Is Big Pharma On Your Side?

In my internship last summer, I worked for a pharmaceutical company’s lobbying team that gave money to both Democrat and Republican Members of Congress. The company signed these checks with the hope that members would vote in their interest. While I, of course, believe that the company I work for acts in the public’s best interest, critics of pharmaceutical companies generally view their lobbying unfavorably. However, Congressmen of both parties met with our team over the summer, which Peltzman would assume was an attempt to maximize the votes they will eventually receive. In these meetings, I observed my team educating and convincing members that certain policies (like the Clear Labels Act) would not only harm company profits by raising production costs, but also harm consumers. In this way, the company tried to align members' incentives with our own profit-maximizing incentives. We argued that a vote-maximizing politician should side with our interests because the bill would harm consumers.

In Peltzman’s model, f is the probability that a beneficiary of a policy supports the politician. Our lobbying meetings were intended to persuade legislators that voting in our favor would increase the likelihood that their constituents would support them electorally. I argue that this case was not necessarily a case of capture by special interests or rent-seeking, since the intended outcome had positive social value. Instead, some lobbying efforts can be seen as instances of experts educating politicians on issues that affect their constituents in ways they may not realize. Assuming this information is accurate and unbiased (likely somewhat unrealistic to assume), the resources devoted to the cause are not wasteful. While our company is clearly motivated by profits, our interests are compatible with the interests of consumers (at least in this case). My experience demonstrates how, in the Peltzman model, politicians balance competing interests, but do not always have to make trade-offs between business and consumer interests.