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Drug Companies Increase Spending to Lobby Congress and Governments


By Robert Pear
New York Times
June 1, 2003


"Lobbyists for the drug industry are stepping up spending to influence
Congress, the states and even foreign governments as the debate
intensifies over how to provide prescription drug benefits to the
elderly, industry executives say.

Confidential budget documents from the leading pharmaceutical trade
group show that it will spend millions of dollars lobbying Congress and
state legislatures, fighting price controls around the world,
subsidizing "like-minded organizations" and paying economists to produce
op-ed articles and monographs in response to critics."

Lobbyists for the drug industry are stepping up
spending to influence Congress, the states and even foreign governments
as the debate intensifies over how to provide prescription drug benefits
to the elderly, industry executives say.

Confidential budget documents from the leading pharmaceutical trade
group show that it will spend millions of dollars lobbying Congress and
state legislatures, fighting price controls around the world,
subsidizing "like-minded organizations" and paying economists to produce
op-ed articles and monographs in response to critics.

The industry is worried that price controls and other regulations will
tie the drug makers' hands as state, federal and foreign governments try
to expand access to affordable drugs.

The documents show that the trade association, the Pharmaceutical
Research and Manufacturers of America, known as PhRMA, will spend at
least $150 million in the coming year.

That represents an increase of 23 percent over this year's budget of
$121.7 million.

Directors of the trade association approved the new budget, together
with an increase in membership dues to pay for an expanded lobbying
campaign, at a meeting last week.

"Unless we achieve enactment this year of market-based Medicare drug
coverage for seniors, the industry's vulnerability will increase in the
remainder of 2003 and in the 2004 election year," says one document,
which laments the "demonization of the industry."

Congress will plunge into work on Medicare soon after it reconvenes next
week. President Bush and Congressional leaders have said they intend to
revamp Medicare and add drug benefits for the elderly. Both houses plan
to vote on the legislation before the Fourth of July recess. But a
struggle over drug costs and benefits is likely to continue for months,
or years.

The drug trade group plans to spend $1 million for an "intellectual echo
chamber of economists - a standing network of economists and thought
leaders to speak against federal price control regulations through
articles and testimony, and to serve as a rapid response team."

The trade association and its tactics have become an issue. In debate on
the Senate floor last summer, Senator Richard J. Durbin, Democrat of
Illinois, said, "PhRMA, this lobby, has a death grip on Congress."

Senator Charles E. Schumer, Democrat of New York, said the drug industry
made wonderful products, but was becoming "despised and hated" because
of its aggressive efforts to keep prices and profits high.

But Senator Orrin G. Hatch, Republican of Utah, defended the trade
group, saying it had been vilifed as a "satanic" force, "a bunch of
greedy, money-grubbing companies." In fact, he said, drug makers do more
than any other industry to help people.

The pharmaceutical association gets nearly all its revenue from dues
paid by member companies, according to the documents, which were
obtained from people in the industry. Dues will total $143.8 million in
the coming year, an increase of 24 percent, or $28.3 million, over this
year's dues, the documents show.

In its budget for the fiscal year that begins on July 1, the
pharmaceutical lobby earmarks $72.7 million for advocacy at the federal
level, directed mainly at Congress; $4.9 million to lobby the Food and
Drug Administration; and $48.7 million for advocacy at the state level.
In addition, the budget sets aside $17.5 million to fight price controls
and protect patent rights in foreign countries and in trade negotiations.

The PhRMA budget allocates $1 million "to change the Canadian health
care system" and $450,000 to stem the flow of low-price prescription
drugs from online pharmacies in Canada to customers in the United States.

The major pharmaceutical companies operate in global markets. Canada,
like many industrial countries, offers health insurance to all citizens,
but limits drug prices.

A memorandum for the PhRMA board says the industry is on the defensive,
facing a "perfect storm" whipped up by several factors: "expanding
government price controls abroad, resulting in politically unsustainable
cross-border pricing differences; increasing availability of medicines
from abroad via Internet sales"; state ballot initiatives to make drugs
more affordable in the United States; increasing state demands for drug
discounts in the Medicaid program; and "false perceptions that drug
prices are increasing by 20 percent a year."

Exact comparisons are difficult, but a group facing similar problems,
the American Association of Health Plans, budgeted $26 million this year
to lobby for health maintenance organizations.

In its budget, the Pharmaceutical Research and Manufacturers of America
says it will spend these amounts in the coming year:

- $15.8 million to fight "a union-driven, get-out-the-vote ballot
initiative in Ohio," which would lower drug prices for people who have
no insurance to cover such costs.

- At least $2 million, and perhaps $2.5 million, in payments to research
and policy organizations, "to build intellectual capital and generate a
higher volume of messages from credible sources" sympathetic to the
industry.

- $9.4 million for public relations, including "$1 million for
inside-the-Beltway advertising, $555,000 for placement of op-eds and
articles by third parties," $600,000 for polling, $1.3 million for local
publicity in 15 states and $680,000 for media relations consultants.
The federal affairs staff at PhRMA has quadrupled, to 20 employees today
from 5 in 1999. The organization plans to spend $5 million for outside
lobbyists at the federal level. In their campaign contributions, drug
companies have favored Republican candidates. But PhRMA has retained a
diverse group of lobbyists to ensure access to politicians of both
parties.

Its Democratic lobbyists, listed in recent reports to Congress, include
former Representative Vic Fazio of California; David W. Beier, who was
chief domestic policy adviser to Vice President Al Gore; Joel P.
Johnson, who was a top aide to President Bill Clinton and to Senator Tom
Daschle, the minority leader; and Nick Littlefield, former chief counsel
for Senator Edward M. Kennedy of Massachusetts.

Republicans who reported lobbying for PhRMA include former
Representatives Vin Weber of Minnesota and Bill Paxon of New York; Dave
Larson, former health policy adviser to Bill Frist, now the Senate
majority leader; Edwin A. Buckham, former chief of staff to Tom DeLay,
now the House majority leader; and Scott Hatch, the son of Senator Hatch.

The state government affairs division of PhRMA will spend $3.1 million
to retain more than 60 lobbyists in the 50 states. The number of state
legislative proposals dealing with prescription drugs has doubled since
1999. The drug industry says many of the bills "are seriously negative,
have a high probability of enactment and require major attention on our
part."

Dale Butland, a spokesman for the coalition seeking lower drug prices in
Ohio, said the drug industry lobby was "spending money like water here,"
challenging the validity of signatures on petitions seeking a statewide
referendum.

PhRMA said it would spend $12.3 million to develop coalitions and
strategic alliances with doctors, patients, universities and influential
members of minority groups.

The organization has earmarked several million dollars to foster ties
with groups like the National Black Caucus of State Legislators, the
National Hispanic Caucus of State Legislators and the National Medical
Association, which represents the interests of African-American doctors.
The budget includes $500,000 for efforts to "educate and activate
Hispanic-Latino organizations on a state and federal level."

Several Hispanic groups have joined the drug industry in opposing state
efforts to control Medicaid costs by establishing lists of preferred
drugs. The Texas League of United Latin American Citizens issued a
statement last year saying it "stands solidly" behind a lawsuit filed by
the industry to block the use of such lists.

Luis Roberto Vera Jr., general counsel of the Texas Latino league, said
it received $10,000 from PhRMA to help pay for a workshop on Latino
health issues last year. But "there was no quid pro quo," Mr. Vera said.
Ana Yanez-Correa, policy director for the Texas group, said PhRMA was
"overstating and misrepresenting the amount of support it had" from
Latinos.

Dr. L. Natalie Carroll, president of the National Medical Association,
said her group had received small amounts of money from PhRMA. The
grants, she said, helped the association publish research showing that
different racial groups respond differently to some drugs.

As a result, Dr. Carroll said, state policies steering patients to the
cheapest drug in a therapeutic class could be particularly harmful to
black patients.

 

 

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