logo logo

Pfizer’s pforeign intrigue: Tried to scupper US trade deal in price control protest

CBS News | December 21, 2010

Pfizer’s pforeign intrigue: Tried to scupper U.S. trade deal in price control protest

By Jim Edwards

Pfizer (PFE) lobbied to scupper a free trade deal between the U.S. and New Zealand because it was angry at the New Zealand government’s healthcare system, which strictly controls prices and new drug approvals, according to diplomatic cables leaked by Wikileaks. U.S. drug companies regard New Zealand as “hostile ground,” the cables say, but that is in part due to their failed attempt in 1990 to unseat former Health Minister Helen Clark – Clark later became the country’s Labour Party prime minister and apparently remains unimpressed by Big Pharma’s interference in her country’s affairs, the cables show.

The cables offer a lesson in lobbying on foreign territories: Promoting your own interests is one thing, but trying to subvert democratically elected leaders or gaming the system to the disadvantage of the locals can come back to bite you. This is the second mention of Pfizer within the Wikileaks cables, and the second alleged attempt by the company to bring down a local politician.

First, some background on the New Zealand healthcare system: About 73 percent of prescription drugs are bought via the country’s government-run system, in which the Pharmaceutical Management Agency (Pharmac) decides which medicines will be covered and sets the prices and subsidies for the drugs it is willing to pay for. New Zealanders are free to buy drugs with their own money even if they are not Pharmac approved

Drug companies, via their lobby group the Researched Medicines Industry, criticize the government’s refusal to increase its budget for drugs, and the lack of transparency at Pharmac. The 2004 cables say:

From Pharmac’s pricing policies to the government’s positions on intellectual property and direct-to-consumer advertising, U.S. pharmaceutical companies consider New Zealand to be hostile ground. Unable to meet their sales and profit targets, they say it is becoming increasingly difficult to persuade their home offices to keep investments or even a presence in the country.

Some companies made good on their threat, reducing their Kiwi staff:

Pfizer downsized its pharmaceutical division by 15 percent, to 60 people. Johnson & Johnson two years ago cut its staff by 10 percent, and Jan Trotman, its general manager in New Zealand, said that if conditions do not improve in 2005, the company could leave the country in three to five years.

But companies have poisoned the locals against them, the cables say, due to their historic meddling:

Pharmaceutical companies see ideological opposition to their industry in comments by Prime Minister Clark, Health Minister King and other cabinet members. One pharmaceutical executive recalled how, upon simply introducing himself at a public forum, the Prime Minister said the drug industry needed to be “stopped” from making excessive profits. (The industry may be paying a price for its unsuccessful effort in 1990 to unseat Clark, who at the time was health minister.)

… Pfizer, which withdrew from RMI early this year, will oppose free-trade negotiations until the New Zealand government alters some of its policies, especially its patent law and reference pricing.

Clark lost the 2008 election to the center-right National Party, so now Pfizer et al. may get another chance to loosen NZ’s rules and pursestrings.

That will likely be an uphill battle, however. The country experimented with “commercialization” in the 1990s and didn’t like the results. Clark had stopped the commercialization experiments and consolidated parts of the system but overall spending fell. Labour lost power in 1990 to the National Party and the system went through a period of recommercialization through 1999, when Labor again regained power and Clark again stopped it. Academic Brian Easton writes:

One negative lesson of the 1990s experience is that this sort of commercialisation is unpopular with the public (although with a little more care there could have been less antagonism) and with the professionals involved. It also failed to deliver the promised benefits – it is possible that it did not deliver any health benefits at all – while the disruption from the change resulted in health dis-benefits (including higher costs and therefore less production of medical outputs).

Put this chapter together with Pfizer’s alleged attempt to dig dirt on a Nigeria attorney general in order to force a lawsuit settlement, and you’re forced to conclude that unlike its peers, Pfizer is apparently unafraid of foreign intrigue.

 source: CBS News