Drug (Money) Traffic

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http://www.alternet.org/drugreporter/20007/

 

Drug (Money) Traffic

By Kelly Hearn, AlterNet

 

Posted on September 28, 2004,

http://www.alternet.org/story/20007/

 

The pharmaceutical industry's main trade association quietly gave $41

million to " stealth PACs " in 2002 and failed to mention most of it to

the IRS, according to a report issued by a watchdog group.

 

Public Citizen says four non-profit groups, so-called 501©(4)s for

the IRS code under which they operate, were heavily financed by The

Pharmaceutical Research and Manufacturers of America (PhRMA), a

gargantuan trade association representing more than 40 of the world's

most recognized drug companies. The groups, which pitch themselves as

advocacy groups for senior citizens, but are not obligated to disclose

funding sources, apparently used the millions of dollars to broadcast

TV ads and send out direct mail brochures supporting political

candidates friendly to drug industry interests.

 

That, in itself, is not illegal. But not reporting the financing or

not disclosing political activity may be illegal.

 

Public Citizen, basing its allegations on federal disclosure forms and

tax filings, asked the IRS last week to investigate PhRMA for not

disclosing a combined $31 million it gave two of the groups, United

Seniors Association and 60 Plus.

 

It also accused all four non-profits – the other two being Seniors

Coalition and America 21 – of lying to the tax authorities about the

extent of their political efforts.

 

But even if the IRS takes PhRMA to task, observers say it won´t mean a

hill of beans.

 

The association's wealth and political leverage are near impossible to

overstate. The primary industry mouthpiece on Capital Hill, PhRMA

counts among its members some of the world's biggest corporations,

including Eli Lilly and Company, Bayer Corporation Pharmaceuticals

Division and Merck & Co. From 1991 to 2002, members of PhRMA spent

$558 million dollars on POLITICAL CONTRIBUTIONS, LOBBYING and

ADVERTISING, according to Common Cause, a citizen advocacy group which

tracks money in politics. And last year alone, in order to shape the

Medicare prescription drug bill, PhRMA spent more than $16 million on

lobbyists, according to Public Citizen.

 

If found to be in violation of tax law, however, the groups which

PhRMA funded could lose their cherised non-profit status.

 

Court Rosen, a PhRMA spokesperson, says the association doesn't

discuss advocacy tactics or make its contributions public. " But any

contributions we make are always within the letter and spirit of the

law, " he says.

 

And contributions it will make.

 

PhRMA will spend what it can to keep friends in Congress. That´s

because its members so heavily depend on government favors. Patents,

tax credits and deductions, taxpayer-funded scientific research –

these are the life-affirming taxpayer gifts to industry. Also helpful

are laws that shut out lower cost foreign imports of drugs, keep

cheaper generic drugs off the market, and push government regulators

out of drug price negotiations' laws that Pharma-friendly lawmakers

have handed up over the years.

 

Keeping warm ears in Congress means getting the right propaganda to

voters, but in nuanced ways.

 

" Names like 60 Plus Association, Seniors Coalition and United Seniors

Association have a far more pleasant connotation that the

Pharmaceutical Research and Manufacturers of America, " says Taylor

Taylor Lincoln of Public Citizen. " The first list of names smacks of

alliances of concerned citizens, presumably largely volunteers, while

PhRMA sounds like what it is, a trade association for a for-profit

industry. "

 

And even though PhRMA and the non-profit groups did not disclose their

financing, Public Citizen researchers, in making their case, connected

what they say were obvious dots.

 

In 2002, for example, United Seniors got $20 million from a single

undisclosed source, a sum constituting 79 percent of its total revenue

that year. PhRMA acknowledged providing an " unrestricted educational

grant " to United Seniors the same year. Similarly, about $11 million

of the $12 million budget of 60 Plus flowed from one source in 2002.

PhRMA said it also gave an " unrestricted educational grant " to 60 Plus

that year.

 

United Seniors Association, which did not respond to an interview

request by press time, is active in this year's election cycle. Public

Citizen claims the group has sponsored TV ads in at least 17 House

races, praising candidates who supported the PhRMA-backed Medicare

drug law passed by Congress in 2003. That law is widely considered to

be a gift horse for the pharmaceutical industry.

 

In a letter sent last week, Public Citizen asked IRS Commissioner Mark

Everson to open a special investigation of PhRMA and the non-profit

groups. The key allegation is that the groups undertook enough

political activity to breach a prohibition against making political

activity their primary purpose. The letter, signed by Public Citizen

President Joan Claybook, also claimed PhRMA " failed to disclose its

grants to USA and 60 Plus, perhaps as much as $20.1 million and $11

million, respectively, to whom it is known to have given money in 2002. "

 

Another claim is that all the non-profit groups claimed zero political

expenditures to the IRS, asserting instead that their 2002

communications were not intended to influence elections.

 

" These claims do not seem plausible given the content of the groups‚

television commercials and direct mailings, the timing of their

messages, and the groups' decisions to direct the messages

disproportionately to voters who lived in particularly competitive

election districts, " the letter stated.

© 2004 Independent Media Institute. All rights reserved.

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