Sick and tired of being pummeled in the media as one of America’s mean, greedy drug companies, Pfizer, the pharmaceutical industry’s largest player, unveiled a plan July 7 to help 43 million uninsured Americans purchase Pfizer products at considerable discounts. This initiative deserves kudos in the short term, but a bright yellow light in the long run.
The cutely named Pfizer Pfriends program
would offer reduced prices to uninsured families who earn less than $45,000 annually and individuals with incomes below $31,000. As soon as August, they can look forward to average savings of 37 percent, and as much as 50 percent off average retail prices at drug stores for most Pfizer medications.
Families with annual incomes exceeding $45,000 and (more than $31,000 for individuals) can anticipate average savings of 15 percent, up to 25 percent off of average retail prices.
“We are providing choice, simplicity and expanded access to help Americans get the medicines they need,” Pfizer chairman and chief executive Hank McKinnell said as he unveiled the program at the company’s Manhattan headquarters. “Because we all know that millions of Americans can’t afford health insurance, we are making an unprecedented commitment to help these hard-working people gain access to prescription medicines.”
Pfizer deserves credit for helping Americans in need. Especially in an election year, such corporate good-guy behavior should help blunt the never-ending attacks Pfizer sustains as sector leader for supposedly chiseling Americans for every penny they can grab. Who cares that Pfizer’s products have made heart attacks more rare and erections more common?
Still, as admirable and warm-hearted as Pfizer’s pfriendliness is right now, this company and any competitors that follow its example could cause themselves long-term illness. While this program will help today’s uninsured, it also fuels the notion that the pharmaceutical industry is part of the philanthropic world, and Pfizer is really just the Salvation Army with test tubes.
A very odd mentality–what I call the “Free Drugs Now!” movement–expects pharmaceutical companies to develop expensive cures and treatments, then more or less give them away. This is, more or less, what Pfizer’s effort does.
Pfizer and its colleagues at other drug companies should beware the issue of perceived value. They would be wise to study the recording industry’s cautionary example.
I belong to Columbia House and BMG record clubs, as do millions of other American music fans. We can buy CDs for about $4-$6 through these clubs. The trouble that has befallen the music labels and such bankrupt retailers as Tower Records is that when we listeners see a $17.99 price tag on new CDs, we want to laugh, unless we are too angry even to smile. The perception is that CDs (even brand-new ones) are “worth” about $5, even though discounts apply primarily to albums that have been on the market at least for a few months, to say nothing of classic rock albums recorded in the days of vinyl and bell bottoms.
This has made people reluctant to buy CDs at normal retail prices. Many consumers await discounts or simply burn their own CDs off of the Internet. (This is the rough equivalent of the Canadian drug-reimportation threat that is nipping at the pharmaceutical industry’s toes like the flames at Joan of Arc’s feet.)
While impressive as corporate philanthropy, Pfizer Pfriends fuels the ideas that this company is really a big charity. This is just the latest nice thing it’s doing to help the poor folk. The next time Pfizer defends its right to charge higher prices on new drugs (at least to “regular” customers), some people may think, “Wait a minute. Doesn’t Pfizer give away its products? What kind of fast one are these guys trying to pull now?”
“You have Republicans and Democrats falling all over each other to substitute the current creativity of the pharmaceutical industry with the creative innovativeness of the American public-school system,” says Fred Smith, president of the Competitive Enterprise Institute, a Washington-based free-market think tank. He worries that Pfizer may be killing itself softly through programs like this one.
“What you want to do is have differential pricing for a differentiated world.” Smith continues. “And unless some people fly business class, nobody can fly coach. The best way we can insure that the whole world has a mediocre health system is to allow everyone to fly coach.”
Pfizer Pfriends proves that this corporation has a heart. Now, if they simply could cool it down just a little bit…