Pfizer marketing vice-president Dr Peter Rost (pictured) has published a review of a new book by his colleague Hank McKinnell, the CEO of Pfizer. Dr Rost has come to prominence for speaking in favour of free trade in pharmaceuticals which would allow US citizens to legally import drugs from Canada and Europe. He writes:

Pfizer's CEO, Dr. Hank McKinnell has written an astonishing book in which he admits that he doesn't always believe in what he's saying (p. 11), that drugs from Canadian pharmacies are safe (p. 69) and that high US drug prices have nothing to do with past R&D expenses (p. 46)...

Dr. McKinnell starts his book with the surprising confession that he doesn't always believe in what he's saying. "They listened to my logic, but I could tell they weren't convinced, and to tell you the truth, I wasn't either." (p. 11).

He also doesn't shy away from embarrassing facts, "Branded drug prices are anywhere from 25-100 percent more expensive in the United States." (p. 50) He even admits, "Drugs from Canadian pharmacies are as safe as drugs from pharmacies in the United States." (p. 69).

But his impressive mea culpa doesn't stop there. He slams everyone who makes a connection between drug prices and R&D. "It's a fallacy to suggest that our industry, or any industry, prices a product to recapture the R&D budget spent in development." (p. 46)...

Dr. McKinnell ends his book with a wonderful quote by Gandhi, for those who desire change. "First they ignore you. Then they laugh at you. Then they fight you. Then you win." (p. 193) Dr. McKinnell just doesn't realize that he has become "them."

Dr Ron Paul is a medical doctor by training who has a seat in the US House of Representatives as a Republican. Dr Paul has been nicknamed "Dr No" for his consistency in saying no to corporate welfare and big government. He is scathing about those who profess to be free-marketeers but, through some weird intellectual gymnastics, simultaneously argue that consumers should not be allowed to buy pharmaceuticals from abroad.

In 2003, when a bill to allow imported drugs was being debated, he stood up in the House and said:

...I wish to express my disappointment with the numerous D.C.-based "free-market" organizations that are opposing this bill. Anyone following this debate could be excused for thinking they have entered into a Twilight Zone episode where "libertarian" policy wonks argue that the federal government must protect citizens from purchasing the pharmaceuticals of their choice, endorse protectionism, and argue that the federal government has a moral duty to fashion polices designed to protect the pharmaceutical companies' profit margins. I do not wish to speculate on the motivation behind this deviation from free-market principles among groups that normally uphold the principles of liberty. However, I do hope the vehemence with which these organizations are attacking this bill is motivated by sincere, if misguided, principle, not by the large donations some organizations have received from the pharmaceutical industry. If the latter is they case, then these groups have discredited themselves by suggesting that their free-market principles can be compromised when it serves the interests of their corporate donors.

He later wrote:

...while Americans ostensibly enjoy a freer economy than the rest of the world, they perversely pay more for their prescriptions than residents of any other nation.

The pharmaceutical industry obviously likes this, and it worked overtime lobbying against the reimportation measure - paying off some strange bedfellows in the process. Several supposedly free-market groups came out against reimportation, making tortured attempts to argue that the free-market principles they normally promote somehow just don't apply to imported prescription drugs. Some even made the outrageous argument that reimportation will threaten the pharmaceutical industry's profits, as though it is the job of government to ensure the profitability of any industry!

The truth is that many of the organizations opposing reimportation either directly represent the pharmaceutical industry, or receive funding from it. They are transparently willing to abandon their free-market "principles" when necessary to protect their bottom line.

PhRMA, the Pharmaceutical Research and Manufacturers of America, presents itself as pro-consumer. But when thinking about this trade body, readers should remember the wisdom of Adam Smith:

People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.

Despite their free-market rhetoric, Pfizer et al do not operate in a free market. They work in a protected market. In the market for laptop computers, for example, if existing producers enjoy abnormally large profits, new companies come into the market to get their bit of the action. But in the market for pharmaceuticals, patent protection prevents that from happening. In the US, uninsured consumers of drugs are being held to ransom.

In opposing free trade ("parallel trading") in pharmaceuticals, drug companies are effectively putting a gun to the heads of US consumers and saying: your money or your life! Either pay our inflated prices or we won't be able to develop new drugs. If that does not convince, the companies implausibly claim the issue is one of safety. Yet there has been free trade in drugs in Europe for over two decades and safety has not been an issue.

Given that pharma has been the most profitable sector in the US economy for most of the last quarter century, and given that they spend less on R&D than on marketing or on profits to shareholders, their claim that free trade would affect their R&D makes no sense. All they are trying to do is protect their profitability. As one Pfizer vice-president has explained, profit is the sole reason drug companies oppose free trade in drugs.

When you also note that drug companies are heavily reliant on government-funded research for many of their most innovative, most socially-important new drugs, one thing becomes clear: the economic system the research-based drug companies support today is not the free market. It is statism.