President Bush has installed more than 100 top officials who were once lobbyists, attorneys or spokespeople for the industries they oversee.

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http://www.commondreams.org/headlines04/0523-02.htm

 

 

When Advocates Become Regulators

President Bush has installed more than 100 top officials who were once

lobbyists, attorneys or spokespeople for the industries they oversee.

 

by Anne C. Mulkern

 

WASHINGTON -- In a New York City ballroom days before Christmas, a powerful Bush

administration lawyer made an unprecedented offer to drug companies, one likely

to protect their profits and potentially hurt consumers.

Daniel E. Troy, lead counsel for the U.S. Food and Drug Administration, extended

the government's help in torpedoing certain lawsuits. Among Troy's targets:

claims that medications caused devastating and unexpected side effects.

Pitch us lawsuits that we might get involved in, Troy told several hundred

pharmaceutical attorneys, some of them old friends and acquaintances from his

previous role representing major U.S. pharmaceutical firms.

The offer by the FDA's top attorney, made Dec. 15 at the Plaza Hotel, took the

agency responsible for food and drug safety into new territory.

" The FDA is now in the business of helping lawsuit defendants, specifically the

pharmaceutical companies, " said James O'Reilly, University of Cincinnati law

professor and author of a book on the history of the FDA. " It's a dramatic

change in what the FDA has done in the past. "

Troy's switch from industry advocate to industry regulator overseeing his former

clients is a hallmark of President Bush's administration.

Troy is one of more than 100 high-level officials under Bush who helped govern

industries they once represented as lobbyists, lawyers or company advocates, a

Denver Post analysis shows.

In at least 20 cases, those former industry advocates have helped their agencies

write, shape or push for policy shifts that benefit their former industries.

They knew which changes to make because they had pushed for them as industry

advocates.

The president's political appointees are making or overseeing profound changes

affecting drug laws, food policies, land use, clean-air regulations and other

key issues.

Government watchdogs call it a disturbing trend, not adequately restrained by

existing ethics laws.

Among the advocates-turned-regulators are a former meat-industry lobbyist who

helps decide how meat is labeled; a former drug-company lobbyist who influences

prescription-drug policies; a former energy lobbyist who, while still accepting

payments for bringing clients into his old lobbying firm, helps determine how

much of the West those former clients can use for oil and gas drilling.

" When you go to work in lobbying, it is clearly understood and accepted that

your job is to advocate for the interests of those who hired you, " said Terry L.

Cooper, a University of Southern California ethics and government professor.

" When you go to work in government, you are supposed to be responsible for

upholding and maintaining whatever you can identify as the public interest. "

The Bush administration says the regulators were chosen for their abilities.

" The president appoints highly qualified individuals who make their decisions

based on the best interests of the American people, " said White House spokesman

Jim Morrell. " Any individual serving in the administration must abide by strict

legal and ethical guidelines, including full disclosure of past lobbying

activities. "

Six of the former industry advocates have faced ethics investigations or

resigned amid conflict-of-interest charges. Those and at least 14 others have

been lambasted by public-interest groups.

Government ethics standards are part of the problem because they don't fully

address the kind of issues that now permeate Washington, Cooper and some inside

government say. The rules focus mainly on direct financial conflicts. Other,

more nuanced conflicts aren't addressed

" There are so many ways around, over and under these (ethics) bans ... they

almost never work, " said Paul Light, who for decades has studied the appointment

process for the Brookings Institution, a think tank in Washington. " There're

more screen doors than steel doors. "

A March 16 report from the Interior Department's inspector general, for example,

concluded that department's " byzantine " conflict-of-interest rules were " wholly

incapable " of addressing ethical questions involving a former energy lobbyist,

J. Steven Griles, as the department's No. 2 official.

The report called the department's ethics system " a train wreck waiting to

happen. "

Bringing bias to a federal job isn't new. Presidents of all political

persuasions have appointed people who shared their party's values.

As president, Bill Clinton peppered the federal bureaucracy with Democratic

state officials, lawyers and advocates from various environmental or

public-interest groups.

Only a handful of registered lobbyists worked for Clinton, however.

Bush's embrace of lobbyists marks a key difference because it allows " those who

are affected by the regulations to determine what the ground rules should be, "

said David Cohen, co-director of the Advocacy Institute, which helps teach

nonprofits how to lobby in Washington.

While previous Republican presidents hired lobbyists, " the Bush administration

has made it rise in geometric proportions, " Cohen said, meaning Bush is

" capturing the instruments of government and using them for the ends " that favor

Bush's political supporters.

" In the Bush administration, " said U.S. Sen. Joe Lieberman, D-Conn., " the foxes

are guarding the foxes, and the middle-class hens are getting plucked. "

Republicans and their lobbying allies reject the idea that industry is embedded

in the administration.

" Foxes? No, " Vice President Dick Cheney told The Denver Post. " I think we have a

good track record. "

The clout of industry is balanced by the power of labor unions, trial lawyers

and public-interest groups, said Jerry Jasinowski, chairman of the National

Association of Manufacturers.

" The notion that somehow business gets everything and we've gotten a free ride

is absurd, " he said.

Still, the lobbyists-turned-policymakers control or influence health care, food

safety, land use, the environment and other issues touched by government.

HEALTH CARE

Ann-Marie Lynch

The drug-industry lobbyist who fought price controls joined the Health and Human

Services Department and has helped drug companies avoid the limits.

Top aides in the Department of Health and Human Services provide analysis and

advice to the president on key consumer issues, including prescription-drug

policies. In doing so, they consider the needs of pharmaceutical companies

seeking revenue for future research, and consumers struggling to afford

increasingly costly medications.

In June 2001 Bush installed Ann- Marie Lynch, a lobbyist for the drug- company

trade group Pharmaceutical Research and Manufacturers of America, to help set

those policies.

As a lobbyist, Lynch fought congressional attempts to cap prices for drugs.

Price controls, she argued, would hamper medical innovation.

Thirteen months after Lynch became deputy assistant secretary in the office of

policy, her division issued a report that praised brand- name drugs. It warned

that " government-controlled restrictions on the coverage of new drugs could put

the future of medical innovation at risk and may retard advances in treatment. "

Consumer advocates say that's nonsense. Other countries innovate despite price

controls, said Gail Shearer, director of health policy analysis for Consumers

Union, nonprofit publisher of Consumer Reports.

" They haven't taken as seriously their job of making medicines affordable to all

Americans, " Shearer said. " When you talk about the need for (drug) innovation,

you have to put it in the context of, will people get the wonder drugs? "

Critics say the report influenced congressional debate over a Medicare drug

policy that, among other things, banned government from using Medicare's buying

power to cut drug prices. The legislation will mean an extra $139 billion in

profit over eight years to drug companies, Boston University researchers said.

Republicans in Congress used arguments that came " directly out of Ann-Marie

Lynch's mouth " and from the trade group she previously worked for, said Rep.

Sherrod Brown of Ohio, lead Democrat on the Energy and Commerce Committee's

health subcommittee.

Lynch declined to talk to a reporter. HHS spokesman Bill Pierce said the report

was not intended to sway Congress. Provisions banning Medicare from negotiating

drug prices date to 2000, he said.

Lynch also blocked the release of about a dozen completed research reports that

challenge drug-company claims, three former employees said. Pierce said Lynch

decides research topics and which reports are released.

One 2001 report, for example, criticizes Medicare plus Choice (now known as

Medicare Advantage). Its findings suggested that running the Medicare

prescription-drug benefit through private health companies - the method the

administration ultimately chose - would be more expensive and would not serve

rural areas well.

" Very few of (the private companies) manage to bring in the benefit cost

effectively, " said Mark Merlis, the private health policy consultant who wrote

the report.

Thomas A. Scully

The former hospital lobbyist presided over an agency that helped a chain he once

represented win a favorable settlement in a Medicare fraud case.

Thomas A. Scully represented the nation's for-profit hospitals as a lobbyist

before being hired by the Bush administration in June 2001 to head the federal

Centers for Medicare & Medicaid Services.

Eight months after Scully arrived at the Medicare and Medicaid agency, it moved

to settle final claims involving HCA Inc., a hospital chain that was the biggest

member of Scully's former employer, the Federation of American Hospitals. HCA

Inc. faced allegations it fraudulently overbilled the government for Medicare

cases.

Under the terms agreed to in June 2002 by Scully's agency, HCA would have

settled for $250 million. Medicare fraud cases typically are ironed out with

Justice Department participation, but Scully agreed to those terms on his own,

said John R. Phillips, an attorney who represented whistle-blowers in the case.

" The $250 million was a total sellout by Scully, who totally negotiated it

behind Justice's back, " Phillips said.

It also was handled in a way that protected the company from a full review of

its cost reports and the triple- damage civil fines that can be imposed in fraud

cases, he said.

Sen. Charles Grassley, R-Iowa, asked Justice in October 2002 if that deal was

" too lenient. "

Justice delayed the settlement until June 2003.

HCA, the nation's biggest for-profit hospital company, eventually paid that $250

million, plus $631 million in civil penalties and damages and $17.5 million to

states.

Scully's ethics agreement did not require him to officially avoid cases

involving HCA. But Scully said he steered clear.

" I recused myself from everything involving HCA-specific issues or policy and

was not involved in any way, shape or form, " Scully said. " Every time anything

came up (regarding) HCA, I left it to my deputies. "

But Grassley in a June 25, 2002, letter to a Justice Department lawyer said

comments by Scully " have given me great concern that there is an active, ongoing

effort underway to change or modify enforcement (on Medicare fraud) policy that

in my view could significantly undermine the (law). "

Scully has since left the administration for consulting jobs with a lobbying

firm and an investment company that represent Medicare providers.

Daniel E. Troy

The lawyer who represented major drug companies still fights for causes that

benefit them as chief counsel at the Food and Drug Administration.

Daniel E. Troy was well-known at the FDA before he arrived in summer 2001 to

work as chief counsel, the top legal position in the department.

As a lawyer in private practice, Troy repeatedly sued the FDA, arguing that it

had only limited ability to regulate drug companies. He filed those suits

through the Washington Legal Foundation, a group funded by businesses, including

drug companies. Donors include charitable foundations run by Pfizer Inc.,

Procter & Gamble Co. and Eli Lilly & Co.

Troy also represented Pfizer through his firm, Wiley, Rein & Fielding. Troy said

in an e-mail to a reporter that his Pfizer work was mainly communications and

insurance law, and averaged only 80 hours a year.

At the FDA, Troy still is fighting for causes that benefit drug companies.

It's unclear whether any of pharmaceutical firms responded to his December

request for lawsuits the FDA might get involved in.

By the time Troy made that offer, he had already intervened in three

drug-company cases as FDA chief counsel. One involved Pfizer.

In court briefs, the FDA argued that it determines which warnings a drug company

must give consumers. Lawsuits filed in state courts arguing that drug-company

warnings are inadequate therefore were invalid, the FDA says. One of the cases

Troy challenged involves thousands of consumers who say they were harmed by

painful withdrawal from an antidepressant.

Lawsuits accusing drug companies of telling consumers too little about side

effects constitute the largest category of cases against drug companies, law

professor O'Reilly said.

If Troy's legal position prevails, O'Reilly said, it would be catastrophic for

consumers hurt by drugs. He said it would bar cases like the one filed against

the makers of fen-phen, the combination of diet medications tied to heart

problems. The makers of those drugs are settling with consumers for $14 billion.

That case predates Troy's policy.

Troy, who declined to be interviewed, said in a written statement that the FDA

is intervening in the lawsuits to protect " the safety, effectiveness and

availability of important medical products. "

He said that would be " adversely affected if judges and juries acting under

state law had the power to substitute their judgment for the expert

determinations made by FDA scientists. "

Clinton's Justice Department, he added, took the same legal position, arguing

that federal law pre-empts state law.

But prior to Troy, professor O'Reilly and one FDA official said, the government

got involved only when a judge asked. Troy, in contrast, is seeking cases in

which to intervene.

And the FDA now is staking a new legal claim, experts say: that its authority to

determine drug labeling always trumps any claims made in state court.

The FDA is " taking sides in private litigation, " said Thomas McGarity, a

University of Texas Law School professor and president of the Center for

Progressive Regulation, which supports government regulation on health and

safety issues.

The FDA asks drug-company attorneys to alert the agency to cases because

otherwise " our rules might be undermined by contrary state findings " the agency

is unaware of, said Peter Pitts, an FDA spokesman.

He added: " For people to infer that (FDA) decisions are made with anything but

the public health as our focus is untrue, unfair and very ill-considered. "

FDA officials also say they want to discourage frivolous lawsuits, which drive

up costs.

A former FDA chief counsel in the Nixon administration, Peter Barton Hutt, said

he supported the FDA's legal position but added, " I probably wouldn't be out

there encouraging " lawsuits.

Troy oversees other FDA changes that provoked accusations that he is siding with

drug companies.

In October 2001, the Health and Human Services Department gave Troy's office

final approval over warnings telling companies they could be in violation of FDA

rules. Those had previously been sent out by the FDA's drug-marketing division

and district offices.

After that change, the number of warnings of questionable claims by

pharmaceutical companies quickly dropped from an average of seven a month to

two.

FDA spokesman Pitts said fewer letters were sent because the process was

centralized.

" If you torture statistics long enough, " Pitts said, " they confess to anything. "

Others see this as dangerous to the public.

" This ... may be a welcome development for the drug industry, but it poses

serious dangers to public health, " Rep. Henry Waxman of California, the top

Democrat on the House Committee on Government Reform, said in an Oct. 1, 2002,

letter to HHS Secretary Tommy Thompson.

Waxman said the bad policy decision was " exacerbated by the appointment of

Daniel Troy. "

The investigative arm of Congress, the General Accounting Office, in October

2002 also found that, under the new system, warning notices " have taken so long

that misleading advertisements may have completed their broadcast life cycle

before FDA issued the letters. "

Waxman described the delays as " a development that benefits the powerful

pharmaceutical industry at the expense of consumers. "

FOOD SAFETY

Charles Lambert

As a USDA official, the former lobbyist for the meat industry who opposed

labeling told a hearing that mad cow disease was not a threat.

Mad cow disease had yet to surface in the United States last June when a U.S.

Department of Agriculture official - a meat-industry lobbyist only eight months

earlier - bet his job on the promise that the ailment couldn't sneak into the

country through imports.

Congress had just passed a law requiring meat labels to state which country a

cow lived in before slaughter. Food safety groups say those labels could, among

other things, help consumers avoid buying beef from countries with mad cow

disease.

The USDA opposed such labeling. The person making the agency's case, Deputy

Undersecretary Charles Lambert, knew the arguments against such labels. He'd

made them as a lobbyist for the National Cattlemen's Beef Association.

Lambert spent 15 years at the Cattlemen's Association working in Denver before

coming to Washington, D.C., where he worked as lobbyist and chief economist. He

left in December 2002 to join the USDA as undersecretary for marketing and

regulatory programs.

When asked about mad cow and the labels, Lambert said mad cow disease wasn't a

threat.

" Is there a possibility that it could get through? " Rep. Joe Baca, a California

Democrat, asked Lambert at a hearing last June.

Lambert answered, " No, sir. "

" None at all? " Baca asked.

" No, " Lambert replied.

" You would bet your life on it - your job on it, right? "

Lambert answered, " Yes, sir. "

The disease was discovered in the U.S. six months later - apparently brought

here by a cow from Canada.

Lambert now says, " I overstated my case. "

More than a dozen other high-ranking USDA officials appointed under Bush also

have ties to the meat industry.

" Whether it's intentional or not, USDA gives the impression of being a wholly

owned subsidiary of America's cattlemen, " said Carol Tucker Foreman, director of

the Consumer Federation of America's Food Policy Institute. She served as a USDA

assistant secretary in the Carter White House. " Their interests rather than the

public interests predominate in USDA policy. "

When he came to the USDA, Lambert signed an agreement stating that in his first

year he would " not participate personally and substantially in any particular

matter involving specific parties in which (Cattlemen's) is a party or

represents a party, unless I am authorized to participate. "

During that period he met at least 12 times with current or former members of

Cattlemen's and its affiliates, an office calendar obtained by The Denver Post

shows.

Lambert said that at any meeting where policy was discussed, he acted only as a

facilitator and that another USDA person was present. The calendar shows

meetings where other USDA people were present, although it is not always clear

what was discussed.

The rest of those meetings were at social settings, he said.

" You're not required to sever all personal and past relationships ... when you

come to federal employment, " Lambert said in an interview.

ENVIRONMENT

Jeffrey Holmstead

The EPA official, a lawyer, formerly worked for a firm that represents utility

companies, which are among the biggest air polluters.

When the Environmental Protection Agency issued proposed changes to air

pollution rules Jan. 30, the wording troubled Martha Keating, a scientist with

environmental advocacy group Clear the Air.

" It struck me that I had seen this before, " Keating said.

At least 12 paragraphs were identical to or closely resembled a Sept. 4, 2003,

proposal given to the Bush administration by Latham & Watkins, a law firm that

represents utility companies.

The EPA official overseeing the proposed changes is Jeffrey Holmstead, who until

he joined the EPA in October 2001 had worked as a lawyer at Latham & Watkins.

His clients included a chemical company and a trade group for utility companies.

Power plants are among the biggest air polluters.

Holmstead oversees the EPA division that governs air pollution.

Environmental groups say the rewrite poses a health threat because it slows the

reduction of mercury emissions by as much as 11 years. Those emissions can end

up in water where they contaminate fish. Forty-three states have issued

advisories about fish consumption because of mercury pollution, the U.S. Public

Interest Research Group said.

One effect of the proposal would be that 168 of 236 Western-based plants,

including those in Colorado, would not be required to reduce those emissions at

all, Keating said.

Lobbyists commonly suggest wording for legislation. But even EPA Administrator

Mike Leavitt objects to how this language was lifted.

" To take something from a source without noting it doesn't seem to be the normal

course of business, and it shouldn't have been done, " EPA spokeswoman Cynthia

Bergman said, speaking for Leavitt.

Holmstead declined to comment.

Six Democratic senators are asking for an investigation. Ten attorneys general

and 45 senators - including three Republicans - have asked Leavitt to void the

proposed rule because of undue industry influence.

The inspector general hasn't decided whether to investigate. Bergman said the

final pollution rule is still under development.

LAND USE

J. Steven Griles

The tenure of the veteran energy lobbyist at the Interior Department was labeled

an " ethical quagmire " by the agency's inspector general.

At the U.S. Department of the Interior, which oversees some 507 million acres of

national parks, refuges and rangeland, top officials weigh the competing merits

of resource conservation and development.

Bush named J. Steven Griles, a veteran energy industry lobbyist, as the

department's second-highest official in June 2001.

Griles earned $585,000 a year as a lobbyist, representing an array of oil, gas

and other energy interests. As Interior's deputy secretary, he continues to

receive $284,000 a year for four years to pay him for the value he had created

for the firm by bringing in clients.

Upon entering the government, Griles had pledged to remove himself from

deliberations that affected his former clients.

This year, the department's inspector general called Griles' tenure an " ethical

quagmire. "

" Mr. Griles' lax understanding of his ethics agreement and attendant recusals,

combined with the lax dispensation of ethics advice given to him, resulted in

lax constraint over matters in which the deputy secretary involved himself, " the

inspector general concluded.

That report or a subsequent review by the U.S. Office of Government Ethics found

other issues:

A former business partner of Griles' hosted a party for Griles and top Interior

officials for land and mining.

Also, a former Griles client, Advanced Power Technologies Inc., won some $2

million in no-bid contracts from his department after two people Griles

supervised pressed APTI's case.

And Griles urged the EPA not to press concerns over a plan to open 8 million

acres in Wyoming and Montana to gas drilling by companies including six of his

former clients. The project is proceeding while a task force studies the matter.

The investigations of Griles found no illegalities. Secretary of the Interior

Gale Norton announced that her right-hand man had been " cleared. "

Review of ethics guidelines

Neither the Bush administration nor Congress has called for a systematic review

of government's ethics guidelines.

They should, says Stuart Gilman, president of the Ethics Resource Center, a

nonprofit group in Washington that works with companies and government groups.

" The question is, are we dealing with the problems we're currently confronting

in government? " Gilman said.

Complaints about ethical breaches within government in some cases can be

politically motivated, said Gilman, who also worked in the Office of Government

Ethics under Presidents George H.W. Bush and Clinton.

At the same time, Gilman said, governmental leaders have a responsibility to

eliminate both real and perceived conflicts of interest.

" For government to function, government must have the confidence of people, "

Gilman said. " If people don't believe the government is acting fairly, it

encourages everyone to cheat. "

Denver Post staff writers John Aloysius Farrell and Mike Soraghan and

researchers Tamania Davis, Barbara Hudson and Regina Avila contributed to this

report.

© Copyright 2004 The Denver Post