Pawlenty Proposal Pfizzles at Pfizer Meeting

April 24, 2004
Conrad F. Meier

CHICAGO, April 24, 2004: Minnesota's Republican Governor Tim Pawlenty's attempt to threaten Pfizer with a price control resolution went nowhere at the Pfizer stockholder meeting held Thursday, April 22, at the Ritz-Carlton in St. Louis.

Pawlenty and a group of protestors came to the meeting to pressure the pharmaceutical company's executives to agree to limit prices, allow U.S. consumers to buy Pfizer drugs from Canadian pharmacies, and end restrictions on exports to Canada. They left empty handed.



Shareholders Not Impressed

A shareholder's resolution drafted by Pawlenty's group would require drug companies to conduct business according to government mandates and establish practices that do not rely on "exorbitant revenue" from U.S. sales; end boycotts against Canadian wholesalers and pharmacies who resell drugs to American consumers; and disclose expenditures on attorneys, lobbyists, and marketers.

The resolution missed the deadline for consideration by Pfizer stockholders. However, stockholders did vote on a proposal to ask Pfizer to detail, by September 2004, how it is keeping price increases of its most-prescribed drugs at or below the inflation rate. The measure was overwhelmingly defeated. In preliminary voting, 95 percent of the shareholders voted no.

When invited to speak, Pawlenty dropped all the previous tough talk about price-gouging and dumped his prepared remarks, choosing instead to take a moderate tone when asking shareholders to urge the Pfizer management team to allow U.S. customers to buy Pfizer drugs from Canadian pharmacies. Speaking directly to Pfizer's CEO, Dr. Hank McKinnell, Pawlenty said, "As you know there is a prairie fire that's been set across America on these issues."



Pfizer's Response

McKinnell responded saying, "Allowing Americans to re-import its drugs from Canada would be unsafe and lead to widespread drug counterfeiting." This kind of action, said McKinnell, would not necessarily reduce prices for customers in the United States. "While importing cheaper drugs from Canada looks like an easy fix," the Pfizer chief said, "the practice exposes all Americans to a rising tide of counterfeit drugs, most indistinguishable from legitimate ones."

McKinnell also said "more than 93 percent of drug development is funded by pharmaceutical companies. And the expense is growing: It takes up to 15 years and costs $1.7 billion, on average, to develop a drug." Previous estimates pegged the cost between $800 million and $1 billion.

McKinnell also told stockholders the high price of medicine in America is a trade issue. "The United States needs to act against countries that fix drug prices. Consumers in France, Germany, and Canada, among others, should share the cost of discovering and developing medicines, rather than simply reaping the rewards."

"Pfizer," he said, "is doing what it can to make that happen. We are encouraging members of Congress to recognize this for what it is--a trade issue."

The effort already seems to be producing results. A week prior to the Pfizer meeting, the Office of the U.S. Trade Representative created the new position of Assistant U.S. Trade Representative for Pharmaceutical Policy and filled it with Ralph Ives, who recently negotiated free-trade agreements with Australia and Singapore.

After the meeting Pawlenty met with reporters and said he had met with Pfizer executives earlier, saying they "agreed to disagree" on the trade issue. Yet they found common ground in the need to address foreign price-fixing. "We identified a series of trade issues that should be addressed," said Pawlenty.



The Battle Back Home

Last February, Pawlenty issued the resolution in response to moves by Pfizer to end sales to 15 prescription drug wholesalers in Canada citing safety issues. On February 27, the Minnesota State Board of Investment voted 3-1 to approve a resolution essentially forcing price controls on Pfizer by threatening to dump $476 million in Pfizer stock from the state employee retirement program. The resolution was expanded to include AstraZeneca, Bayer, Eli Lilly, GlaxoSmithKline, Merck, and Wyeth.

Daniel Clifton, executive director of the American Shareholders Association, a DC-based group created by Grover Norquist's Americans for Tax Reform, said such a move would devalue the holdings of more than 10 percent of the state pension fund. "The [drug] cost issue has become a political football with no real solutions being provided," said Clifton.

Minnesota Secretary of State Mary Kiffmeyer was the sole vote against the resolution, explaining the use of "funds that belong to state employees and retirees to pressure drug companies is not consistent with the board's fiduciary duty."

David Strom, president of the Taxpayers League of Minnesota, said "it's sad to see the Board make this mistake. [The resolution] looks like a political statement, and Kiffmeyer was right to oppose it."

Outside the Pfizer stockholders meeting room, a small gathering of protesters carrying signs saying "Shame on Pfizer" was identified as part of the activist group called Minnesota Senior Federation. They are calling for a boycott of Pfizer's over-the-counter products.


Conrad Meier is managing editor of Health Care News, a monthly publication of The Heartland Institute, a national nonprofit organization based in Chicago. To contact Meier or for more information about The Heartland Institute, contact Allen Fore, The Heartland Institute's vice president - public affairs, at 312/377-4000, email fore@heartland.org.

The Web site of The Heartland Institute offers more than two dozen documents addressing prescription drug importation.
http://www.heartland.org/PolicyBotTopic.cfm?artTopic=530.

Nothing in this news release should be construed as necessarily representing the views of The Heartland Institute or as an attempt to influence pending legislation.