President Barack Obama just announced a goal of passing comprehensive health-care reform legislation by July 31, so we all can expect a long, hot summer of debate over how to expand coverage for 47 million uninsured Americans. And at the same time health reform is being fast-forwarded, the drug industry is continuing to consolidate into a handful of very large players. The most recent deal is Pfizer's (PFE) $68 billion purchase of Wyeth, which is expected to be completed later this year. Besides the merger, Pfizer made news on May 15—two days after Obama's call for a deadline on health-care reform—with a plan to provide selected drugs free to those who have lost their jobs and health insurance. To get a business view on health-care reform from an industry insider, I talked with Pfizer CEO Jeff Kindler, who has led the pharmaceutical giant since 2006.
Does business really want universal health care?
jeffrey b. kindler
I can't speak for business…but I just think it's scandalous in a country of our means to have tens of millions of people without access to quality health care. And I don't believe in the long run it's in the interest of business to have an unsustainable health-care system.
If the President said to you: "Jeff, your country needs you to figure out how to pay for the health care of your 47 million uninsured countrymen," what would your plan be?
You know, many people who are currently uninsured are actually eligible for existing programs like Medicaid, SCHIP [State Children's Health Insurance Program], and Medicare, and I think we need to enroll them in those programs. There are others eligible for existing employer plans, and we should do the same for them. And then for those who truly have no access to insurance, I believe [insurance] is best delivered through the private sector but with government subsidies for people who can't afford it.
A new health-care environment is emerging in Washington. How would Pfizer adapt to Medicare negotiating drug prices, to patients importing prescription drugs from abroad, and to comparative effectiveness—pitting one approved drug against another in a clinical trial instead of against a placebo?
I do not believe it would be good public policy to permit the government to, in effect, set Medicare prices for pharmaceuticals. That's a form of price controls that would impede the industry's ability to make the costly but crucial investments in discovering new medicines. As for comparative effectiveness, I do believe it's appropriate to provide greater information about how different treatments and drugs work compared to one another so that doctors and patients can make their judgments. I would not, however, be supportive of a system whereby a group in government makes those determinations and imposes them on doctors and patients.
Pfizer has a history of big acquisitions, such as Warner-Lambert and Pharmacia. But Pharmacia, for one, was somewhat disappointing. Why will the acquisition of Wyeth be different?
I think that the earlier transactions we did actually provided a great deal of value. After all, the Warner-Lambert deal brought us Lipitor, and the Pharmacia deal brought us the Cox-2 inhibitors and Sutent, which is a terrific drug for addressing certain forms of cancer. But although we do intend to achieve improved productivity and cost efficiencies, this is not solely a financially driven deal. This is a deal that creates the opportunity to advance the company in a number of strategic areas that we could not have done alone—specialty drugs, biotherapeutics, and an enhancement of our science in a number of critical areas like neuroscience and oncology.
The Justice Dept. has joined a whistleblower lawsuit alleging that Wyeth defrauded the government out of millions of dollars by not offering the same discounts on drugs to Medicare that it did to hospitals. Will this have any impact on the merger?
No. On the basis of our current information, we continue to expect the merger with Wyeth to close at the end of the third quarter or in the fourth quarter.
How big a hit will Pfizer take when the patent on Lipitor runs out in 2011, and how will you fill the hole?
Another significant benefit of the Wyeth deal is that it definitively addresses the unique challenge of losing exclusivity on a significant medicine like Lipitor. And we're not filling the hole with a single drug. The combined pipelines and portfolios will provide us with a tremendous platform for future profitable growth and more consistency and stability in our earnings.
Pfizer has said it will provide free drugs to people who have lost their jobs and health insurance. The eligible drugs include Lipitor, Viagra, Celebrex, and Lyrica, but not the costliest specialty drugs for diseases such as cancer. Why give people Viagra but not the essential drugs they need to survive?
We are providing more than 70 medicines through this program, and it's primarily aimed at people who were on a particular medicine and then lost their health coverage. We have extensive patient assistance programs that make it possible for people who have challenges affording needed medicine to get that medicine at either a very low charge or even for free. And we have provided tens of millions of drugs on that basis over the past several years across many therapeutic areas.
Are the free drugs a humanitarian gesture or an effort to keep people from switching to generics?
They're all about helping people that are on existing drugs to stay on their existing drugs. We're talking about people whose doctors prescribed a Pfizer drug. And once they're on that drug, it would be a shame if they either stopped taking that medicine or otherwise skipped doses or what have you as a result of their economic circumstances. We did it because it was the right thing to do, and we have not gone out and tried to make it a PR event. We're not running advertisements or anything like that.
Maria Bartiromo is the anchor of CNBC's Closing Bell.