Pharma is all in for Romney
It should come as no surprise that the large majority of pharma companies support Mitt Romney for president, either tepidly or with fervent enthusiasm.
Pharma is all in for Romney
by Daniel R. Hoffman, Ph.D.
As a group, pharma employees probably array across the political spectrum in a fashion similar to their counterparts in other large, well-established, technical industries. Until the last couple of years, many of them on the business side identified strongly with their company's fiduciary officers and believed they too should channel the Republican soul by intoning, "we've got ours, now we want everything you've got." In terms of contributions and other political action, however, corporations spend shareholders' money and exert pressure to support the interests of their C-suite officers and directors. Thus it should come as no surprise that the large majority of pharma companies support Mitt Romney for president, either tepidly or with fervent enthusiasm.
A closer look at what motivates pharma's support provides some interest. In 2009 and 2010, pharma gave mild support to the Affordable Care Act (Obamacare). That only seemed reasonable because the legislation funded an additional 30 million people to become customers for pharma's products. At the same time, Obama gave pharma some enormous sweeteners for withholding their opposition. These included prohibiting Medicare from using its purchasing power to negotiate drug prices and banning the reimportation of U.S.-made drugs from Canada, Britain and other advanced countries at vastly reduced prices. So, organized pharma at that point, principally at the urging of Pfizer's CEO at the time, Jeff Kindler, was pragmatic rather than Ayn Randian.
Mitt Romney, on the other hand, has said many times that he would try to repeal or at least stifle Obamacare, beginning on his first day as president. It's entirely possible that pharma executives don't take Romney's pledge on this issue seriously and, instead, view it as a pacifier for the Tea Partiers, libertarians and half-wits in the Republican base.
What seems more likely is that another issue motivates pharma's support for Romney beside the class identification among the industry's C-suite and the fact that most of them also want to earn $20 million a year from interest on accounts in the Cayman islands and Switzerland. That issue concerns the fact that what one industry publication termed the "European drug pricing ethos" will inevitably come to the U.S. and the pharma execs want a King Canute to try halting the tide.
In both Europe and the emerging markets over the past two years. the austerity measures required by a global recession have constrained health care spending, thereby causing either a slowdown or a reversal of drug prices. The U.S. remains the only national market where drug prices have continued to rise over the past year.
A sign of possible change appeared last week when an op-ed article, authored by three physicians at the prestigious Memorial Sloane-Kettering Cancer Center, appeared in the New York Times. The article probably arrived as a shot across pharma's bow because, beneath the explanation of Sloane-Kettering's action on a particular drug, the authors signaled that comparative drug evaluation may also come to this country to curtail regular price increases.
The Times op-ed explained why Sloan-Kettering would not offer the new cancer medication, Zaltrap, at a per patient cost of $11,000 per month, since it affords no advantages over an older product that costs less than half as much. But commenters note that the Times item contains phrases that almost appear as if they were lifted directly from German legislation intended to constrain drug prices.
Pharma probably finds this action by Sloane-Kettering especially ominous because oncology as a therapeutic class has been immune from pricing comparisons or constraints. Few insurers or other payers were willing to court the bad publicity from denying patients the latest cancer therapy, especially if physicians praised the new product as a breakthrough. The Sloane-Kettering action shows that even physicians who are aware of lucrative research opportunities, acting within a specialty that always craves the latest toy, appear capable of addressing financial realities in a practical manner.
Given the way this tide of price constraint may rise, pharma execs lack the patience for pragmatic, legislative bartering. They want a President who will reflexively act to preserve their cartel. The way they see the situation developing, there will be billionaires running things from inside "quiet rooms," while Big Bird gets shoved outside into the cold. Pharma's managers never seemed inclined to identify their interests with oversized fantasy characters for children.