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Health Reform Battle Pays Off For Pfizer's Kindler
By Matthew Herper on pharmaceuticals
When it seemed that President Obama's bid to reform the U.S. health care system had been dashed, one unlikely supporter was unwavering: Pfizer chief executive Jeffrey Kindler.
"Pfizer has been a long-time proponent of comprehensive health care reform and we still are," Kindler told Forbes in February. "Health care is complex, it is not surprising this has been difficult to accomplish."
Today, the stocks of pharmaceutical manufacturers are rallying on the passage of a reform bill in the House of Representatives late last night. Merck shares rose 2% in morning trading; Pfizer shares rose 1.4%.
Kindler, reportedly a Democrat, broke with industry's long tradition of supporting Republicans. He gave money to Hillary Clinton during the 2008 primaries, and to Obama during the general election. In February 2009, Kindler gave a speech to the Economic Club of Chicago in which he laid out why he thought industry should be involved in a health care reform bill. (Read the speech here.)
"The system has gotten so bad and the need for reform so clear, that we just might have a unique opportunity to fix it," Kindler said. "In fact, for the first time in decades, there is broad agreement across the political spectrum and the private sector on many elements of reform and on the urgency to act."
This November the Wall Street Journal ran an editorial saying Big Pharma had sold out. It specifically placing the blame on Kindler. As the prospects for reform seemed to fade, WSJ columnist Kim Strassel lambasted Kindler as a pied piper who had led the drug industry to disaster.
For agreeing to give $80 billion in Medicare discounts to help pay for reform, Big Pharma got a palatable bill that does not institute any price controls. The bill also gives drug firms a generous 12-year period during which generic companies cannot make copies of protein drugs, even if patents on them expire. Such protein drugs are currently many of the industry's biggest sellers and brightest research hopes.
The drug industry's focus has changed drastically since the 1990s, when it was vocal opponent of the health reform plan proposed by President Clinton. Back then, drug companies mostly sold pills for everyday ailments like high blood pressure. They feared that price competition on me-too drugs following reform would cut their sales significantly.
Today the drug industry is increasingly focuses on high-priced specialty medicines for cancer and rare diseases. They can cost $50,000 or more a year and few people can afford them without good insurance. Health reform gives them millions of more customers.
Just this month, Kindler took over as the chairman of the industry's trade group. His industry in general—and Pfizer in particular—still face all sorts of big problems. Drug companies find themselves unable to invent new hits. Finding a way forward is going to require a lot more than just negotiating the rough terrain of Washington, D.C. blogs.forbes.com |
