Drug Companies Increase Spending to Lobby Congress and Governments

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http://www.nytimes.com/2003/06/01/national/01LOBB.html?th

 

Drug Companies Increase Spending to Lobby Congress and Governments

 

By ROBERT PEAR

 

 

WASHINGTON, May 31 — 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.

s 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.

 

Copyright 2003 The New York Times Company |

 

 

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