An Adventure in Price Fixing
As an investor in Eli Lilly & Co. (LLY), imagine for a moment a case in which a bureaucrat of the Injustice Department decided to force the company to significantly price fix a drug by lowering its cost according to the Injustice Department's standards. I know it is the dream of every bureaucrat who does this to eat a company's cake and have it too. But imagine what would happen if this move of the Injustice Department became standard practice that no despotic authority was able to contain and control.
After an Injustice Department bureaucrat imposes himself on Eli Lilly & Co. (LLY) he leaves corporate headquarters in Indianapolis, Indiana, and gets into his car to drive home to Chicago, Illinois. As he pulls out of the parking lot, the bureaucrat notes that he is hungry because the businessmen had kept him waiting so long before the meeting. So, the bureaucrat finds a McDonald's to get a quick bite to eat. As he walks inside, the bureaucrat sees several long lines with few employees in uniform. After a very long time, a worker attends to him, only to announce that the store is out of the sandwich the bureaucrat wanted. "What do you have?", the representative of the Injustice Department asks in an annoyed tone. "Milkshakes and ice water? What kind of business is this?" After buying a milkshake, the bureaucrat continues on his way.
He gets on the highway out of Indianapolis that will take the bureaucrat back to Chicago; but he notices that he is low on gas. Turning off at the next exit, he proceeds to the Speedway gas station only to see all the pumps out of service. As a member of the Injustice Department, he storms inside to demand an explanation. "Why is there no gas for sale?" The owner attending the counter replies, "We were doing well, until a government edict reduced our prices so much that no supplier would come. I don't blame them. Who works for a loss, anyway?" The Injustice Department bureaucrat peels out of the station, and hurries to the next exit. The result is the same--no supply. After questioning the manager of a Mobil gas station, he is informed that the gas shortage is state wide.
By now the sun has begun to set; and judging by the flimsy suit and dress shirt, no heat source will mean a very cold night if the Injustice Department bureaucrat does not find lodging. So, he crosses the overpass to a hotel nearby. Unfortunately, there is no vacancy. He drives to the next exit--only to find a motel in the same state. With the temperature rapidly falling, the Injustice Department bureaucrat is desperate; so he marches in and demands to talk to someone in charge. "Why is there no lodging anywhere in sight?" The hospitality manager replies, "It didn't used to be like this; but then those price fixing bureaucrats came along--ruining our profit. It's not like I blame the businessmen. Who works for negative pay?" The Injustice Department bureaucrat opens his wallet. "One room for one night. Name your price." The manager responds, "No. The law is the law. Don't blame me. Its those damn bureaucrats from the Injustice Department."
That night, the bureaucrat catches pneumonia in his car. Unfortunately, a cutting-edge, experimental drug from the labs of Eli Lilly & Co. (LLY) could have quickly cured this, but had been scuttled years ago due to government regulation. The "Justice Department" bureaucrat dies.
Paul Wharton
Special thanks to Eli Lilly & Co. (LLY)