By Kimberley A. Strassel
Pfizers Jeffrey Kindler is a case study in the hitch-and-hope mentality.
The sight of ObamaCare on life support has many Democrats disappointed. It could be worse. They could be
Pfizer CEO Jeffrey Kindler.
The twin events of an Obama presidency and a financial crisis rattled corporate America. Public anger put companies on the defensive. A liberal president vowing to punish firms that didnt aid his agenda got companies scared.
Fortune 500 execs could stand up for a free market that benefits consumers and shareholders or hitch their cart to the new Democratic majority. Pfizers Mr. Kindler is a case study in the hitch-and-hope mentalitya CEO who became the motivating force behind Big Pharmas $80 billion deal on reform and industry support of ObamaCare. With that health agenda burning the choice isnt looking so grand.
Pfizer was long a company that zealously guarded against government interference. Prior CEOs had seen how European governments had ruined its industry and recognized the threat. When the board made Mr. Kindler CEO in 2006picking a relative newbie over insidersit was a vote for shakeup. Mr. Kindler changed a lot more than the business.
Already known as a Democrat and political junkie Mr. Kindler was primed for the Obama ascendancy. Like many big CEOs he started playing footsie with groups that had long despised business but would now have the presidents ear. Pfizer quietly created a board of notables to advise it on policy. A top recruit: Andy Stern fiery head of the Service Employees International Union. (It also includes Newt Gingrich.)
Mr. Kindler heeded congressional threats that companies would do well to have more Democrat-heavy lobby shops. Many of Pfizers free-market government hands have retired or been fired. In December Mr. Kindler sent an internal memo noting the latest changes: Tony Principi George W. Bushs Secretary of Veterans Affairs and now Pfizers senior vice president for government affairs would soon transition out of that role.
Up for expanded government-relations duties are Sally Susman a successful former Este Lauder executive who happens to be the daughter of a top Obama fund-raiser. Other notable hires include former Al Gore aide Greg Simon as well as Jennifer Duck who worked for Sen. Dianne Feinstein and former Sen. Tom Daschle. (Pfizer says its Washington office still has more self-identified Republicans than Democrats or independents.)
Pfizer also aggressively shifted political giving. According to OpenSecrets.org in the 2006 campaign cycle it gave 33 of its money to Democrats. In the 2008 cycle 52. In the 2010 cycle so far 61. (The company says it has budgeted 55 for Democrats and the 61 is a misleading snapshot.) In 2009 Pfizer became the fourth largest federal lobbyist spending nearly $25 million. The year before it hadnt even made the top 20.
With these gestures Mr. Kindler surely believed Democrats would treat his industry gently. The strategy: The industry would pledge $80 billion to reform. In return it would get greater volume and a requirement that people buy brand-name drugs. Democrats would also fight against drug reimportation and forgo price controls.
No one pushed harder than Mr. Kindler. The CEO made no fewer than five trips to the White House last year. He was the man prodding Pharmaceutical Researchers and Manufacturers of America head Billy Tauzin every step. He wrote an op-ed with the SEIUs Mr. Stern demanding reform. He pressed the industrys $150 million ad campaign promoting ObamaCare rolled out with liberal activist groups.
Critics warned the legislation would lead to a government takeover and price controls. They warned Democrats would take the money and double-cross them. None of it phased the industry right up until ObamaCare imploded.
Mr. Kindler and Co. are left with the ashes. Having got this far (with Big Pharmas help) Democrats are more desperate than ever to pass something. It wont include any upside for drug companies. There is talk instead of popular stand-alone legislation including reimportation Medicare price controls and slashing the industrys 12-year exclusivity on biologics.
Big Pharma cant count on former conservative protectors. Republicans were sympathetic to its decision to sit at the table but grew furious when it engaged in active advocacy of the Democratic agenda. One House Republican staffer predicts the next time drug companies ask us to stand in front of the train the answer will be: Since you were so happy to work with Democrats call them. Go on go: Call Rahm Emanuel. Call Henry Waxman.
Public anger over ObamaCare doesnt help the industrys reputation. Many Americans now view drug companies in the same light as crony capitalist banks or energy firms that turn to government to bolster the temporary bottom line. Pfizers stock price has been decent (due mostly to Mr. Kindlers business restructuring) but the industry faces threats from a slowdown in innovation.
In response to queries Mr. Principi wrote: Comprehensive health care reform is a massive undertaking and while we cannot predict the ultimate outcome Pfizer remains committed to constructive engagement focused on providing greater access for patients and improvements to quality.
Mr. Kindler might take solace that hes not alone. Insurers hospitals utilitiesmany chose to accommodate a president whose health-care and climate agendas are now comatose. Theres a lesson here for corporate America. Try standing up for the free markets and limited government that have always been the foundation of U.S. business. It might work out better.
