Pfizer’s Bad Political Bet -billion$ to support Obamacare

February 8, 2010 05:17


The sight of ObamaCare on life support has many Democrats disappointed. It could be worse. They could be Pfizer CEO Jeffrey Kindler.

The twin events of an Obama presidency and a financial crisis rattled corporate America. Public anger put companies on the defensive. A liberal president vowing to punish firms that didn’t aid his agenda got companies scared.

Fortune 500 execs could stand up for a free market that benefits consumers and shareholders, or hitch their cart to the new Democratic majority. Pfizer’s Mr. Kindler is a case study in the hitch-and-hope mentality—a CEO who became the motivating force behind Big Pharma’s $80 billion “deal” on reform, and industry support of ObamaCare. With that health agenda burning, the choice isn’t looking so grand.

Pfizer was long a company that zealously guarded against government interference. Prior CEOs had seen how European governments had ruined its industry and recognized the threat. When the board made Mr. Kindler CEO in 2006—picking a relative newbie over insiders—it was a vote for shakeup. Mr. Kindler changed a lot more than the business.

Already known as a Democrat and political junkie, Mr. Kindler was primed for the Obama ascendancy. Like many big CEOs, he started playing footsie with groups that had long despised business but would now have the president’s ear. Pfizer quietly created a board of “notables” to advise it on policy. A top recruit: Andy Stern, fiery head of the Service Employees International Union. (It also includes Newt Gingrich.)

Mr. Kindler heeded congressional threats that companies would do well to have more Democrat-heavy lobby shops. Many of Pfizer’s free-market government hands have retired or been fired. In December, Mr. Kindler sent an internal memo noting the latest changes: Tony Principi, George W. Bush’s Secretary of Veterans Affairs and now Pfizer’s senior vice president for government affairs, would soon “transition” out of that role.

Up for expanded government-relations duties are Sally Susman, a successful former Estée Lauder executive who happens to be the daughter of a top Obama fund-raiser. Other notable hires include former Al Gore aide Greg Simon, as well as Jennifer Duck, who worked for Sen. Dianne Feinstein and former Sen. Tom Daschle. (Pfizer says its Washington office still has more self-identified Republicans than Democrats or independents.)

Pfizer also aggressively shifted political giving. According to, in the 2006 campaign cycle it gave 33% of its money to Democrats. In the 2008 cycle, 52%. In the 2010 cycle so far, 61%. (The company says it has budgeted 55% for Democrats and the 61% is a misleading snapshot.) In 2009 Pfizer became the fourth largest federal lobbyist, spending nearly $25 million. The year before it hadn’t even made the top 20.

With these gestures, Mr. Kindler surely believed Democrats would treat his industry gently. The strategy: The industry would pledge $80 billion to reform. In return it would get greater volume and a requirement that people buy brand-name drugs. Democrats would also fight against drug reimportation and forgo price controls.

No one pushed harder than Mr. Kindler. The CEO made no fewer than five trips to the White House last year. He was the man prodding Pharmaceutical Researchers and Manufacturers of America head Billy Tauzin every step. He wrote an op-ed with the SEIU’s Mr. Stern demanding reform. He pressed the industry’s $150 million ad campaign promoting ObamaCare, rolled out with liberal activist groups.

Critics warned the legislation would lead to a government takeover and price controls. They warned Democrats would take the money and double-cross them. None of it fazed the industry, right up until ObamaCare imploded.

Mr. Kindler and Co. are left with the ashes. Having got this far (with Big Pharma’s help), Democrats are more desperate than ever to pass “something.” It won’t include any upside for drug companies. There is talk instead of “popular” stand-alone legislation, including reimportation, Medicare price controls, and slashing the industry’s 12-year exclusivity on biologics.

Big Pharma can’t count on former conservative protectors. Republicans were sympathetic to its decision to “sit at the table,” but grew furious when it engaged in active advocacy of the Democratic agenda. One House Republican staffer predicts the next time drug companies “ask us to stand in front of the train,” the answer will be: “Since you were so happy to work with Democrats, call them. Go on, go: Call Rahm [Emanuel]. Call [Henry] Waxman.”

Public anger over ObamaCare doesn’t help the industry’s reputation. Many Americans now view drug companies in the same light as “crony capitalist” banks or energy firms that turn to government to bolster the temporary bottom line. Pfizer’s stock price has been decent (due mostly to Mr. Kindler’s business restructuring), but the industry faces threats from a slowdown in innovation.

In response to queries, Mr. Principi wrote: “Comprehensive health care reform is a massive undertaking and while we cannot predict the ultimate outcome, Pfizer remains committed to constructive engagement focused on providing greater access for patients and improvements to quality.”

Mr. Kindler might take solace that he’s not alone. Insurers, hospitals, utilities—many chose to accommodate a president whose health-care and climate agendas are now comatose. There’s a lesson here for corporate America. Try standing up for the free markets and limited government that have always been the foundation of U.S. business. It might work out better.

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