Category: Pharmaceuticals

Last July, I wrote about the nuttiness of the American Jobs Creation Act, a one-time tax break for companies bringing overseas profits back to the U.S. (the tax rate on such earnings drops from about 38% to about 5%). Michelle Leder at Slate just wrote about the subject, calling it an “absurd provision of a law designed to create jobs.”

It’s a good piece, but she makes a “numbers in a vacuum” argument about Pfizer, which leads me to wonder if she’s not being fair toward the other companies, which are in fields that I don’t cover. She writes,

At Pfizer, the pharmaceutical giant that announced the single largest repatriation—$37 billion—the one-time windfall works out to approximately $11 billion. That kind of tax savings buys a lot of $600-an-hour lobbyists, though not, apparently, many scientists and salespeople. In its annual report, Pfizer doesn’t list employees by region. But the company’s total head count dropped to 106,000 at the end of 2005, about 8 percent fewer jobs than at the end of 2004.

Thing is, those layoffs weren’t at all related to Pfizer’s overseas profits. They were a result of Pfizer acquiring Pharmacia and Warner-Lambert, along with a raft of smaller companies. Those acquisitions basically guaranteed layoffs in the thousands; this is what’s known as “generating efficiencies by combining operations.” So those layoffs were in the works long before the AJCA was passed in 2004.

Now, you can argue that the acquisitions were foolhardy or unlucky (especially the Pharmacia one, which pivoted on the Celebrex/Bextra franchise), but complaining that the company should have kept ‘redundant’ employees on because it had this one-time tax refund coming is flat-out stupid.

The first day of the conference was good, but I did a bunch of running around and interviewing, punctuated by a long lunch with a client who revealed that his first marriage ended because his wife was making it with the landscaper. He is not very happy that his second wife enjoys Desperate Housewives so much.

Unfortunately, that lunch ran over into an interview, so I had to reschedule. My subject was only free at 5pm, after the conference ended. We talked till about 5:45, and I headed out from there.

The taxi line was approximately 2 miles long. I took one look at the massive queue and said, “Screw this! I’m goin’ home!”

Unfortunately, the McCormick convention center is pretty remote, so this was not going to be achieved on foot, especially after a full day on a convention center floor.

So I started walking over to the hotel connected to the center. Unfortunately, plenty of people got that idea and were already on line for cabs.

I couldn’t find a shuttle bus, and thought I could be risking things by sneaking onto the bus for the Sanofi reception; after all, that event could’ve been located even further from my hotel. I kept walking.

Then I saw a trolley-bus. The driver was standing outside it, leaning against the door. Three guys in good suits were walking by it. One said, “How much to get us uptown?” His buddies laughed and they walked on.

I said, “I’ll give you twenty dollars right now to get me to the Embassy Suites.”

He said, “Okay!” and jumped into the bus. I ran on and shouted to the three guys to follow me. They did. The trolley took off and started maneuvering through the traffic.

At one point, the driver said, “I hope I don’t get in trouble for this.”

One of the suits (they were all business development/arbitrage guys for biotechs) said, “Don’t you remember? The cops told you to move your bus, because of the safety issues with the protesters! You had to get going, and now you’re stuck in traffic!”

“Man, you guys are smart!” he told us.

Twenty bucks later (about $5-8 more than a cab ride), I was home.

Here’s a pic of the convention center:

Poignant, sensible and sad post on pricing for cancer drugs, courtesy of Derek Lowe.

I’m having a hard time splitting my thoughts between the events in Louisiana & Mississippi and the day-to-day stuff I need to get done, so I’m going to write a little more about the latter. I hope you don’t take it to mean that I’m glossing over what’s going on down there. If anything, I’m feeling this constant drain as I try to grasp the concept of a city that’s dying at high speed, while I’m racked with worry about the health and security of my future in-laws.

All of which is a preface to saying that I had a nice professional moment this morning. When I got the office, I received an e-mail from a guy at the European Commission in Brussels, asking if it’s okay to cite my Top Pharma/Biopharma Companies report in his new paper on Biotech and Applied Genomics R&D in Europe.

He sent an early copy of the study/proposal, which was mainly about how the EU has lagged in Biotech R&D. It had some neat suggestions for what they need to do to regain a competitive position vis-a-vis the U.S. and Asia (mainly the U.S.), but I was just gratified that all the work I did earlier this summer proved valuable enough for a government agency to base some of its findings.

In that same vein, a friend of mine called last night to see how I’m doing and what I’m up to in September. “Well, I said, I’ve gotta write the second part of my Biomarkers article, interview some people about Pharma/Biopharma facility design, get a lot of materials ready for our annual conference, and edit a bunch of contributed articles for the mag. At night I’ll be working my way through a re-read of Don Quixote, before my trip to Madrid in November.”

She thought I was complaining.

[Here’s the From the Editor page for the latest issue of my magazine]

By now, the story of the first Vioxx lawsuit is old news. Merck was found liable in the death of Robert Ernst and the Texas jury awarded more than $250 million to his widow. State laws will knock that down to $26 million, and it may get reduced further on appeal. The penalty is harsh and, if it turns out to be the average payout for each trial, Merck will obviously go under. The company says it still plans to fight each lawsuit individually and not enter a class-action settlement, but has admitted that it may settle some cases rather than go to trial. For more on their legal/financial strategy, check out this Slate article.

The size of the award was troubling, of course, but once a case goes to trial, no one really knows what to expect. What was more troubling was a comment from one of the jurors in the case. From The Wall Street Journal‘s story the Monday after the verdict, we learned the following:

Jurors who voted against Merck said much of the science sailed right over their heads. “Whenever Merck was up there, it was like wah, wah, wah,” said juror John Ostrom, imitating the sounds Charlie Brown’s teacher makes in the television cartoon. “We didn’t know what the heck they were talking about.”

Yup: In a trial about the impact of Vioxx on Mr. Ernst’s health, the jurors had no idea what the science was about, and essentially ignored that part of the trial. This left them with the folksy popularism of plaintiff’s lawyer Mark W. Lanier, whose post-trial comments showed how he painted the case: “I love when a widow from a small town can stand up against one of the largest companies in the entire world, actually get access to their documents and show a jury how they killed her husband.”

Yup: “How they killed her husband.” I’m not sure if this is a step up or down from John Le Carre’s recent novel (and now a Major Motion Picture!) The Constant Gardener, in which ‘Big Pharma’ leaves the protagonist’s wife dead (and raped) in Africa, because of trials for a lucrative tuberculosis drug. We�re facing a serious PR problem in this business, and it’s not solely about the average American’s aversion to science.* Maybe people have seen Erin Brockovich enough to decide that all big business is evil, but when that big business is developing pharmaceuticals, we’re in serious trouble.

According to the WSJ article, Mr. Lanier assembled a “shadow jury” to follow each day’s proceedings. Each night, the shadow jury met with a consultant (they weren’t told which side they were consulting for) at the local McDonald’s, where they provided their feedback on the case.

Yup: While they were discussing whether it was Vioxx or clogged arteries that caused Mr. Ernst’s fatal heart attack, they were eating McDonald’s on a nightly basis. And they came out 9-4 against Merck.

Thanks,

Gil Roth
Editor

* About that “average American”: I’ve always contended that, as Americans, we only have two civic duties (as opposed to our existential duties of death and taxes): voting, and jury duty. But plenty of people find their way out of jury duty, ethically or not. This means that Merck was fighting the opening round of the battle for its life with a jury filled with people who couldn’t get out of jury duty.