Cahill calls drug protest `bad idea'
Says Springfield plan could hurt city pension fund
State Treasurer Timothy P. Cahill tried yesterday to dampen enthusiasm in Springfield for Mayor Michael Albano's proposed divestiture of US drug company stocks, branding it an ill-advised "political statement" that could hurt the city's pension fund.
"It think it's a bad idea," Cahill said in a telephone interview. "Everyone has to be careful of taking a political direction on investment decisions. I understand the mayor's frustration, but it's very dangerous to mix the two together."
At a state commission with oversight over municipal pension funds, a warning flag also was raised about Albano's proposal that the city Retirement Board sell $6 million in drug stocks to protest high US prescription prices.
Joseph E. Connarton, executive director of the Public Employee Retirement Administration Commission, pointed out that Springfield's pension fund is already underperforming, having lost 13.3 percent of its value in 2002, one of the worst rates of return among municipalities in the state.
"We generally frown on such divestiture," said Connarton. "Obviously, it's a delicate balance when you are trying to maximize your return on portfolio and be socially aware."
Neither Cahill nor Connarton said they would have power to overturn a local investment choice, however. The Springfield Retirement Board is scheduled to meet this morning to consider Albano's request that it divest stocks in Johnson & Johnson, Pfizer Inc., Eli Lilly & Co., Merck & Co., and a handful of other drug companies. The request is part of Albano's ongoing battle to import Canadian drugs to cut prescription drug costs for city workers.
In July, the mayor set up the nation's only government employee health plan to import prescription drugs from Canada, drawing a rebuke from the Food and Drug Administration. The Globe reported yesterday that Albano has now shifted his focus to divestiture, a strategy used in recent decades to pressure South Africa on apartheid and, to a lesser extent, tobacco companies on health issues.
Yesterday, Mayor Michael J. Sullivan of Holyoke said he would follow Albano's lead and ask his city's Retirement Board to consider selling its drug stocks, which Sullivan said represented a "very, very small" part of the overall fund. Albano and Sullivan, both Democrats, said their cities were being squeezed as drug costs for their employees pulled money away from such critical services as fire, police, and roadwork.
"This is the money that is eating up our sidewalk accounts and roadway accounts," said Sullivan.
Albano said "bold action" was required to force change, including a focus on more than the bottom line in investment strategy.
"It's about changing policy makers in the pharmaceutical industry. It's about pricing. It's about safety on the streets of Springfield," he said. "If you look at it from a single focus, you take the profits."
Cahill, asked yesterday to comment on the Springfield proposal, said drug companies are not in the same league as South Africa and tobacco companies, because they make products that save lives.
Furthermore, he said, pension fund stewards should have dollars and cents as their top priority. While he said the "the argument could be made" for divestiture in South Africa because companies that did business there came to be seen as riskier investments, he said he disagreed with divestment from tobacco stocks, which was mandated by the Massachusetts Legislature in 1997.
Also, as a Quincy City Council member, Cahill cast the sole vote against a 1997 resolution to cut businesses with ties to Burma from the city's purchasing list.
"We have to be careful when we make any value judgments, based on what's good for society and what's bad for society," said Cahill.
Christopher Rowland can be reached at email@example.com.
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