Lilly CEO: Immigration, tax laws slow innovation

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The U.S. government needs to open its borders wider to attract and retain talented scientists for drugmakers to employ, Eli Lilly and Co. CEO John Lechleiter planned to tell a technology conference on Thursday.

The pharmaceutical industry faces $1.3 billion in development costs for a single drug and had 95 Food and Drug Administration clearances in the past five years, the lowest in such a span since the late 1970s. The industry is in a six-year window when products that make up 40 percent of pharmaceutical sales lose patent protection, equivalent to a $100 billion loss in annual revenue, he said.

Lechleiter plans to call for U.S. immigration officials to issue more green cards (formally called permanent resident cards) for highly skilled immigrants along with adopting a shorter, simpler process to obtain the proof to live and work in the United States. His remarks are part of a five-point proposal to reinvigorate U.S. innovation at a Washington, D.C., conference.

“To those that argue that these immigrants are taking jobs from Americans, I say baloney,” according to a draft of prepared remarks provided to Bloomberg. “And it surely beats the alternative: talented people trained in the U.S. returning to their native country or going elsewhere to start or help a foreign firm to compete against us.”

He added: “You want a job killer? That’s a job killer.”

Employees of Indianapolis-based Lilly sponsored by the company wait an average of five years to obtain a green card. The uncertainty and frustration drives away promising potential candidates for employment, Lechleiter said in his remarks.

Lechleiter also called for bigger tax breaks and an Food and Drug Administration approval process that more evenly weighs safety and benefits. The corporate tax rate needs to be dropped as low as 20 percent and the U.S. shouldn’t tax the overseas earnings of U.S. companies, he said.

The U.S. corporate tax rate was 40 percent in 2009, according to KPMG LLP, a tax firm based in New York. The United Kingdom’s rate was 28 percent and China’s was 25 percent in the same year.

The Biotechnology Industry Organization, a Washington lobbying group that represents manufacturers of biologic drugs made from living organisms, plans during its annual conference next week to introduce legislative proposals aimed at spurring innovation as well.

BIO President and CEO Jim Greenwood said the proposals won’t address immigration even as he acknowledged green-card access is an industry concern.
“Congress should be running to us asking, ‘What do you need?’” he said.

BIO will be ready with a proposal, once it is adopted by its board June 27 at the Washington conference, that will include legislative recommendations for Congress, much like Lechleiter’s suggestions, on tax incentives and regulatory changes at the FDA, Greenwood said.

He didn’t specify the tax stimulants the trade group would seek or the regulatory changes except to say that “the risk-benefit ratio or consideration isn’t there” at the FDA.

Greenwood said he came up with the idea for the proposal last year following passage of the health law and the 10th anniversary of the sequencing of the human genome. He sought help from former National Institutes of Health Director Elias Zerhouni, who now is president of research and development at Sanofi.
The FDA drug review process must be more systemic, Lechleiter said.

“There is much greater pressure on regulators to identify and avoid risks of new medicines than to balance those risks against the potential benefits to patients,” he said in his remarks.

Lechleiter wants the FDA to document the basis of putting off decisions or erring on the side of avoiding risk.

The FDA and industry held talks on enhancing communication as part of negotiations over user fees that drugmakers pay to speed product approvals that must be reauthorized in 2012. The agency said on its website it proposed to create liaisons to meet more often with industry about drug applications.


  • 311 Million Americans and Not a Scientist to Hire?
    Why, out of the 311,617,269 people living in the U.S., can't Lilly (and other companies relying on Green Card workers) find enough qualified scientists to meet their needs?

    It's hard to believe that U.S. colleges aren't producing graduates that can meet Lilly's needs. But if they're not, maybe Mr. Lechleiter should resign from the board of Nike, Inc., and get appointed a trustee of a major university, where he would have some influence on how potential employees are trained.

  • Hard workers are always needed
    I know of one young man (illegal) who is the hardest worker I know of. He would be a great citizen. But, financially and paperwork needed, he finds it next to impossible to become a citizen. To hire a lawyer, it would take 6 full paychecks to do so. He has to eat and have a roof over his head.

    We need good new citizens--no matter what their background and education is.
  • Selling Out America?
    "We still have greater afordability and greater access to meds than anywhere in the world." Is there any evidence to support this? Is this really about bringing the most talented scientists to America? Or is it about bringing somewhat interchangeable scientists, who happen to be willing to work for half of what Americans would typically be paid? Hasn't Lilly laid off something like half of its American scientists here in Indianapolis recently? Did they really all suck?
  • Immigration
    I appreciate your comments, but you are incorrect about the downward pressure on other salaries. Companies and society benefit from talented well trained people, and so if we in the U.S. can recruit the best of the best, society benefits, the companies prosper, and ever more jobs are created in all sectors of industry.

    Lastly, the prices in the U.S. are higher than other countries, but if the pricing were the same everywhere, then poor developing countries would not be able to receive any medications. We still have greater afordability and greater access to meds than anywhere in the world. If we push the pricing down further in this country, then ultimately the ability to bring forward new pharmaceuticals or medical devices will be greatly diminished, and all of society will suffer. Please remember that drugs take 10-15 years to bring to market and with a cost of $1.3B plus of investment; if the companies cannot support this R and D effort with their pricing and sales volume, relatively little of health deliverables for society will come forward. While NIH and other government organization do some good fundamental research work, they do not deliver or develop new drugs or medical devices.
  • Response to Comments
    The pharmaceutical industry does hold power over the general US population unfortunately; however, Indianapolis would be lost without this company, its corporate philanthropy and the Lilly Endowment that was created from Mr. Lilly's success. Think of the state of unemployment now-- imagine if Lilly disappeared tomorrow. I can only begin to imagine the unemployment and the flight of talent that would occur. That's our reality we must face.

    On the point of immigrants. It is a sad truth that the level of workforce talent here is becoming less competitive on the global labor market. However, until we can make changes to our education system and take a genuine concern for our children's future, businesses must look beyond our borders to remain competitive. In the meantime, I will shake the hand of one who has come to the US to contribute their knowledge, taxes, hard-working principles, and diversity to Indianapolis and its economy. We are a nation of immigrants, and as my ancestors were not native to the Americas, I will not turn away one who is also drawn to this country for the same reasons my family was over 200 years ago.
  • Immigration
    Why is it the USA doesn't produce people smart enough to do the jobs Lechleiter wants to import people to do?
  • Immigration
    Mr. Lechleiter fails to mention that immigration also puts downward pressure on salaries companies like Lilly pays, but of course that downward pressure on compensation never applies to the executive suite. I think it is also interesting how the pharmaceutical industry benefits mightly from current government policies. Americans pay far more for drugs and health care than any other country in the world. The Drug Industry spends a lot of money in Washington and it seems like most times they get what they paid for and they don't they have a temper tantrum.
    • Tax reform
      When the Congress of the US finally gives up its century old dependency of the income tax and the federal tax code as a narcotic for power, the problems with immigration, corporate taxes and all will soon go away. But we have an elected body that won't give up its addiction to the tax issue. Listen top what Senator Lugar has to say about The FairTax...you can find it on YouTube. Therein lies the solution, but we have too many people looking into a crevace where the sun doesn't shine, for answers.
      • Immigrants?
        “To those that argue that these immigrants are taking jobs from Americans, I say baloney,” according to a draft of prepared remarks provided to Bloomberg. “And it surely beats the alternative: talented people trained in the U.S. returning to their native country or going elsewhere to start or help a foreign firm to compete against us.”

        He added: “You want a job killer? That’s a job killer.”

        1. So is there something in the water overseas that makes immigrants smarter than americans? Why not focus, incourage, help with finanacial aid (like you do with immigrants) our own native americans so they can become your "highly trained skilled employees and scientists"?
        2. I would venture to guess your "special immigrants" don't make up .1% of the unemployment problem in the U.S. So what Lilly's is really concerned with is their own piece of the pie or $pecial intere$t$, they don't really give a rats ass about the overall unemployment problem in this country.
        Baloney-is what Lilly's is pedaling to us.....so they can eat more steak.
        • 40%
          I realize KPMG has fallen far, but they don't even know the US corporate tax rate is 35%???

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