In 2011 multinational pharmaceutical giant Glaxosmithkline was facing the prospect of a class-action lawsuit by consumers of its antidepressant Wellbutrin SR. A sheet metal workers union from Alabama went to court seeking to become recognized as a “class” with all other people who bought the drug either themselves or indirectly through health plans.
They wanted to launch a multimillion-dollar lawsuit against the drugmaker for allegedly bullying manufacturers of the generic form of the drug out of business with reams of phony patent lawsuits. Lawyers for the plaintiffs argued that by squashing competition from generics, the company had forced everyone to pay more for the drug and that therefore everyone who bought it could be party to a massive class-action lawsuit.
For help, Glaxosmithkline turned to Princeton Economics Group, a 12-person consulting firm on State Road that specializes in antitrust lawsuits. The company rose to the challenge. Analyst John Bigelow crafted legal testimony that helped convince Eastern Pennsylvania circuit court judge Lawrence F. Stengal to deny the sheet metal workers permission to form a class. Bigelow, serving as an expert witness, argued that many of the people who would be part of the class bought the drug through health plans that did not charge co-pays, and so they were never affected by the cost of the drug, and that others were loyal Wellbutrin SR consumers who would have bought it even if a generic alternative were available.
Stengal’s ruling in February, 2011, in favor of Glaxosmithkline only temporarily staved off the company’s legal woes, and it settled a class-action Wellbutrin lawsuit the next year for $49 million. The case is, however, a perfect example of how Princeton Economics became well known in its field despite its small size. This reputation has led to a buyout for Peter Bronsteen, the sole owner, who founded the company in 1989. Princeton Economics was bought in April by Compass Lexecon, a Chicago-based consulting powerhouse. Bronsteen received a sum of money that he declined to reveal.
Bronsteen was raised in Westchester County, New York, and Stamford, Connecticut. His mother was a homemaker and his father was an accountant. He has an A.B. in economics from Stanford and a Ph.D. in economics from UCLA. Bronsteen began his career with prestigious law firm Skadden Arps as the firm’s first ever in-house economist.
“That was pretty novel,” Bronsteen said. “At the time, the head of the antitrust department felt it would be helpful to have someone on staff to help them with economic issues, which were mostly merger cases at the time, and began interviewing candidates. About the same time, I had come to a similar conclusion. I was contacting different law firms trying to tell them that it would make sense for them to have an economist full time.”
Bronsteen said he got about five years of work experience in the three years he worked at Skadden Arps. After that, he worked for another consulting company. In 1989, seeking a new intellectual challenge, he founded Princeton Economics Group. Running his own company expanded Bronsteen’s mind in ways he never imagined.
“One project we did was for NASCAR, when they were alleged to have monopolized the market for stock car racing in the United States. We worked with them to understand the allegations and to try to understand who they compete with and why they did what they did,” he says.
“I found it fascinating largely because I knew nothing about stock car racing. I was curious as to why stock car racing was so popular. I’ve continued to be puzzled by the popularity of the sport, and in the meantime, having watched it, I became fascinated with stock car races myself, for reasons I can’t identify. I’ve talked to lots of people who are from the south and who are born and bred NASCAR fans, and it’s hard to form an opinion as to why the spectacle of a NASCAR race is so exciting to so many people. Is it the noise, the colors, the cars, the drivers? It’s hard to say. I find the whole process just captivating, and I still watch races to this day.”
Another case that fascinated Bronsteen, a lifelong sports fan and ice hockey player at Stanford, was working for the NFL in an antitrust case involving sportswear. A small hat manufacturer had sued the football league for giving Reebok exclusive manufacturing rights for its merchandise.
“It was interesting to learn about the NFL and how they are organized as a business,” he says.
Those cases brought together two of Bronsteen’s passions, sports and economics.
“What attracted me to economics was the problem-solving nature of it,” he says. “You are given a set of basic tools that maybe could be characterized as supply and demand, and you use these tools to try to understand why businesses do what they do. I find problem solving with this set of tools just fascinating.”
Bronsteen, who has lived in Princeton since 1988, found an outlet for his fascination with athletics outside of his company. When he’s not in the office, Bronsteen can be found shooting sports photographs for Princeton University’s athletics department. For four years, he was also a photographer for the Trenton Titans minor league hockey team.
Selling the company will allow Bronsteen to take more time to pursue those passions, as well as to spend time with his wife of 27 years and his three grown sons, if he so chooses.
“I have the opportunity to do as much or as little work as I want,” he says, adding that he probably won’t be as involved as he was before in the day-to-day decisions making of the business.
The main reason he says he sold the business, however, was to allow the office to continue and ensure a stable future for the employees. “I wanted to find a home for my staff where they had at least as much opportunity going forward as they would have had if we had remained independent.”
The staff of the office has not changed since the sale, nor has its business. In addition to Bigelow, a former Yale economics professor, the staff includes former University of Arizona economics professor Jianjun (Jason) Wu.
Bigelow said the consulting group does most of its work serving as expert witnesses to antitrust lawsuits, as in the Glaxosmithkline trial. They also provide economics consulting to other corporate and legal clients dealing with regulatory or policy matters. “The acquisition gives us the chance to go on doing the same kind of work we’ve been doing, and we’re proud of doing, and gives us the opportunity to do it with colleagues and with considerably more resources available for us to draw on should we need them,” Bigelow said.
Compass Lexecon is a multinational consulting firm with 15 offices. Bigelow said the larger company has resources including computing power and a research staff that Princeton Economics Group never had available to it before. “We’re all very excited about it and looking forward to the opportunities that this new combination creates,” he said. “It sounds like corporate boilerplate, but in this case it’s actually quite true.”
Princeton Economics Group, 707 State Road, Suite 223, Princeton 08540; 609-279-0600; fax, 609-279-0201. www.econgroup.com.