It is the biggest and most powerful drug company on the planet. Its famous blue diamond-shaped Viagra pills have made it a fortune beyond the dreams of small nation states and the butt of smutty jokes worldwide. But Pfizer’s global reach has not turned the world’s third largest business into a benevolent giant, according to its critics.
Quite the contrary. The vast multinational stands accused of blocking reforms to global drug pricing that would help lift impoverished countries out of disease and spur their development.
As shareholders gather for the annual general meeting in Michigan this morning, their investments snugly coining profits at the rate of $1-million an hour, critics are asking increasingly urgent questions about Pfizer’s attitude to those who need medicines in poor countries.
The takeover last week of Pfizer with Pharmacia, which took the New York-based giant past its British rival GlaxoSmithKline to become the largest company of the most profitable industry on the planet, makes it all the more important, they say, that Pfizer takes a lead in conceding a system of low prices in the 90% of the world worst hit by disease.
The battle for low prices for the poor pits the basic instinct of huge American corporations to make money against a growing public belief that pharmaceutical companies have a special humanitarian duty to help the sick, wherever they are in the world and however little they can afford to pay.
Already the major drug companies have slashed the prices of Aids drugs, albeit as a result of a public outcry combined with competition from generic companies making cheap copies of their drugs in countries that do not yet acknowledge their patents.
But now the stakes have risen higher still. The drug companies have recognised that they must be seen to help in the Aids crisis, but Pfizer and the rest want to draw a line in the sand, separating Aids, malaria and tuberculosis and similar infectious pandemics from the insidious and profitable diseases that affect millions in rich countries as well as poor, such as cancer. Cheap Aids drugs – yes. Cheap cancer drugs? Well, says Pfizer, poor countries haven’t asked for them. They’ve got far too many other problems.
”I’ve got to tell you, I don’t know very many health ministers in very many poor countries that are approaching pharmaceutical companies, generic or non-generic, asking for cancer drugs,” says Robert Mallett, Pfizer’s combative vice-president for corporate affairs.
But Rafael Bengoa, director of management of non-communicable disease at the World Health Organisation, says they had better look out. The struggle over Aids drugs will inevitably become a struggle over insulin and cancer drugs too. While Aids and Sars hit headlines, he warns, ”the invisible epidemics are killing more people than those”.
Pfizer says talk of cancer drugs is irrelevant. This is a massive but in many ways old-style American corporation, making megabuck profits that to US eyes look more impressive the higher they climb. For over 150 years, since young Charles Pfizer left Germany with $2 500 borrowed from his father and set up in Brooklyn with his cousin Charles Erhart, the company has prided itself on its entrepreneurial spirit and the quality of its products.
Their first big hit was santonin, a bitter and unpopular medicine used to treat intestinal worms. The pair, inspired by Erhart’s confectionery background, mixed it with almond-toffee flavouring, moulded it into a cone shape, and never looked back.
A smart line in painkillers, preservatives and disinfectants during the civil war confirmed Pfizer as a runaway success story. In 1955, it began selling antibiotics in the UK. By 1972 it had crossed the billion-dollar sales threshold. By 1980, it had its first billion-dollar single drug — the anti-inflammatory medicine piroxicam, brand-name Feldene.
It’s a classic American success story. Pfizer has made its own luck, called all the shots and has now reached the top of the pinnacle. But the pressure is on to introduce the kind of tiered pricing system — different rates for different states — that runs counter to its philosophy.
Campaigners who took to the streets and lambasted the drug giants over the appalling spectacle of young men, women and children in Africa dying of Aids, which is treatable although not curable in rich countries, have now widened the grounds for complaint. They want a transparent system which will allow poor countries to waive the multinational giants’ patents and buy or make whatever cheap drugs they need to safeguard the health of their people. That means cancer, asthma, diabetes as well as Aids, TB and malaria.
In Geneva, negotiations that were supposed to endorse the right of poor countries to obtain cheap medicines when they need them have ploughed into a quagmire. Developing countries want the so-called Doha declaration of the World Trade Organisation talks to specify that they can have drugs for any illness. Just before the end of the year the US, whose interests appear indistinguishable from those of the pharmaceutical industry, blocked a deal.
Pfizer was one of the companies lobbying energetically against concessions over Doha. ”Well I think we are comfortable with the position that the US government has taken as a whole,” says Mallett, who used to work in the office of the US Trade Representative — the government department in charge of the negotiations.
In fact, Pfizer is happy to have no deal at all. Existing trade agreements give the very poorest countries the option to waive patents if they need to, he insists. But Paul Zeitz, of the Global Aids Alliance, says they are not enough. ”Developing countries are highly intimidated by the US Government and Pharma and the Doha Declaration provides them some protection,” he says. The issue could scupper the trade round, fire the anger of developing countries and protesters and turn the WTO meeting in Cancun in September into another Seattle.
Pfizer knows how to flex its lobbying muscles. Three years ago it was among pharmaceutical companies who targeted a statutory committee of the Australian government responsible for recommending whether medicines should be paid for by the state, and at what price. (Drug prices in Australia were among the lowest in OECD countries.) Critics claim industry pressure led to the dissolution of the pharmaceutical benefits advisory committee and the re-appointment of some but not all members, together with an industry representative.
Pfizer also sued two members of the committee over their refusal to recommend Viagra, the impotence pill, to the government for state subsidy, but lost their court action.
Pfizer rejects any suggestion that it is not doing its bit for the poor although it won’t participate in tiered pricing schemes administered by outside independent bodies, as recommended by Clare Short’s Department for International Development working group last year.
”The notion that some body out of Europe or the US should come up and start dictating what prices ought to be somewhere else strikes us as a rather radical notion,” says Mallett. ”We do pricing by markets.”
In Aids-hit Africa, in response to international pressure, Pfizer donates its drug fluconazole (brand name Diflucan) to nations where it is desperately needed to treat cryptococcal meningitis and oral thrush, which commonly infect and can kill those with weakened immune systems.
But donations are not good enough, says the Nobel Peace prize-winning organisation of volunteer doctors, Medecins sans Frontieres. ”We’re talking about systematic long-term medicines provision for about 90% of the world’s population,” says Ellen t’Hoen of MSF. ”You can’t possibly deal with that on a donations basis. It is not realistic. The solutions need to be found in the trade area.”
”Whatever companies like Pfizer say in their glossy annual reports, the really big issue is how to make medicines affordable for poor people,” says Sophia Tickell, Oxfam policy adviser.
”This is not a question of philanthropy and donations; it is about giving the 40 million people who die every year from preventable diseases access to medicines. It is scandalous that the likes of Pfizer refuses to budge on changing the rules of trade so that life — saving drugs are available to the poor, not just the rich.”
”Drug donations programmes are definitely not the right answer,” says Paul Zeitz of the US-based Global Aids Alliance. ”They (the drug companies) have been extremely slow to offer them, they implement cumbersome enrolment and eligibility criteria, they protect the patent system, and they allow the company tax write-offs and good public relations, but they do not solve the problem.”
In fact there have been major problems with the implementation of Pfizer’s flagship fluconazole donations programme. On paper, the Diflucan Partnership looked the very model of responsible and generous corporate giving. The world’s largest drugs company would offer Diflucan, which can be a life-saver for HIV/Aids patients, at no charge in 50 of the world’s poorest countries and fund medical training to go with the donations.
There would be ”no dollar or time limits”, said Hank McKinnell, Pfizer’s chief executive, and the director general of the World Health Organisation hailed it as evidence that ”the private sector is showing it is willing to do its part to fight the HIV/Aids epidemic”.
The reality on the ground was very different, according to some of those trying to distribute the free supplies of Diflucan. A year after the launch of the Diflucan Partnership, Pfizer effectively admitted that supplies were not reaching the intended recipients in great enough numbers.
Instead of running the scheme in-house, it sub-contracted administration to Axios International, a Paris-based company which performs a similar role with other pharmaceutical company’s donation programmes. Even now, however, the intended target of 50 countries is not even close — free supplies have reached just 15, in some cases in very small quantities.
Joseph Saba, chief executive of Axios, says: ”What Pfizer was trying to do was go country by country, but with 50 countries it was taking a long time so they came to us to open it up. I hope that if you ask us in six months’ time, it will not be 15 countries, but 20-25. Setting up the programme took a long time. It’s important to acknowledge that. But it was not because Pfizer was dragging its feet – it’s because they were figuring out the best way to do it.”
Even so, the fluconazole donation programme is not a model that campaigners want to see copied. Charity, at the whim of a multinational corporation, they say, is not a sustainable response to pandemics not only of Aids, TB and malaria, but increasingly also the diseases that are stealthily creeping across the developing nations as the rich countries of the US and Europe export the unhealthy diet and lifestyles of the affluent.
Pfizer says it’s only really about the expensive drugs needed for the Aids pandemic. ”We cannot as an industry solve the healthcare problems of the entire poor world, nor should we be held accountable to do that. What we should be held accountable to is to the extent we can to make our products available on affordable terms to many of the poor countries,” says Mallett.
Shareholders may not agree. A recent report from investment houses in the City of London sent a warning to the pharmaceutical companies that they must pay more heed to the needs of the poor in developing countries if they are not to damage their share values. At Pfizer’s AGM today, there is everything to play for.
$10bn-a-year empire built on Viagra
There has never been a drug company quite like Pfizer. Last week it completed the $60bn takeover of its rival Pharmacia, allowing it to reclaim top ranking among pharmaceutical companies with an 11% share of the world market; it is now 50% bigger than its nearest challenger, GlaxoSmithKline.
It has 120 000 employees and a stock market value of $180-billion, making it the world’s fifth-largest quoted company — only Microsoft, General Electric, Exxon Mobil and Wal-Mart are bigger .
Last year, 10 of its drugs recorded individual sales of more than $1-billion – the industry definition of a blockbuster — and the group boasts that on any given day, 40 million people around the world are treated with a Pfizer medicine; the range runs from Viagra for impotence through to consumer brands such as Nicorette, Listerine and Sudafed. The profits from this enterprise are astonishing: Wall Street analysts predict Pfizer will make close to $10-billion this year — about $27-million a day, including weekends, or over $1-million an hour, every hour.
Perhaps the most astonishing aspect is that a decade ago Pfizer was among the also-rans of the global drugs league. In 1990, it ranked only 14th and looked more like prey than predator. Its big leap forward came with the discovery of three blockbusters in the early 1990s — Zoloft, an antidepressant, Zithromax, an antibiotic, and Norvasc for hypertension.
By 1997, profits had doubled in five years to $2,2-billion and Pfizer then hit the jackpot with Lipitor, a cholesterol-lowering drug.
By 1999, Lipitor was the world’s biggest-selling prescription drug, with sales that year of almost $4-billion, a figure that has since doubled. After the biggest-selling drug came the most famous. Viagra, developed by Pfizer’s British laboratories in Kent and a marketing triumph in an area of medicine that most pharmaceutical companies had written off as too seedy or too obscure.
The critics complained that Pfizer’s sales force — with a reputation for employing former militarypersonnel — had turned the business of selling prescription pharmaceuticals into something akin to selling soap powder, but Wall Street loved it. The brash New York company was clearly a winner.
Then came last year’s bid for Pharmacia, which initially gave Wall Street the jitters and sent Pfizer’s shares to their lowest level for four years. Nine months of sweet-talking by chief executive Hank McKinnell, however, seems to have done the trick.
This time he is promising cost savings of $2,5-billion over the next three years as surplus jobs are shed, although the sceptics argue that the company is now just too big for its own good.
To keep earnings growing at 10%-plus a year, it needs a steady supply of new blockbusters. Its big sellers, such as Lipitor, Zithromax and Zoloft, are now ageing, and the group’s labs have not produced a blockbuster since Viagra, even though Pfizer is already the industry’s top spender on original research.
Until it can rediscover its scientific touch, it is open to the charge that it is just a highly skilled practitioner of the corporate arts of selling products and buying rivals. – Guardian Unlimited Â