Henry Greenspan

Big Noise in the Mitten State: Part 4 - Gesundheit 911

It came as a shock. Everyone anticipated that Pfizer would make significant cut-backs. But when the company announced in late January that it would be closing down all their Michigan facilities, and particularly the large Global Research and Development Center in Ann Arbor, we were completely taken by surprise.

"Pfizer's gut punch" proclaimed The Ann Arbor News. $13 million in tax revenues. 2,500 jobs. $4 million in charitable donations. People said: "It's like the Twin Towers collapsing here." "A crater opened and swallowed everything up." "It's like a death in the family."

To understand the impact, you need to go beyond the numbers. The Pfizer labs take up a campus of their own occupying a very large patch of the north side of town. When the "footprint" was expanded, only six years ago, there was celebration all around. "It's a win, win, win situation" proclaimed the Director of the Labs and the President of the University and the Mayor of Ann Arbor. That was reality until last week. When "win, win, win" became "sayonara."

So far, most of the analysis—local and beyond—has been on target. The dried-up pipeline, the fast-approaching loss of patent on drugs that make up 40% of Pfizer's annual sales, have been accurately described. What happened to our town, and our state, was the perfect refraction of the "blockbuster" business model that Pfizer, like all the major pharmaceutical companies, has followed. In essence, we became generic.

In the first days after the news, there was sympathy and sadness. People tried to support Pfizer's employees, many of whom had come to Michigan to work in the company. They had bought homes, raised families, gotten involved. Others had been here a long time. They had been part of the many other Michigan drug companies - Upjohn, Pharmacia, Parke Davis, and Warner Lambert – that had been absorbed by Pfizer.

Pfizer itself has said different things about their fate. Initially, the word was that "up to 70%" would be offered jobs elsewhere in the company. Of course, "up to" can mean, well, "up to." Then there was a statement that perhaps 1,000 would be offered positions—less than half. Most recently, the company said that "a significant number" would be receiving offers. On one side, headhunters worked feverishly. On the other side, a guillotine in slow motion.

The workers themselves were quiet. Indeed, outside of private conversations, they were entirely silent. The normally reticent Ann Arbor News came out with a page-one article: "Workers are Afraid to Speak." The reporter wrote: "'My spouse,' said a member of one Pfizer household, 'would rather die than speak with you.' It's a reaction News staffers have encountered over and over since last week's announcement that the city's largest private employer would walk away from its Plymouth Road labs: 'We can't talk.'" (1) The reporter made clear that this was not the silence of shock or sadness or a need for privacy. It was the silence of fear. And it was a silence commanded.

In the meantime, the political machine has not been silent. Even while the body was still warm, the Republican Majority Leader of the State Senate suggested that Pfizer's decision had to do with the possibility that our unique drug shield law would be rescinded. The Chamber of Commerce has been quick to echo the word. And what was first spoken with hesitancy has become a vicious and vociferous chorus. "It's the fault of the Democrats. It's the fault of the lawyers. It's the fault of Debbie Stabenow." It's the fault of everyone in Michigan who ever said anything critical of the drug industry in general, and anything in favor of rescinding immunity in particular. A business model doomed to fail – and so predicted everywhere from the Chemical & Engineering News to Forbes (2)(3) - became the fault of everyone who failed to remain silent.

The facilities on Plymouth Road are now Survivor Island. Soon, the mother ship will come and take the lucky among the silent ones to Connecticut or California. These are not states known for "tort reform." And the obvious lesson is that ten years of absolute drug industry immunity in Michigan have been accompanied by higher drug prices, fewer new drugs, a decline in pharmaceutical industry jobs, personal tragedies, and – ultimately – economic cataclysm.

None of that will silence the accusers. A recent full-page ad paid for by the Michigan Chamber of Commerce in response to the real possibility of rescinding immunity (more on that in the next installment) invoked the demonology of "greedy personal injury lawyers" four times in as many sentences. Armies of pro-immunity lobbyists carry armfuls of disinformation. And the more the legislative tide turns against them, the shriller they become. Given all that has happened, what was once outrageous has become simply pathetic.

Meanwhile, the lights go out on the north side of town. After the last one flickers and dies, we may hear different things than we have so far. It is possible we will learn a good deal.

Previous Mitten State Entries

Part 1
Part 2
Part 3

Henry Greenspan: Author Bio | Other Posts
Posted at 9:59 AM, Feb 26, 2007 in
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Thank the land pirate.

When the pro-lawyer rent biased legislature or court attacks the productive entity, boycott. To deter.

Thank the land pirate not only for the immediate loss. The land pirate by over-reaching, worthless regulation, and by research budget devastating litigation, also destroyed the missing new concept drug. That missing drug would have added $billions to our economy by helping save on surgery, on health care, and by helping sick people remain at work, and more productive.

The proximate and remote losses from the lawyer land piracy is more exponential than imagined.

Posted by: Supremacy Claus | February 26, 2007 9:41 PM

I would love to see an English translation of Mr. Claus's comments? Honestly. It sounds a bit like Sam Kazman on a bender, but I'm not sure I get the point, truly.

Posted by: Hank Greenspan | February 27, 2007 12:11 PM

Hank: 600,000 men died to validate the Supremacy Clause in 1865. Why is it hard for the Michigan lawyer to obey Federal regulation?

At a more basic level, if land pirates await a business entity at one location, there is a right of self-preservation to go a friendlier elsewhere. Indeed, the business has a fiduciary duty of prudence to the shareholders to do so.

You might understand better by looking at an extreme. Should a business move out of Venezuela, or should it stay once nationalization begins? If the land pirate wants to just take, then the citizens deserve the consequences to their standard of living. Starvation is coming to oil rich Venezuela due to its redistributionist philosophy. Let it come to Michigan, and all other pro-land pirate rent seeking locations.

I bet you refuse to openly condemn the expropriation process in Venezuela. You want to duplicate it in Michigan in a stealthier, slicker form. It is as if the land pirate had forgotten the central lesson of the 20th Century, learned at the cost of the 100 million lives taken by the redistributionist to impose a failed idea.

Posted by: Supremacy Claus | February 28, 2007 7:16 AM