Last week in Washington, DC, a luncheon at the National Press Club Ballroom was the scene of a unique treat, as members of the US media were on hand to sample the steak salad and crab cake sandwiches and to rake Ian Read, CEO of Pfizer Pharmaceuticals, over the coals.
One of the “stewards of the drug industry,” Read was on hand to defend his company’s practices (price gouging, political lobbying, etc.) and to spread the gospel of good will from Big Pharma. And to take some pot shots at Canada along the way.
I know what you’re thinking. You like the guy already.
For over an hour, Read spoke of the challenges faced by pharmaceutical companies in bringing a new drug to market, insisting that research and development are costly endeavours and that without charging the high fees they do for drugs (he’d call it citizen-funded investment in medical innovation, you may have different names for it), advances in healthcare just wouldn’t happen.
Read quoted a Boston University study that said developing a new drug and taking it from discovery through to FDA approval takes on average ten to 15 years and costs about $2.6 billion. “Pfizer spends $8 billion a year on research and development,” said Read. “We were lucky if we produce three drugs a year. I don’t need the study to know what it costs to bring new drugs to society in today’s environment,” said Read, (who with that confession likely figured it’s time we all start nodding in admiration of his company’s tenacity. It is tough, I suppose, when you’re pulling in 50 bil a year, to keep fighting the good fight.)
Read: Most of these countries, if you look at Canada, if you look at Australia, if you look at New Zealand, all highly developed countries, all free-riding on inventions in the United States…
The messaging continued through until near the end of the Q & A when the topic of international trade agreements came up. “We didn’t support [the Trump-scuppered] Trans Pacific Partnership because it was really bad for our intellectual property,” said Read. “Most of these countries, if you look at Canada, if you look at Australia, if you look at New Zealand, all highly developed countries, all free-riding on inventions in the United States.”
Read drove the point home by saying, “Canada is cheaper because of [drug] ration[ing]. And Canada is cheaper because it can, because it free-rides off American innovation.”
The claim has been made before. The idea goes that citizens in countries with universal healthcare pay less for drugs than they do in the US because the governments of Canada, New Zealand and Australia constrain drug companies from charging the full monty for their products. Thus, the poor pharma companies have to make do with less profits in the rest of the world and consequently must rifle all the more vigorously through the pockets of American citizens in order to pay for their R&D.
We’ll look more carefully at this claim in a second, but first: wow, that hurts, really.
Okay, Mr. Read, sure, it’s probably a little true, the Canada thing. We are sort of a Bob and Doug MacKenzie type of people, aren’t we. A bit pogey-loving, a bit trailer park lounging?
Do you like that smart phone in your pocket, Mr. American businessman? I’d say you owe us and the folks at BlackBerry for that one…
Maybe we cling too much to our blue-hatted Lester B. Pearson salad days instead of pulling our weight right now on the international front. Maybe after Saturday hockey’s done, we might watch a bit of American football on Sunday. Okay, we like Hollywood and HBO.
But freeloaders, Mr. Read? Freeloaders on American innovation! I’m no Einstein, but I think you might have it a little ass backwards, dude. Do you like that smart phone in your pocket, Mr. American businessman? I’d say you owe us and the folks at BlackBerry for that one. The old-fashioned telephone, too, you might remember, was made by a Canadian/Scotsman. I could go on.
And I will.
Thomas Edison may get the credit for the light bulb, Mr. Read, but he bought the patent from a couple of Canadians by the name of Woodward and Evans. More co-opting of Canadian ingenuity, the inventor of the AM radio broadcast was Reginald Fessenden, another Canadian trying to make a living down in the States.
Who invented the Java programming language? James Gosling from Calgary. Who invented both the alkaline and lithium batteries? Chemical engineer Lewis Urry from little Pontypool, Ontario. IMAX technology? A Canadian team. Who first came up with the donut? Okay, that one is supposedly American, but we’re really grateful.
Allow me to step into your sandbox, Mr. Pfizer, and say one word: insulin.
Yes, Mr. Read, some of our inventions may seem a bit pedestrian to you big city types. The paint roller, for one, and instant mashed potatoes. Five pin bowling. But no one can say we aren’t crafty with our surroundings, to wit, the snowblower, the ski-doo, instant replay and the hockey mask.
Finally, allow me to step into your sandbox, Mr. Pfizer, and say one word: insulin.
Now, with that fully out of our systems, let us return to the broader thesis that research and development carried out by pharmaceutical companies requires proper financial investment by countries and their drug-consuming, over-a-barrel citizens.
“Overall, I think it’s fair to say that we’re being responsible when it comes to the pricing of our medicines,” said Read. “We’re producing great value for society and simultaneously taking large financial risks due to the uncertainty of the drug.”
It is true, pharmaceutical companies do spend a lot of money on research and development. An average of 18-20 per cent of these companies’ budgets get spent this way, more than any other major industry spends on R&D. But drug companies also lean heavily on outside sources, getting government funding and research from publicly funded institutions, and more broadly, even, these companies depend upon public research institutions to train the people who are then hired to make their drugs.
As well, in any given year, companies like Pfizer spend more on sales and marketing of their drugs than on research and development. From 2013, for example, Pfizer spent $6.6 billion on R&D and $11.4 billion on sales and marketing. The same year, Johnson & Johnson spent $8.2 billion on R&D and $17.5 billion on marketing.
That $6.6 billion spent on R&D seems a lot less impressive when stacked up against $22 billion in profit — and, consequently, the whole argument that high drug costs are necessary for innovation seems a whole lot of nonsense…
In one sense, there’s nothing inherently wrong with promoting your product. Everybody does it, and people like Read can claim that if they spent less on shilling their pills they’d take in less revenue, which would translate into fewer resources to put into R&D and thus less innovation in healthcare. A tight little circle.
The only problem is that in 2013, Pfizer’s profit margin was 43 per cent. That $6.6 billion spent on R&D seems a lot less impressive when stacked up against $22 billion in profit — and, consequently, the whole argument that high drug costs are necessary for innovation seems a whole lot of nonsense.
Worse than nonsense, really. The fact of the matter is that pharmaceutical companies do not sell office supplies, they sell drugs. Pfizer is involved in healthcare and that means it is easy for Read and others to talk about their business in the language of social goods. It means they can, in order to justify their actions, speak as if they are on our side and that their companies are, first and foremost, motivated toward the betterment of the human race.
While some of his company’s employees likely think this way, pushing the bounds of science and medicine as they do, Read, himself, certainly does not. His company does not. Simply put, Pfizer is not a public charity, thus they do not get to pass their behaviour off as being in the public interest.
And yet there he was, blaming Canada and calling it “commercial blackmail” when governments (“monopoly-purchasing governments,” he says) have the audacity to set prices for his drugs. There he was chastising Canada and attacking our government’s utter gall in considering its citizens’ interests, their health and their livelihoods when deciding on drug prices. And calling us a country of innovation freeloaders, to boot!
Before pondering that some more, I think I’ll zip up the ol’ parka, jump on my snowmobile and head to the bar for a Bloody Caesar. Maybe get a butter tart, too.