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Brooks Wilson's Economics Blog: PhRMA, Advertising and Competitive Free Speech

Wednesday, March 17, 2010

PhRMA, Advertising and Competitive Free Speech

People often assume that business leaders support legislation that strengthens markets, but this assumption is usually false.  Business leaders support legislation that increases the profit of the firms they own and manage.  Given the assumption that drug companies Represented by the Pharmaceutical Research and Manufacturers of America (PhRMA) which represents the country’s leading pharmaceutical research and biotechnology companies, are self interested profit maximizers, Chris Frates of Politico provides evidence directly from PhRMA's advertising budgets that their profits will not be harmed by current reform legislation in his informative article ("PhRMA plans $6 million pro-reform ad buy in 38 House districts").
PhRMA agreed Tuesday to fund an initial $6 million ad buy in the districts of 38 wavering House Democrats. The pro-reform ads will come from the industry-funded coalition Americans for Stable Quality Care and could hit the airwaves as early as today, a top industry official said. The deep-pocketed trade group didn’t decide how much it would spend in total on the campaign; officials are waiting to review the bill first. The decision to flip the switch on five or six days worth of advertising will come when the industry is comfortable with the bill’s direction.

The emphasis added is mine.  Presumably, "comfortable with the bill's direction" means that these firms will benefit from the reform legislation.

A recent Supreme Court decision allowed corporations to spend freely on elections.  Many speculated that the decision would allow corporations to buy elections (see "Justices, 5-4, Reject Corporate Spending Limit").  In a blog post, I noted that business interests were not monolithic and that elections would be competitive.  Frates provides evidence that special interest funding would indeed be competitive.
The drug industry is really the only pro-reform group able to match the millions being spent by opponents like the Chamber of Commerce.

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