“Politicking Jeopardizes State Investments,” Schatz says

(Washington, D.C.) – Citizens Against Government Waste (CAGW) today praised Minnesota Secretary of State Mary Kiffmeyer for being the sole member of the State Board of Investment to oppose a demand, endorsed by Governor Tim Pawlenty and Attorney General Mike Hatch, that the pharmaceutical company Pfizer alter its business practices.

“Secretary Kiffmeyer is rightfully fighting to keep the State Board of Investment out of political battles,” CAGW President Tom Schatz said.  “The Board should focus on its core mission of maximizing the return on investment for Minnesota’s pension retirees.”

The Board called on Pfizer and other pharmaceutical companies to stop charging customers more for prescription drugs in the United States than in other countries.  The Board claimed that the disproportionately high U.S. drug prices can't forever be sustained and so threaten the companies' long-term economic health.  The state pension fund’s large holdings in those companies give public employees a compelling interest in their business practices, the Board claims.

“The spectacle of a state board telling a corporation its practices are ‘unsustainable’ is laughable,” Schatz continued.  “If government officials knew how to run a business, Minnesota wouldn’t have a $185 million budget shortfall.”

Gov. Pawlenty introduced the resolution last week after Pfizer cut off supplies to two Canadian wholesalers it claimed were reimporting Pfizer drugs to the U.S.  Price controls in Canada allow dealers to sell drugs at artificially low prices.  Gov. Pawlenty has been promoting a reimportation web site that helps Minnesota residents buy Canadian drugs – an activity that is illegal under federal law. 

“As the highest elected official in the state, Gov. Pawlenty is setting a poor example by both flouting the reimportation laws and abusing his political power in an attempt to determine business practices,” Schatz said.  “He should cease and desist in both cases.”

“The investment board funds belong to state employees,” Schatz continued.  “The board shouldn't be plucking money from a trust fund in order to badger drug companies in a political dogfight.”

Furthermore, encouraging Americans to buy discounted drugs from across the border could destroy the economic incentive that gives birth to medical advancements. The pharmaceutical industry migrated from Europe to the United States because price controls in those countries dried up the costly research that fuels new discoveries.  Basic economics teaches that price ceilings lead to shortages and capital depreciation.  Pharmacists in Canada warn that reimportation programs in the U.S. will aggravate the drug shortages that already afflict Canada's government-run health care system.

“Pfizer is a productive company that returns good dividends to shareholders and provides Americans jobs,” Schatz concluded.  “Instead of condemning Pfizer, Minnesota officials should be blasting Canadians for getting a free ride on US-funded research.  Secretary Kiffmeyer is right to remind the board of its fiduciary responsibility.”

Citizens Against Government Waste is the nation's largest nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government.