Ladies and gentlemen,
I’m honored that I’ve been invited to share some time with you tonight. I’ve
been asked to talk about what is wrong with drug industry today, where they
lost it and what needs to be changed. I’ve decided to do that in the context
of what I’ve experienced myself and most importantly, to also give you time
for Q&A.
As many of you may know I worked at Pfizer as a Vice President until
December 2005.
I’ve been very fortunate and I have done well in this industry; I’ve been
trusted to manage both a major region overseas as well as a $600 million
global business franchise. And I’ve been well compensated for my work. I’ve
never been unemployed and I’ve never had trouble buying drugs or providing
healthcare for my family. Until now.
A month ago, Pfizer terminated my employment. They waited until I was
outside the country, and then called the press and told them that they had
fired me. They didn’t even try to contact me where I was. They simply drove
by my house and taped my termination letter to my front door. Fortunately
the New York Times and a few other newspapers called me and told me what
they’d done, so eventually even I learned about my unemployment.
Pfizer told the press a lot of different things, many of them incorrect.
Among other things, they said I’d get a nice severance package. Reality, of
course, is very different. Pfizer has not paid me a penny in severance and I
have no other compensation from them. Instead for the first time in my life
I am eligible for unemployment benefits and I’m entitled to collect a
maximum benefit of $13,078 over a six month period, then it goes down to
zero.[1] So suddenly I am in the same situation as countless other
Americans. The U.S. Department of Labor claims we have an unemployment rate
of 4.9%.[2] According to “the Economist,” however, the true unemployment
rate in the U.S. is over 8%, or 12.6 million Americans.[3] The difference is
due to the fact that the U.S. Government doesn’t count people as unemployed
after six months without a job.[4] I’ve also learned that if my unemployment
benefit is all the money I make this year, my family of four would actually
fall below the income level the federal government defines as poverty.[5]
I’m also uninsured for the first time in my life and I have to pay full
price for drugs I used to get for free, just like over 40 million other
uninsured Americans.[6] I have to admit that when I started fighting for
cheaper drugs for the uninsured I never expected to become part of that
group myself. Contrary to many others, however, I do have a choice. In
accordance with federal COBRA law, Pfizer has offered me the opportunity to
continue my health care coverage for 18 months. The cost of doing that,
straight out of my own pocket would be $15,269 per year.[7] That’s a
shocking amount of money for simple insurance. You know, there used to be a
time when insurance meant paying a small amount of money to avoid a big cost
later on. But $15,269—how many people can afford to pay that? And even if
they can—who’d want to pay that amount?
Ladies and gentlemen. The system we have today isn’t just broke. The system
is utterly and completely sick and our weakest citizens are paying the
price, every day. And here I get to the important point. I can’t talk about
what’s wrong with the drug companies without also talking about what’s wrong
with our current system. It’s a system that quite frankly is built on greed.
You know the definition of greed? Greed is an excessive desire to acquire or
possess more than someone needs or deserves.[8] Greed is not a corporate
executive who builds an organization such as Microsoft and happens to get
rich. Greed is coal miners killed because of safety violations. Greed is
unaffordable drugs. Greed is underperforming CEO’s with big pay packages.
Let me give you a real-life example of greed. There’s a company where the
CEO has secured about a $100 million retirement package,[9] he’s fired
16,385 employees,[10] he also got a 72% pay increase to $16.6 million.[11]
And of course this would be great if he had actually increased shareholder
value. That’s his job. The only problem is that the company’s stock price
has drastically underperformed its peers and dropped 40% over the last five
year—twice as much as the AMEX Pharmaceutical Index.[12] So he didn’t do a
great job, and still got all that money for himself. The company’s name is
Pfizer.
Greed. It’s pretty easy to recognize. And our society is built on it. We
have removed all sense of decency; we have pulled out all the stops.
According to the New York Times average worker pay has remained flat since
1990—sixteen long years—at around $27,000, after adjusting for inflation,
while CEO compensation has QUADRUPLED, from $2.82 million to $11.8
million.[13]
So the CEO’s made sure their million dollar compensation increased by 400%
while the workers saw virtually no increase. What’s wrong with this? What is
wrong is that the CEO’s have been put in a position in which they can
basically use our American companies as their personal piggy banks. They
have unlimited power, they put in their own board of directors and pay
consultants. And then they start robbing our corporations. And this is
perfectly legal as long as they get someone else to sign their check.
Meanwhile, the federal minimum wage has remained at $5.15 an hour since
September 1, 1997. In fact, after adjusting for inflation, the value of the
minimum wage is at its second lowest level since 1955 [14].
And don’t think congress isn’t helping these very rich men. Imagine you get
an award from your employer, taking a trip on an airplane to a vacation spot
in Cancun. Of course you’ll have to pay tax on the full value of your
airfare. But if the CEO flies to the same spot on the corporate jet, at
fifty times your cost, he doesn’t have to pay more tax than you did. This is
a law courtesy of U.S. Congress, elected by our people. In short, our
country, our corporations, our future, is being stolen away by rich men in
handmade suits and our elected representatives are helping them.
Anyone heard of the Abramoff affair? Mr. Abramoff's actions have prompted
Assistant Attorney General Alice Fisher to state, “Government officials and
government action are not for sale.” According to the Baltimore Sun, “This
was an outrageous lie. Just because the excessive chutzpah and greed of
Jack-the-Corrupter Abramoff and his gang got them nabbed does not negate the
political reality that government officials and government action have been,
still are, and in all likelihood will remain for sale.”[15]
There is nothing cheaper to buy than a congressman or two; or a President.
Let me explain; every year we see these tallies of millions spent on
lobbying. The pharmaceutical industry in 2003 spent $143 million on lobbying
activities according to the Center for Public Integrity. At that time, there
were 1,274 registered pharmaceutical lobbyists in Washington, D.C. During
the 2004 election cycle, the drug industry contributed $1 million to
President Bush.[16]
Did you hear that? One Million!! Is that all it takes to buy a President?
You’re asking what’s wrong with the drug industry, when you can buy a
president for a million bucks? What industry wouldn’t buy him for that fire
sale price? My point is that for an industry that makes $500 billion on a
global basis, spending just one million on a President is pocket change.[17]
It’s nothing. And hey, just to hedge their bet the drug industry also spent
half a million on Kerry. Clearly the drug industry wanted Bush to win, but
if Kerry won, they wanted him to be indebted to them too. There is no free
lunch, no money without strings, not even for a President.
And what did the drug industry get for this money? Well, they certainly were
able to stop cheaper drugs. This money was well spent. It stopped legalized
import of cheaper drugs and instead we got a new Medicare drug program. This
$720 billion law includes $139 billion in profits to drug manufactures and
$46 billion in subsidies to HMOs and private insurance plans.[18] The
program has been such a disaster for our poor that at least twenty-four
states have enacted emergency measures to ensure access to medications in
the last couple of weeks.[19] That’s what a million dollars buys in
Washington. It is probably not surprising that Democratic Leader Pelosi,
yesterday asked for a congressional investigation into the role played by
the Alexander Strategy Group, a lobbying firm closely linked to Tom DeLay
and Jack Abramoff, in the passage of the Medicare Prescription Drug Act.
They wrote, “The Medicare Prescription Drug Act, which has caused so much
confusion and havoc since January 1, was a product of a corrupt legislative
process.”[20]
What a world. And of course the drug industry plays along in this corrupt
reality. They’re corporations; they’re only here to make money. Lot’s of
money. That’s what a corporation does. Just like a lion eats other animals.
But we have a government to makes sure there is a balance in the nature of
economics. That the lions don’t eat all the sheep. Only as many as they need
for survival. I’m not saying we shouldn’t have lions; we should have lots of
healthy lions. I’m simply saying that in the nature of economics there needs
to be balance. Reality, however, is that the lions have bribed the
caretakers in the Zoo called American politics, and get to feast on however
many sheep and lamb they want. And the sheep; our poor, are paying for this
with their lives, every day.
The American democracy has been stolen by the lions; our new class of Robber
Barons—the CEO’s of our big corporations. A political system dependent on
charity from corporations managed by rich men isolated from the masses in
chauffeur driven limousines and private jets, with $100 million retirement
packages is not a true democracy. It is a kleptocracy [21]. It is not what
our founding fathers envisioned.
I know that I’ve used tough words, so I’ll also use a quote by Harry Truman:
‘I never give them hell. I just tell the truth and they think it's hell.”
I do believe things can change and you in this room, you are the first step.
You can light that fire. What you’re doing, trying to improve access to
drugs, is in the best interest of the nation. One day people will look back
at this period when we abused our weakest the same way we look back at the
time before the civil rights movement. One day our children will look back
at our time, when we denied our sick access to drugs based on price; when
drug companies fought to keep cheaper drugs from poor Americans, as just as
barbaric.
History will prove you right. God bless you all.
1. NJ Department of Labor Notice to Claimant of Benefit Determination BC-3C
(R-10-99)
2. http://www.dol.gov/
3. http://www.economist.com/finance/displayStory.cfm?story_id=4223595
4. http://www.thinkandask.com/news/jobs.html
5. http://aspe.hhs.gov/poverty/06poverty.shtml
6. http://help.senate.gov/testimony/t194_tes.html
7. Cobra Fact Sheet, January 6, 2006
8. http://www.google.com/search?num=100&hl=en&lr=&q=define%3Agreed
9. Pfizer Inc. Notice of Annual Meeting of Shareholders,
Proxy Statement and 2004 Financial Report1
10. PFIZER INC. FORM 10-Q
11. http://www.forbes.com/2005/03/10/0310autofacescan06.html
12. http://finance.yahoo.com/q/bc?s=PFE&t=5y&l=on&z=m&q=l&c=%5EDRG
13. http://www.nytimes.com/2006/01/18/business/18pay.html
14. http://www.cbpp.org/9-1-05mw.htm
15. http://baltimorechronicle.com/2006/011206Hirschhorn.shtml
16. Drugmakers go furthest to sway Congress
17. http://open.imshealth.com/IMSinclude/i_article_20040929.asp
18. http://www.house.gov/stupak/issues_prescription.shtml
19. http://www.nytimes.com/2006/01/21/politics/21drug.html
20. http://www.yubanet.com/artman/publish/printer_30841.shtml
21. Definitions of kleptocracy
Want to read more of what Peter Rost has to say?
Check out The Insiders Prescription, transcribed from the July 2005 interview seen on 60 minutes.
