Pfizer, Pharma, and You

The truth behind Pfizer's claims about government money.

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Things seem to be going well regarding the development of a coronavirus vaccine. Pfizer, AstraZeneca, and Moderna are all in the latter stages, with Pfizer this week receiving emergency approval to begin deploying its vaccine in the United Kingdom.

Governments have put a ton of money into the effort to quickly craft a vaccine, and the U.S. is no exception. Moderna and AstraZeneca both received significant funding from the federal government for research and development.

Pfizer, though, didn’t tap into that same pot, which led to a quibble with the Trump administration over who deserves credit for the corporation’s breakthrough. “We were never part of the Warp Speed,” said a senior vice president and head of vaccine research and development at Pfizer, referring to the government’s vaccine effort. “We have never taken any money from the U.S. government, or from anyone.”

Pfizer CEO Albert Bourla was more careful, but still distanced the company from any government entanglement, saying that Pfizer eschews public money for research and development. “Basically I gave [our scientists] an open checkbook so that they can worry only about scientific challenges, not anything else. And also, I wanted to keep Pfizer out of politics, by the way,” he said.

It’s not true, though, that Pfizer stays out of politics or the public trough, and American taxpayers deserve due credit for the money they’ve put into the corporation’s efforts, not just regarding coronavirus but over the last several decades.

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For starters, perhaps Pfizer doesn’t take direct federal money specifically for research, but it certainly benefits from federal tax credits for research and development, as well as federal investments in medical technology.

Also, Pfizer received a $1.95 billion pre-order from the government for coronavirus vaccine doses, which, while not a direct grant, is certainly incentive to keep plugging away that it wouldn’t have had absent federal action. The coronavirus-related contracts are also quite opaque, so there could be other benefits that haven’t been publicly disclosed. Pfizer’s partner in developing the vaccine, the German company BioNTech, received significant support from European taxpayers.

Pfizer has also benefitted from $321,218,841 in state and local tax incentives and another $220 million in loans and bond financing from state and local governments, totaling more than half a billion dollars in state and local government support dating back to the 1990s. Michigan has provided it with more than $85 million, Connecticut with $60 million, and North Carolina more than $49 million from 74 separate awards.

In 2010, Pfizer had to repay tens of millions of dollars in incentives to New York after it promised to keep jobs in New York City, but then moved them to New Jersey and Pennsylvania anyway. The same thing happened in Missouri in 2009, except with layoffs instead of relocations, as well as Connecticut in 2011. Yet Pfizer kept on receiving new incentives. In 2018, it received the very first tax break under Michigan’s newly-enacted Good Jobs for Michigan program.

That’s far from keeping Pfizer out of politics. The dispersion and protection of taxpayer resources is the epitome of politics.

Why does any of this matter? First, it’s simply important to clarify that Pfizer does, indeed, benefit from public assistance in its business, and that it absolutely does involve itself in politics. Some corporate executives like to act as if they are above all that when they’re not.

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Second, the level of support it receives should factor into what Pfizer charges for the vaccine, both from the public and from the government. Pfizer claims that everyone will get its vaccine free — which means it will bill the government instead — at $20 per dose, or $40 per person since its version requires two doses.

Is that too high, given the amount of money governments have sunk into vaccine development? Some folks think so, saying the initial order of nearly $2 billion for about 100 million doses was too generous given the investments the government already made in helping Pfizer achieve what it did.

There are, of course, loads of issues with how the U.S. government handles big pharmaceutical corporations and how those corporations in turn treat the public. Big Pharma is pejorative for a reason. Lax antitrust enforcement has led to concentration that not only drove up U.S. drug prices to among the highest in the developed world, but will affect vaccine storage and distribution, as my colleague Olivia Webb has pointed out.

So Pfizer and its brethren have been allowed to become dominant by government failure, then use the power they’ve accumulated to extract resources from local communities desperate for investment, before turning around and claiming the right to charge excessive rates because of the money they’ve supposedly poured into research all on their own.

That’s not “keeping Pfizer out of politics,” no matter what its CEO might plead.

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ONE MORE THING: Salesforce announced this week that it intends to buy Slack, the messaging service. Salesforce doesn’t get nearly as much attention as other big tech companies, but it employs many of the same tactics to extract resources from local communities. For instance, here’s a Bloomberg story about local tax incentives hurting school districts and, lo and behold, there’s Salesforce receiving tens of millions of dollars that undermine school budgets, and then turning around and making a “grant” to those schools that amounts to a fraction of the largesse it received.

Antitrust enforcers should reject the Salesforce-Slack merger, by the way.


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— Pat Garofalo