Glaxo Threatens Not To Invest In Massachusetts
22 CommentsBy Ed Silverman // May 7th, 2008 // 7:58 am
Glaxo is playing hardball with Massachusetts. Chris Viehbacher, who heads the drugmaker’s North American pharma biz, sent what The Boston Herald calls “harshly worded letters” to three state politicans to accuse the state of a “strong anti-biopharmaceutical streak” and complains of attempts to “attack and demonize the industry.”
His ire was prompted by Senate President Therese Murray’s proposed ban on gifts to docs and, in his letters, Chris suggests Glaxo may not invest as much in the state if “political developments…devalue” assets there. His missives arrive just two weeks after Glaxo agreed to pay $720 million for Sirtris Pharmaceuticals, which is based in Cambridge. The two firms employ about 115 workers in Massachusetts.
A Glaxo spokeswoman wouldn’t tell the paper what would happen if “political developments” occurred. Yet Viehbacher’s letters - which were sent to Murray, Governor Deval Patrick and House Speaker Sal DiMasi - referred several times to “our current intent” to keep jobs in the state, while also calling Massachusetts the “most hostile state in the nation to biopharmaceutical sales.”
Viehbacher, who is based in North Carolina’s Research Triangle, praised Massachusetts as potential “fertile ground” for Glaxo due to its “great research institutions and a cluster of promising biotech companies.” And he went out of his way to praise Patrick’s proposed $1 billion life sciences initiative, the Herald writes. “At the same time, however, I must express my concern - and even alarm - about a strong anti-biopharmaceutical streak that seems to run through the Massachusetts political establishment.”
The bill, which has already passed the Senate and is now before the House, threatens fines of up to $5,000 and two years’ imprisonment for violations of a ban on gifts to docs by reps. The proposed ban, which supporters say is intended to increase health-care transparency and decrease industry conflicts of interest, even includes giving pens with company logos, the paper writes.
Viehbacher wrote that the ban on gifts would make Massachusetts “the most hostile state in the nation when it comes to biopharmaceutical sales.” Not surprisingly, Viehbacher’s letters stunned State House leaders, especially since the Governor and legislative leaders are about to pass the life sciences initiative, the Herald continues.
A spokesman for Murray declined comment, referring questions to other senators who worked on the bill. They could not be reached for comment. A spokeswoman for DiMasi tells the Herald the speaker opposes “criminalization” of gift giving, though wouldn’t comment further. A spokesman for Patrick told the paper that Murray’s bill contains “really good ideas” but the governor is still reviewing the gift-ban provision.
Source: The Boston Herald, which designed the nifty graphic
Hat tip to Pharmagossip
Dan
Mr. V needs to work on his PR skills a bit.
pharma PR hack
I would have to agree with Dan- considering in the last two years 14 states have proposed this same ban and it has passed in some states– maybe Mr. Viehbacher doth protest too much. I wouldn’t normally believe that there was all that much to a pen and notepad but then again - if they are so ferociously guarding the right to give trinkets maybe it does affect prescribing.
Matt
This sounds a lot like corporate extortion. Obviously, GSK’s man in the US never learned how to play nicely in the sandbox and is resorting to the bullying tactics that Big Pharma has done for years. You don’t give me my way and i’m not going to invest in your state anymore. There has to be something illegal about that!
Justice in Michigan
Speaking from the perspective of Michigan, companies don’t decide whether or not to invest in an area because their feelings are hurt.
Michigan twisted itself into a pretzel to be a good place for the several companies that eventually became Pfizer.
When we became disposable, they split anyway.
RTW
Justice in Michigan - News Flash! Those companies would have been happy to stay here in Michigan if it hadn’t been for the hostile takeover bid by Pfizer. Practically none of their management was retained after the takeovers.
From what I heard, the original plan was to shut down the facility in SoCAL, and those in MO. A member of the board insisted that the CA facility should not be closed so to make the numbers they decided to keep the St Loius site, and SoCal site, and close the Ann Arbor site. Michigan got nailed by Pfizer because Groton CT, and Sandwich UK were untouchable original Pfizer sites pre takeover.
Dumbest thing they ever did. IMHO.
harpy
I wonder why GSK in particular is taking this so personally?
Bobby C
So, GSK wants to continue this low level bribery of doctors which distorts our health care system and ill-serves patients?
Gee, I wonder why.
Must….sell…..drug
Must….sell…..drug
Must….sell…..drug
Chris
Is it not his responsibility to seek the best commercial terms for his company, without sacrificing patient care? Of course this could have been done more diplomatically (based on this article) but his job remains to make money for the company and there are plenty of other states that would offer very attractive incentives to accept in inward investment caused by GSK’s relocation. Didn’t we see this week the negative effect of the UK’s NICE decision on pricing? Shire has decided to pack up and move to Ireland where conditions are more favorable towards pharma. There’s nothing to say that businesses - any businesses - can’t decide on where they choose to locate their operations. I’m not ignoring the effect on employees and their families but that’s not what’s being discussed.
Pharma Giles
This one’s for you, Chris…
Chris
Crumbs Pharma - that must have taken you ages! Very good though and thanks for sharing.
Justice in Michigan
RTW - Thanks for word. I know some at Pfizer who had been part of the Parke-Davis/Warner-Lambert history. Sounds like you were yourself. Assuming so, you would know relative number of “survivors” among managers until they sunk the whole island.
Bob Freeman
Any company which leaves a State after significant tax abatements were extended or outsources key functions such as manufacturing or R & D, should have its products assessed the highest supplemental Medicaid rebates possible and presented with a tax bill for corporate taxes originally reduced by the abatement. I don’t know about the legality of the former but the latter will get their attention.
The raping of States and localities by despicable corporate behavior should not go unpunished.
Chris
Bob,
Interesting point. Is there a formula that captures the extent to which a company may or may not have paid back its tax abatements to a state? And on that basis of reciprocity, if that’s the concept, at what point is the company free to leave without punishment?
In other words is there a contract with a state that provides for a term of residency?
Bob Freeman
Chris, I wish I knew. I’m not an attorney so I wouldn’t want to speculate. Perhaps someone here can add some insight.
I should think a company can abandon any State willy-nilly but I am wondering out loud if there’s any recourse for all the economic incentives provided.
RTW
Justice in Michigan - Yes I was there for a little over 20 years doing drug research. I was one of the “hands” working in the trenches. Saw a lot of changes most significant once Pfizer took over. Most of it not so good, though there where a very few ideas that could have gone somewhere if the company had only been a little more patent.
Paul
Where does it say that a company can choose not to invest in a state that is completely unfriendly and outright unwelcoming to it?
I would think Mass would want a productive, innovative industry that can hire the many scientists it produces and that can keep journals like NEJM alive and well fed.
truthman30
Glaxo intimidating politicians and US states now are they?
Is it company policy at Glaxo to bully anyone or anything which they see as a threat to their profits?..
http://www.youtube.com/watch?v=0OhcmaAf_zE
One would have to ponder, did they threaten Paxil Activist Rob Robinson with a lawsuit to keep him quiet? Or did they pay him off? ( I guess either way they weren’t impressed with his protests , one which included flying a plane with a banner “Ban Paxil” around their Philly HQ..)
http://www.thepaxilprotest.com/
http://robrobinsonlives.wordpress.com/
They did threaten UK Seroxat campaigner Bob Fiddaman with a lawsuit over this Video..
http://www.furiousseasons.com/archives/2008/03/glaxo_goes_after_british_bloggers_video_1.html
They also allegedly bullied Dr Buse over the Avandia heart attack scandal..
http://www.pharmalot.com/2007/09/avandiagate-jp-knew-doctor-was-intimidated/
They also threatened Canadian Pharmacies at one stage ..
http://lists.essential.org/pipermail/ip-health/2003-January/004069.html
And GSK made threats to Austraila and threatened to withdraw its R and D investment over one of its diabetes drugs there..
http://www.manufacturingchemist.com/story.asp?storyCode=19103§ioncode=73
It seems to me that GSK uses its corporate muscle and financial strenghth to get its own way…
Governments and politicians seem powerless against it..
Because if GSK doesn’t get its way it makes threats, such as pulling its Research and investment from countries or states who dare to stand up to it…
This is not capitalism or democracy , this is corporatocracy gone mad…
The Seroxat (Paxil) Scandal is one of the most notorious medical scandals of recent times, it is on the scale of Vioxx or thalidomide, yet this drug is still being prescribed…
In the UK (and around the world) many thousands of people have had their lives destroyed by this drug, and despite calls for a ban of seroxat by politicians, coroners, mental health groups, patient groups, psychiatrists, users of this drug and their families , this drug is still on the market…
Why?..
http://seroxatsecrets.wordpress.com/
There was a recent recording of a meeting between the Seroxat Users Group and the MHRA( UK Drug regulator) in London.. This meeting was hosted on the furious seasons website…
http://www.furiousseasons.com/archives/2008/05/recording_british_paxil_users_meet_with_brit_fda.html
The MHRA is pharma funded and some of its high ranking employees have ties to GSK…
It is interesting, because what this audio clearly indicates is the powerlessless of the UK regulator against big pharma…
Big pharma operates above the law because the governments and politicians allow it to…
And they allow it to out of fear…
Being Pharma-Friendly is one thing..
But being Pharma-Fearful is quite another..
If the price of globalization is a society ruled by multinational corporations, corporate executives who are answerable to nobody and consumers whose lives are as expendable as trash then I would gladly trade my Latte and Laptop for life on a pigfarm in Outer Mongolia…
Atlex
Last I checked, there is no law that forces a state to provide tax abatement to corporations. When they choose to do so they should set criteria that corporations must meet in order to receive the abatement. If they don’t set the right criteria, isn’t that the fault of the state and not the corporation?
Chris
I’m sure there is no law. There are many incentives though to attract incoming businesses, and particularly ones that bring manufacturing jobs. Novartis recently moved its R&D from New Jersey to MA on the basis of superior terms, I think related to favorable tax etc. PA is aggressively pushing for companies to leave NJ for there.
Aside from manufacturing there’s also a boost to the economy from higher paid, educated workers so it’s rarely bad business - for as long as they stay in state.
I suppose GSK is alerting other states to their situation, perhaps make an offer, although it sounds like sabre rattling given their various investments there.
Bob Freeman
Chris & Atlex, yes, I agree there is no law, just competition among States and localities. And, Atlex, you’re correct in that many seem to give away the farm to draw industries into their locales.
I see the out-sourcing trend as well as the relocation of corporate headquarters to minimize taxes as having externalities that are to the detriment of both employees and communities.
Justice in Michigan
Speaking for self, I made no claim of a legal obligation. Obviously, in general terms, companies can and do go where they want (if there are Martians willing to work for peanuts, even “globalization” will be out of date).
I was responding more specifically to the use of threats as a tactic of the sort that thhis Glaxo guy did, precisely because relocation decisions are not made on such bases. So it does have the “ring” of what may serve those who represent the comapany in Massachusetts (like in the state legislature and conservative media).
But you have to be careful when you mess with the Bay State. You may see folks dressed up as Indians dumping Paxil and Avandia into Boston Harbor.
Justice in Michigan
RTW - Thanks for further word. Hope things have worked out for you. I have wondered what they will do with the signs on Plymouth Road when the final light goes out….