Dems ready for revenge on drug companies

[Guest guest]

By: Samuel Loewenberg

February 14, 2008 07:23 AM EST

 

Once Democrats seized the committee chairmanships on Capitol Hill, the

big drug companies sharply aligned with Republicans knew a period of

reckoning was coming.

 

Now it has begun.

 

The Democrats' investigations range from the drug-approval process to

television advertising to the bilking of Medicare. And their targets

include the world's largest drug makers — and the Food and Drug

Administration itself.

 

" You know you're hitting a nerve when the halls are flooded with their

lobbyists, " Rep. Bart Stupak (D-Mich.), chairman of the House

Oversight and Investigations Subcommittee of the Energy and Commerce

Committee, said as he prepared Tuesday for his fifth hearing on the

drug approval process. " The whole safety net designed to protect the

American consumer has been shredded. "

 

Since the Democrats took power, the subcommittee has sent out 39

requests for information from drug companies and the agencies that

oversee them, and has also issued two rounds of subpoenas.

 

Drug industry lobbyists are not surprised by the scrutiny.

 

" We generally expected that when the Democrats regained control of

Congress, that they would closely scrutinize some of the industries

that they believed had been particularly favored by the Republicans

and unreasonably benefited in certain ways, " said Bret Koplow, a

pharmaceutical industry lobbyist at Patton Boggs.

 

 

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" There was the perception that certain industries, including

pharmaceuticals, were getting away with a lot, " he said.

 

The broad nature of the inquiries, though, has the drug industry

nervous. As another industry lobbyist put it: " Once they start asking

for things, you don't know where it will go. "

 

Faced with a seemingly daily barrage of headlines about lawsuits and

investigations into the drug industry, the pharmaceutical

manufacturers' trade association has adopted a conciliatory stance.

 

" I don't fault my former colleagues for looking into these cases. I'd

be looking at them, too, if I was chairman, because they are such

highly publicized cases, " said former Rep. Billy Tauzin (R-La.), who

in 2004 stepped down as chairman of the House Commerce Committee to

head the Pharmaceutical Research and Manufacturers of America.

 

" We are not only anxious but anxious and willing to make some changes

to these real or perceived problems. "

 

Despite its conciliatory stance, the drug industry lobbying group

maintains one of the most potent posses of hired guns in Washington.

 

PhRMA has 36 lobbying firms on retainer and spent more than $10

million on legislative advocacy last year, according to the Center for

Responsive Politics.

 

One lobbyist for a company under investigation, who spoke on the

condition of anonymity, attributed the barrage of investigations to

" pent-up hatred by the Democrats for the long-standing bankrolling of

the Republicans by the pharmaceutical industry. "

 

The Democrats dismiss the idea they are acting out of spite, as does

their former colleague Tauzin, and say they are trying to protect the

public interest.

 

Still, there is no doubt that the industry has given overwhelmingly to

Republicans over the years: Over two-thirds of the more than $90

million the drug industry has contributed to Congress since 1994 went

to Republicans, according to the campaign finance watchdog group.

 

And the pressure is not just coming from Democrats.

 

The House Commerce Committee has had bipartisan cooperation in its

investigations.

 

And in the Senate Finance Committee, the ranking Republican, Sen.

Chuck Grassley of Iowa, has been leading the charge, continuing

investigations that began when he was chairman.

 

Amid all of the scrutiny, the industry is seeking allies where it can

find them.

 

Industry lobbyists said they are looking to members in New Jersey and

New York with substantial pharmaceutical companies in their districts

to defend them, at least behind the scenes.

 

Among the hoped-for allies, according industry lobbyists, are

Democratic Reps. Edolphus Towns of New York and Frank Pallone Jr. of

New Jersey and Republican Reps. Joe Barton of Texas, Mike Ferguson of

New Jersey and Michael Burgess of Texas.

 

 

 

 

But finding allies may be difficult in an industry as embattled as

pharmaceuticals, which even the Republican presidential front-runner,

Arizona Sen. John McCain, recently referred to as " the bad guys. "

 

" Sometimes the political downside for coming to an industry's defense

is too strong for even the most ardent supporter, " noted a senior GOP

staffer for an oversight committee.

 

" You don't want to be seen as obstinate, " the aide said. " You don't

want to be the one to catch their attention. "

 

Tuesday's House oversight hearing focused on the fraud scandal

surrounding the drug Ketek, an antibiotic that in some cases was found

to cause liver damage.

 

After the clinical trials conducted by the drug's manufacturer,

Sanofi-Aventis, were found to have been fraudulent, Congress started

asking who knew what — and when.

 

" There were sirens, red flags and bull horns, but it looks like the

company and the FDA kept earplugs and blinders on, " said Grassley, who

testified before the committee about his investigation into Ketek when

he was chairman of the Senate Finance Committee. " I smelled a

coverup. "

 

The House Commerce Committee chairman, Rep. John Dingell (D-Mich.),

was particularly incensed about evidence that the FDA knew about the

fraud and tried to hide it — particularly from his committee.

 

In his opening statement, Dingell said the committee had " repeatedly

been stonewalled, " and the administration had engaged in " bad faith

and obstruction. "

 

Paul Herbert Chew, president of research and development at

Sanofi-Aventis, told the committee that the company has since revised

its drug research procedures.

 

The company has " undertaken a comprehensive review of the lessons

learned, " Chew said.

 

" In retrospect, Aventis could have been more proactive in bringing the

issues " to the FDA's attention.

 

Officials and lobbyists for the various drug companies insist they are

being fully open with congressional investigators. But Stupak said

most of the companies are far from cooperative.

 

They are playing " What nut is the pea under? " he said. " They're always

moving it around. You have to try to figure it out. It's a constant

dance. "

 

One of the committee's most high-profile investigations has focused on

one of the industry's cash cows, an anti-cholesterol drug, Vytorin,

which last month was revealed to perform no better than a cheap

generic — a fact that committee investigators say the companies

covered up for more than 18 months.

 

Meanwhile, the investigators say, the drug was being heavily marketed,

earning the Merck/Schering-Plough joint venture an estimated $5

billion last year.

 

" It was obvious there was a coverup going on, " Stupak said, noting the

committee's investigation forced the revelation of the data.

 

In the wake of the revelations, Schering-Plough's stock dropped by 25

percent and Merck's, by 15 percent, according to news reports.

 

Stupak said that affecting the companies' share price was not a goal,

but he does not regret it. " If it does affect their stock price after

the stuff becomes public, I guess that the only pressure point the

American public has, " he said.

 

His subcommittee is also looking into whether company executives made

millions of dollars by selling off stock options ahead of the release

of the results.

 

The drug's makers said the study was time-consuming and took longer

than they had anticipated.

 

Among the troubling findings were " biological implausibilities, " that

made it difficult to interpret the data, said Skip Irvine, a spokesman

for the Merck/Schering-Plough joint venture that produced the drug.

 

" We have received a series of letters from the committee. We are

cooperating fully with the committee, and we stand behind our

products, as we have done nothing wrong, " Schering-Plough said in a

written statement.

 

The two drug companies have also revealed they are facing more than 50

class action lawsuits alleging fraud, which they say they intend to

fight.

 

The companies have taken out a national " patient education " campaign

in local and national newspapers trying to reassure consumers.

 

At the same time, they " temporarily " suspended its television and

Internet ad campaign.

 

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