Beyond Wall Street
It's terrific to see Democrats such as Senator Schumer and Governor Spitzer backing, in conjunction with Mayor Bloomberg, efforts to keep the financial industry in New York City rather than London. They are proposing to cap punitive damages in securities lawsuits and ease some aspects of the post-Enron accounting law known as Sarbanes-Oxley. Now if the Democratic Party would just discover similar concern for losses to the New York economy being suffered off Wall Street — in, say, the pharmaceutical industry. Yesterday the New York City-based drug company Pfizer announced it was closing its manufacturing plant in Brooklyn, where the company was founded in 1849 by Charles Pfizer and Charles Erhardt. The 600 workers to be laid off in Brooklyn are part of the elimination of about 10,000 positions, or about 10% of Pfizer's total worldwide work force.
News accounts, such as one by Bloomberg News, attributed the job losses at Pfizer to, among other things, competition from generics. Mr. Schumer can't say we didn't warn him. "Schumer's Bill on Patents Could Hit N.Y. Employers," was the headline on a page one news article in The New York Sun on June 21, 2002. "Senator Schumer's bill to rein in pharmaceutical companies scrambling to retain their drug patents would ultimately serve as a punishment for innovating new drugs and could lead to cutbacks at New York City-based industry giants like Pfizer, industry representatives and some analysts say," is how the dispatch began. A July 31, 2002, opinion piece in the Sun by Dr. Scott Gottlieb ran under the headline "Taking Aim at the Drug Industry May Hit New York's Economy Instead" and described Mr. Schumer's legislation as "destructive."
It's not only the Democrats who are to blame. Senator McCain, a Republican from Arizona, was a co-sponsor of Mr. Schumer's "Greater Access to Affordable Pharmaceuticals Act." Just months later, President Bush himself announced a new FDA rule, heralded in an October 21, 2002, White House press release headlined, "President Takes Action to Lower Prescription Drug Prices By Improving Access to Generic Drugs." Still, the Democrats have taken the lead in attacking the drug companies, from Vice President Gore's convention speech in Los Angeles in 2000 in which he said, "It's just wrong for seniors to have to choose between food and medicine while the big drug companies run up record profits," to Senator Kerry's convention speech in 2004 in Boston, where he said, "You don't value families by denying real prescription drug coverage to seniors so big drug companies can get another windfall."
We've nothing against generic drugs or lower prescription drug prices ourselves, and many medical breakthroughs are made possible by federally funded research at university medical centers and the National Institutes of Health, as opposed to for-profit drug companies. Still, common sense dictates that a drug company selling patented pills for $300 a bottle is going to be able to hire more highly skilled scientists and pay them more money than a generic drug company whose pills sell at Wal-Mart for $4 a bottle. Certainly we have a great deal more faith in the ability of the market to sort out all of this than we do in the ability of Senators McCain and Schumer. Nothing personal. The market will outsmart any combination of a small number of individuals.
Not that we're shedding tears for Pfizer, which makes about $8.1 billion a year in after-tax profits and spends millions of advertising dollars in newspapers committed to policies that would destroy it. In any healthy capitalist economy, it's natural for big old companies to sometimes wane, if $8.1 billion in profits can be called waning. What's important is that there be a climate in New York City where, when the next Charles Pfizer comes along, he or she can start a new drug company with a hope of defending and owning the intellectual property it creates and selling the drug for the price it deems appropriate. The products of our best drug companies, after all, aren't merely pills but cures. If New York's economy is to be healthy it has to be a welcoming environment for all industries, not just the ones, like financial services, that it is the fashion of the moment for politicians to worry about courting.
