Skip to main content

Are U.S. taxpayers getting stiffed? Pfizer, Viagra's daddy, is using money from taxpayer-bailed-out banks to help buy major pharmaceutical competitor Wyeth in a $68 billion deal. That won't help taxpayers or consumers. Nor is it designed to. It will harm the companies' workers, 20,000 of whom will likely be laid off.  It's even likely to  hurt small bio-tech companies, drying up potential sources of capital and leaving fewer potential major investors or purchasers.

The deal may be good for Pfizer, helping the company recover from a $2.3 billion legal settlement over misleading marketing on the pain reliever Bextra, and helping them amplify the clout of the $3 million they recently spentlobbying against the right to import cheaper drugs from Canada. But it won't help the rest of us.

So why are banks bailed out with taxpayer dollars furnishing the $22.5 billion of debt financing for this deal? On NPR, a financial analyst crowed about how wonderful it was that major banks were lending this kind of money in the current economy. But it troubles me that among the deal's prime financial backers--Bank of America/Merrill Lynch, Barclays, Citigroup, Goldman Sachs and J.P. Morgan/Chase--all but the British-owned Barclays received money from the Congressional bailout. So the funds they lent to this merger won't be available to help smaller (or larger) companies keep their doors open producing and selling products--ideally ones that actually benefit society--and not just to consolidate control over their industry. This seems one more case of public subsidies for private gain.

I'm no economist. For all I know, maybe in some Henry Paulson-Alan Greenspan dream world this will end up boosting America's physical and fiscal health. Perhaps the new combined entity will come up with some miracle drug that neither company would have created on their own. But mostly, it seems just one more example of how a bailout without strong government control, or even oversight, just feeds the same greed-driven abuses that have gotten us into our current predicament. It's going to take more than Viagra to strengthen our economy once more.

Paul Rogat Loeb is the author of The Impossible Will Take a Little While: A Citizen's Guide to Hope in a Time of Fear, named the #3 political book of 2004 by the History Channel and the American Book Association. His previous books include Soul of a Citizen: Living with Conviction in a Cynical Time. See www.paulloeb.org  To receive his articles directly email sympa@lists.onenw.org with the subject line: subscribe paulloeb-articles

Originally posted to PaulLoeb on Tue Jan 27, 2009 at 10:02 PM PST.

EMAIL TO A FRIEND X
Your Email has been sent.
You must add at least one tag to this diary before publishing it.

Add keywords that describe this diary. Separate multiple keywords with commas.
Tagging tips - Search For Tags - Browse For Tags

?

More Tagging tips:

A tag is a way to search for this diary. If someone is searching for "Barack Obama," is this a diary they'd be trying to find?

Use a person's full name, without any title. Senator Obama may become President Obama, and Michelle Obama might run for office.

If your diary covers an election or elected official, use election tags, which are generally the state abbreviation followed by the office. CA-01 is the first district House seat. CA-Sen covers both senate races. NY-GOV covers the New York governor's race.

Tags do not compound: that is, "education reform" is a completely different tag from "education". A tag like "reform" alone is probably not meaningful.

Consider if one or more of these tags fits your diary: Civil Rights, Community, Congress, Culture, Economy, Education, Elections, Energy, Environment, Health Care, International, Labor, Law, Media, Meta, National Security, Science, Transportation, or White House. If your diary is specific to a state, consider adding the state (California, Texas, etc). Keep in mind, though, that there are many wonderful and important diaries that don't fit in any of these tags. Don't worry if yours doesn't.

You can add a private note to this diary when hotlisting it:
Are you sure you want to remove this diary from your hotlist?
Are you sure you want to remove your recommendation? You can only recommend a diary once, so you will not be able to re-recommend it afterwards.
Rescue this diary, and add a note:
Are you sure you want to remove this diary from Rescue?
Choose where to republish this diary. The diary will be added to the queue for that group. Publish it from the queue to make it appear.

You must be a member of a group to use this feature.

Add a quick update to your diary without changing the diary itself:
Are you sure you want to remove this diary?
(The diary will be removed from the site and returned to your drafts for further editing.)
(The diary will be removed.)
Are you sure you want to save these changes to the published diary?

Comment Preferences

  •  Not only are they buying out Wyeth (9+ / 0-)

    if I'm not mistaken, it's more or less a "hostile takeover"?  That's our tax dollars at work.

  •  Yep was wondering the same thing (2+ / 0-)
    Recommended by:
    Cassandra77, nailbender

    Why is it they banks will fund job loss but not fund job creation.  Auto, home, small business loans would create or save jobs.

  •  It's one big company buying another big (0+ / 0-)

    company.  That's what banks should do, lend money to companies so that they can run more efficiently.

    This is a big non-issue.  

    The bigger drug company will consolidate some jobs and get rid of duplicated jobs, and run more efficiently.  The stock prices will hopefully go up, and unions and workers that have their retirement funds in stock will benefit.

    The banks will make money, getting them back on sound footing.

    That's what the bailout money was for, to get banks lending again.

    "Speak out, judge fairly, and defend the rights of oppressed and needy people." Proverbs 31:9

    by zdefender on Tue Jan 27, 2009 at 10:41:07 PM PST

    •  And bigger is better. (7+ / 0-)

      This we know from experience.  How do you say "too big to fail" in Latin?  It should replace "E Pluribus Unum" as our national motto.

      Yes, and when the bigger and better Pfizer begins to tank, yet another glob of tax cash will be waiting in the wings so that it, too (like the banks that are enabling it today), doesn't Pfail.

      Are you even vaguely aware of the issues Pfizer is facing right now?  Aside from the issues mentioned above, Lipitor's patent is running out and they don't have anything else on the boards.  This is analagous to a homeowner whose cash flow is drying up, applying for a refinance to build an addition - to make his next refinance that much bigger.  

      Here's what Forbes has to say about the deal:

      The acquisition by Pfizer, the world's largest drug company, of rival Wyeth, for $68 billion, is something of an act of desperation. Even for the industry's behemoths, short- and medium-term prospects are bleak, as patents on blockbuster drugs expire and the regulatory climate becomes increasingly hostile.

      Pfizer's (nyse: PFE - news - people ) net income for the fourth quarter dropped 90%t from the same period a year ago, partly due to the effects of a charge to resolve an investigation into its off-label promotional practices. (Companies are prohibited from promoting the use of approved drugs for indications not yet approved by the Food and Drug Administration.) But the company faces product, pipeline and patent problems as well, especially the 2011 expiration of patent rights to the best-selling drug in the world--lipid-lowering Lipitor, which accounted for a quarter of the company's 2007 revenue of $48 billion.

      The Obama administration and a Congress that is increasingly unfriendly to drug companies offer little reason for optimism. Policymakers are likely to reallocate health care resources in a way that emulates the U.K.'s National Institute for Health and Clinical Excellence model, which uses supposed experts to judge the cost-effectiveness of therapies to determine which will be reimbursed by the government.

      I gotta go work on that Latin motto now.

      "Well, yeah, the Constitution is worth it if you can succeed." -Nancy Pelosi, 6/29/07.

      by nailbender on Tue Jan 27, 2009 at 11:01:43 PM PST

      [ Parent ]

    •  zdefender, yeah right! (0+ / 0-)
  •  Their CEO doesn't know what else to do (6+ / 0-)

    Other than this takeover, he hasn't a clue as to how to justify his continued leadership of this stagnating company.

    They don't have much research in the pipeline, nor do they have any hot new drugs coming online soon.  

    And it is shameful that we taxpayers are supplying the cash via his buddies in the banking industry.

    Bush hijacked the US with lies about 9/11 and crashed it into Iraq, killing over 500,000 human beings. So far, he's avoided arrest and prosecution.

    by Zydekos on Tue Jan 27, 2009 at 10:56:25 PM PST

  •  Pfzer needed a new drug pipeline.. (0+ / 0-)

    Expect consolidations across a host of industries...Capitalist Darwinism and is typical in bad times..stock prices are severly depressed...If anything M&A is good for the banks so they can earn some fees....Bad for workers in this enviornment...

    Leave the gun take the cannoli..

    by Wallst Democrat on Wed Jan 28, 2009 at 01:24:08 AM PST

  •  Precisely the problem of a bailout (0+ / 0-)

    Everytime a bailed-out bank or company does anything they will be criticized. The number of diaries on dkos attest to that.
    The "bailout" should have been more specific, but Bush scared us again and the Dems were spineless to demand anything specific. Iraq war redux.

  •  The bailout is just wealth transfer. (2+ / 0-)
    Recommended by:
    Cassandra Waites, Piaffe

    From the taxpayers to the wealthy.
    That is all it will ever be until strict regulation of the financial industry takes place.
    The plan is to regulate, but will it be in time to help the little guy?
    Most likely not, as usual.

    St. Ronnie was an asshole.

    by manwithnoname on Wed Jan 28, 2009 at 04:47:50 AM PST

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site