549
Re: Withdrawal of No-Action Letter Request Regarding the Shareholder Proposal of
the Benedictine Sisters Securities Exchange Act of 1934 - Section 14(a); Rule
14a-8(i)(10)
Ladies and Gentlemen:
On January 18, 2008, Medco Health Solutions, Inc. ("Medco" or the "Company")
submitted a request for a no-action letter to the staff of the Division of
Corporation Finance requesting that the staff concur with our view that, for the
reasons stated in the request, the shareholder proposal (the "Proposal") from
the Benedictine Sisters (the "Proponent") may be properly omitted from the
Company's proxy statement and form of proxy (together, the "proxy materials")
for its 2008 Annual Meeting of Shareholders.
On January 22, 2008, Medco received a letter from Sr. Susan Mika, Director,
Corporate Responsibility of the Proponent. The letter informed Medco that the
Proponent was withdrawing the Proposal in light of the actions already taken by
Medco in response to the Proposal. A copy of the withdrawal letter is enclosed
as Exhibit A.
Based on the withdrawal of the Proposal by the Proponent, Medco is hereby
withdrawing the request for a no-action letter.
[STAFF REPLY LETTER]
January 24, 2008
Lori B. Marino
Vice President & Counsel,
Corporate Law
Medco Health Solutions, Inc.
100 Parsons Pond Drive
Franklin Lakes, NJ 07417
Re: Medco Health Solutions, Inc.
Dear Ms. Marino:
This is in regard to your letter dated January 23,
2008 concerning the shareholder proposal submitted by the Benedictine Sisters
Charitable Trust for inclusion in Medco's proxy materials for its upcoming
annual meeting of security holders. Your letter indicates that the proponent has
withdrawn the proposal, and that Medco therefore withdraws its January 18, 2008
request for a no-action letter from the Division. Because the matter is now
moot, we will have no further comment.
Sincerely,
/s/
William A. Hines
Special Counsel
cc: Sr. Susan Mika
Director, Corporate Responsibility
Benedictine Sisters
285 Oblate Drive
San Antonio, TX 78216
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