A Look at Pharmaceutical Industry Lobbying

from interfaith center on corporate responsiability

Whose Interests are PhRMA Protecting? A Look at Pharmaceutical Industry Lobbying

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Special Web-only Feature

The pharmaceutical industry, often considered an untouchable ally of Republican leadership, has suffered from a recent bout of backlash. Republicans have partnered with Democrats to examine the lobbying and advertising activities of U.S. drug companies; this appraisal followed a heavy-handed industry campaign against Congress’ Emerson-Gutknecht bill (a bill requiring that the FDA implement a system of prescription drug reimportation). The Pharmaceutical Research and Manufacturers of America (PhRMA) lined up with a far-right Christian advocacy group to fight the legislation as an abortion-rights issue. This move angered traditional pro-life allies, and now shareholders are asking: whose interests are PhRMA protecting?

The pharmaceutical industry has long been a first-rate interest group. PhRMA employs one of the largest lobbying staffs on K Street, makes hefty political contributions, and funds extensive issue advertising campaigns; and the trend has been increasingly partisan. In 1990, for example, Bristol-Myers Squibb Company donated $150, 260 to political candidates, with 31% reaching Democrats and 69% reaching Republicans. By 2002, Bristol-Myers Squibb was donating $1,590,813 to politicians, and only 16% went to Democrats (opensecrets.org).

PhRMA’s political power has set the stage for industry-wide business strategies. Political connections have helped drug companies to battle price restraints, stretch patent guidelines, and avoid litigation. PhRMA’s actions have not been without consequence. A 2003 poll conducted by Advanstar Communications found that only “13% of people regularly believe a pharmaceutical company statement,” and 57% feel that pharmaceutical companies should be subject to more government regulation.

PhRMA’s tactics have alienated consumers and regulators. Negative press and uncompromising policies are threatening to marginalize drug companies in the public sphere. Corporate resources have gone towards lobbying, aggressive marketing and legal fees; these same resources, poured into socially responsible actions, could help stop the reputational hemorrhaging and protect shareholder value.

The industry has tried to rebound and appear in touch with consumer needs. PhRMA publicly supports the expansion of health care, especially Medicare coverage for the elderly. President Alan F. Holmer called on Congress to pass “meaningful prescription drug coverage.” The group’s understanding of “meaningful” coverage, however, is limited. According to PhRMA, prescription drug coverage should be provided by the private sector, with no room for the large purchasing blocks that the government uses to negotiate better consumer deals.

When a new Medicare drug benefit emerged under Bush, PhRMA spokeswoman Jackie Cottrell admitted that PhRMA provided an “unrestricted educational grant” to the United Seniors Association. The USA is a strong partisan organization of retired GOP staffers and corporate executives, including Craig Shirley, whose P.R. firm represents the Republican National Committee. The PhRMA money financed USA’s $16 million issue ad campaign. While House and Senate versions of the bill differ, both include the private sector partnerships essential to PhRMA’s strategy.

This heavy-handedness has upset more than just the usual opponents. Despite the industry’s opposition, the new reimportation bill passed in the House, 243-186.

The bill would allow U.S.-exported drugs to reenter the country at foreign, government-controlled prices. American drug companies, resistant to a national drug -pricing program, would be faced with imported price controls. To avoid this embarrassing loss, the industry turned to the Traditional Values Coaliton (TVC), a Christian advocacy group, to fight the legislation.

TVC is known in Washington as “Rent-A-God.” PhRMA used the group as a front for its own operation, not wanting to attach its name to an unpopular pro-life position. As Alan Murray of the Wall Street Journal stated, “(PhRMA) has euphemistically named organizations like ‘Citizens for Better Medicare’ and ‘United Seniors’ to launder its message. Little wonder people ask: What are these guys trying to hide?”

PhRMA did not publicly lend support to the TVC campaign; it did, however, privately lend cash and lobbying staff. Andrea Sheldon Lafferty, TVC’s executive director, distributed a letter to lawmakers stating that the bill would provide greater access to mifepristone, an abortion-inducing drug, and would “effectively repeal” a law that prohibits the postal sale of abortion products (kaisernetwork.org). Computer records revealed that Tony Rudy, a lobbyist for the pharmaceutical industry, wrote the letter’s initial draft.

According to the Washington Post, Sheldon Lafferty also distributed a memo linking reimportation to mifepristone availability. The memo was first drafted by PhRMA’s senior vice president, Bruce Kuhlik.

Lawmakers believe that the pharmaceutical industry managed TVC’s direct-mail campaign as well. The mailings contained abortion drug warnings and pictured newborns with captions reading, “do not miss an opportunity to protect the sanctity of life.” Rudy has been linked to the mailing’s funds, and Rep. Dan Burton (R-Ind.) commented, “I am confident, in fact I am dead sure, that the Traditional Values Coalition did not have the money to mail this kind of trash out to congressional districts all across the country.”

Pro-life Republicans were infuriated at the industry’s link between drug access and abortion. Principled religious advocacy groups, including Catholic organizations like the National Catholic Social Justice Lobby (NETWORK), supported reimportation regardless of TVC’s clumsy campaign. House Republicans circulated a paper that challenged TVC’s claim, explaining that reimported drugs would have to adhere to FDA guidelines (mifepristone is only available with a doctor’s prescription). Enraged by the sham campaign, the Values Action Team, a coalition of conservative lawmakers and outside groups, expelled TVC from its organization.

In the end, money, and not abortion, was the deciding factor in the reimportation vote. According to Capital Eye, lawmakers who voted against the bill (in the industry’s favor) raised an average of $39, 813 in individual and PAC contributions from pharmaceutical companies between 1989 and 2002. Members who voted for the bill raised an average of $13, 917. In the 2002 election cycle alone, members against the bill averaged $14, 958 in pharmaceutical contributions, and those for averaged $4, 058.

PhRMA’s reimportation campaign demonstrated a fundamental misunderstanding in how political capital should be raised and spent. The industry targeted its own allies, and again tinged its reputation. It is time for shareholders to reign in PhRMA, refocus corporate resources, and craft solutions that both corporate management and consumers can live with.

Article written by Ilana Zimmerman, ICCR intern