The Other Drug War:
Big Pharma’s 625 Washington Lobbyists

July 23, 2001
(Executive Summary 

This new Public Citizen report shows how the pharmaceutical industry fought last year, like never before, against the looming threat that Congress and President Clinton would provide senior citizens with drug coverage under Medicare.

Worried that the bulk buying power of Medicare would lead to discounted prices in the lucrative senior citizen market, the drug industry launched an unprecedented blitz of lobbying, campaign contributions, and so-called "issue" ads to help its political allies and attack its enemies.

The bill for that barrage recently became public with the availability of all lobby disclosure reports for the year 2000. Using these lobbying reports, along with data on the industry’s other political spending, "The Other Drug War: Big Pharma’s 625 Washington Lobbyists" shows the following:

·         The drug industry spent $262 million on political influence in the 1999-2000 election cycle: $177 million on lobbying, $65 million on issue ads and $20 million on campaign contributions.

·         The industry hired 625 different lobbyists last year to buttonhole lawmakers – or more than one lobbyist for every member of Congress. Unlike data on contributions and campaign ads, this comprehensive information on lobbying has recently become available (most lobbying details for the second half of 2000 didn’t become available from Congress until May 2001 and no organization has analyzed the data as thoroughly as Public Citizen).

·         The bill for this team of lobbyists in 2000 alone: $92.3 million – a $7.2 million increase over what the industry spent for lobbying in 1999. Brand name drug companies spent $90.0 million, generic drug companies spent $2.3 million.

·         Drug companies took advantage of the revolving door between Congress and other branches of the federal government and the industry. Of the 625 lobbyists employed in 2000, more than half were either former members of Congress (21) or others who previously worked in Congress or in other federal government positions (295).

·         The drug industry spent more (based on available data) on lobbying and other political persuasion than any other industry in 1999-2000.

·         The drug industry lobbyists were well-connected: 33 served as Chief of Staff to members of Congress; 11 others worked for the powerful House Ways and Means Committee, which has jurisdiction over a Medicare drug bill; eight others worked for the key Senate Judiciary Committee, where drug patent law is crafted.

·         In addition, six worked for the Bush I administration; five worked for former House Speaker Newt Gingrich (R-Ga.); four worked for former Senate Judiciary Chairman Orrin Hatch (R-Utah); five worked for current Senate Health, Education, Labor and Pensions Committee Chairman Edward Kennedy (D-Mass.); four worked for former Senate Majority Leader Trent Lott (R-Miss.); and three worked for current Senate Finance Committee Chairman Max Baucus (D-Mont.).

·         The drug industry lobbyists primarily worked against a Medicare prescription drug benefit and bills that might moderate rising drug prices. Public Citizen’s lobbying database shows that drug industry lobbyists worked most on bills pertaining to a Medicare drug benefit, mentioning the issue 2,542 times in last year’s lobby disclosure reports. Pricing issues – which included patent and drug re-importation legislation – were mentioned 2,403 times on disclosure reports.

·         In part, these lobbyists gained access to members of Congress and their staff members, thanks to an aggressive campaign of political contributions ($20 million in the 1999-2000 election cycle) and TV ads ($65 million in 1999-2000) that often supported Republican candidates and attacked Democratic candidates.

·         The industry made $20.1 million in direct contributions to candidates and party committees in the 1999-2000 election cycle, with 59 percent of that coming in huge soft money donations, often of $100,000 or more. Seventy-six percent of all drug industry contributions went to Republicans.

·         In 2001, the drug industry continues to expand its influence. The drug industry contributed $625,000 to the Bush-Cheney inaugural, and campaign contribution reports for the first half of 2001, which are just becoming available, show that the industry has dumped at least $1.4 million in soft money into party committee coffers already this year.

·         The industry also continues to use the revolving door between Capitol Hill and K Street to its advantage. Newly registered drug industry lobbyists in 2001 include former aides to ex-House Speaker Newt Gingrich (R-Ga.), new Senate Finance Committee Chairman Max Baucus (D-Mont.), and new Senate Health, Education, Labor and Pensions Committee Chairman Edward Kennedy (D-Mass.).

Introduction

The drug industry has much to protect in Washington, D.C. – mainly because the industry receives so many favors and privileges from the federal government. The federal government has conferred on the industry monopoly patents and patent extensions, tax credits worth billions of dollars a year, and research subsidies for both the most medically important drugs and also the top-selling ones.

The industry responded to this coddling by raising the average prescription price 10 percent last year.1

Not surprisingly, the drug industry has come under attack by senior citizen groups and large employers who have felt the pinch of rising drug prices. These groups want drug prices and industry practices – such as patent extensions that keep lower-priced generic drugs off the market – reined in.

In turn, the drug industry has worked hard to fight off any proposals that might moderate its prices and profits. That fight was carried out, in large part, by an army of well-connected lobbyists in Washington, D.C.

And it was successful – the industry’s tax breaks, research subsidies, monopoly patents, prices and profits remain unscathed.

The full bill for that barrage recently became public with the availability of all lobby disclosure reports for the year 2000 (lobby disclosure reports typically lag four-to-five months behind the year’s end).

The bottom line – which is detailed in this report – is staggering. The drug industry spent $262 million on political persuasion in 1999-2000. Based on available data that appears to be more than any other industry.

Who Didn’t Lobby for the Drug Industry?

The drug industry was very good for Washington’s "K Street" economy last year. One hundred and thirty-four firms were paid to lobby by the drug industry; and 55 different lobbying firms earned at least $100,000 from the drug industry in 2000. (Public Citizen defines the drug industry as pharmaceutical and biotechnology companies and their trade associations; the two share increasingly similar political agendas on research, intellectual property, drug benefit and pricing issues.)

The industry employed 625 different lobbyists in all and spent $92.3 million on lobbying in 2000 – a $16.8 million, or 22 percent, increase since 1997. (See Table 1 and Appendix A)

Table 1: Drug Industry Lobbying, 1997-2000

Source: Lobby Disclosure reports filed with the Secretary of the Senate and Clerk of the House pursuant to the Lobby Disclosure Act of 1995.

The overwhelming majority of these lobbyists worked for brand name drug companies (and their associations) last year, as opposed to generic drug companies. The brand name companies accounted for $90.0 million of the lobbying expenditures, while the generic companies reported lobbying expenses of just $2.3 million. (See Appendix B for a complete list of all 625 lobbyists.) This lobbying binge helped the drug industry top all others in political spending for 1999-2000. (See Table 2)

Table 2: Industry Comparison of Political Spending 1999-2000

Source: Lobbying totals are estimates (except for the drug industry) based on lobby disclosure data available from TRAC, Inc.  Year 2000 lobby total was calculated by doubling total for the first six months of 2000 (second-half reports not available yet through TRAC, Inc.). Campaign contributions based on data reported by Center for Responsive Politics

The army of lobbyists employed by the industry in 2000 is larger than the 297 lobbyists Public Citizen identified in its "Addicting Congress" report last year.2 In large part that’s because "Addicting Congress" focused only on lobbyists who worked on pricing and prescription drug benefit issues. This year, Public Citizen expanded its focus to include intellectual property and patent issues (which ultimately concern prices) and legislative proposals that dealt with re-importing drugs from countries where the prices are cheaper than in the U.S.

The drug industry acquired the services of the top firms in Washington D.C. in 2000. (See Appendix C) In the process, the industry hired 21 former members of Congress. (See Table 3) The former members were almost evenly divided by party affiliation, with 11 Republicans and 10 Democrats. They included former Senators Howard Baker (R-Tenn.), Dan Coats (R-Ind.) and Dennis DeConcini (D-Ariz.) and Representatives Bill Paxon (R-N.Y.), Vic Fazio (D-Calif.) and Bob Livingston (R-La.).

Table 3: Former Members of Congress Lobbying for Drug Industry, 2000

Source: Lobby Disclosure reports filed with the Secretary of the Senate and Clerk of the House pursuant to the Lobby Disclosure Act of 1995.

The industry also hired 19 of the lobbying firms that made Fortune magazine’s list of the 20 most influential firms in Washington D.C.3 These firms – and their 460 lobbyists – were brought in to supplement the 165 corporate lobbyists who worked in-house for drug companies and their two major trade associations – Pharmaceutical Research and Manufacturers of America (PhRMA) and the Biotechnology Industry Organization (BIO). All the drug companies and groups that spent more than $1 million on lobbying in 2000 are shown in Table 4, along with the number of lobbyists they employed.

Table 4: Lobbying Expenditures and Number of Lobbyists,
For Drug Companies and Trade Groups that Spent at Least $1 Million in 2000

Source: Lobby Disclosure reports filed with the Secretary of the Senate and Clerk of the House pursuant to the Lobby Disclosure Act of 1995. Note: The number of lobbyists in the second column does not equal 625 because not all companies that lobbied are shown in the table; in addition, some lobbyists work for more than one company.

Most Popular Outside Lobbyists

The drug industry employed some Washington lobbying stalwarts, such as Thomas Boggs (of Patton Boggs) and Harry McPherson (of Verner, Liipfert, Bernhard, McPherson & Hand). It also hired younger rainmakers, such as Deborah Steelman (of Steelman Health Strategies) and Anthony Podesta (the brother of President Clinton’s former chief of staff). (See Table 5)

Table 5: Most Popular Drug Industry Lobbyists in 2000
and Their Revolving Door Connections

Source: Lobby Disclosure reports filed with the Secretary of the Senate and Clerk of the House pursuant to the Lobby Disclosure Act of 1995.

The Key Firms and Players

Table 6 below shows the 10 lobbying firms that earned the most from the drug industry in 2000. See Appendix E for a brief description of the firms and their lobbyists.

Table 6: Top Outside Lobbying Firms with Biggest Clients, 2000

Source: Lobby Disclosure reports filed with the Secretary of the Senate and Clerk of the House pursuant to the Lobby Disclosure Act of 1995.

The Key Issues

Lobbyists employed by the drug industry worked on a variety of issues, ranging from tax credits to fetal tissue research. But above all they worked on issues that related to drug benefits for senior citizens and drug pricing.

Public Citizen’s lobbying database (see Appendix E for a detailed explanation of methodology) revealed that lobbyists reported working most on Medicare prescription drug benefit issues in 2000. Altogether, lobbyists mentioned working on Medicare drug benefit legislation a total of 2,542 times in last year’s lobby disclosure reports. Second in popularity were bills that pertained to drug prices. Lobbyists reported working on pricing issues a total of 2,403 times in last year’s reports. (Public Citizen included patent and re-importation legislation in the "pricing" category.) (See Table 7)

Other Medicare issues – such as regulations and reimbursement proposals – were a distant third with 771 mentions on lobbying reports. Legislation concerning a patients’ bill of rights finished fourth with 431 total mentions.

Table 7: Issues Most Lobbied on
By Largest Drug Companies and Trade Groups, 2000

Source: Public Citizen analysis of Lobby Disclosure reports filed with the Secretary of the Senate and Clerk of the House pursuant to the Lobby Disclosure Act of 1995.
Note: The issues tally refers to the number of entries on lobbying forms for a company's in-house lobbying and outside lobbying firms. One entry is equivalent to one lobbyist lobbying on a bill or amendment that Public Citizen has identified as primarily concerning Medicare drug benefit, pricing issues, patent issues, etc. 

Below the Radar: Citizens for Better Medicare

From an inconspicuous Washington, D.C. office – not even listed in the building’s directory – an innocuous-sounding group launched during the last election cycle one of the most expensive political advertising campaigns in American history.

In 1999 and 2000, Citizens for Better Medicare (CBM) spent an estimated $65 million on so-called "issue" ads.4 Some of these thinly disguised "issue" ads supported Republican candidates and attacked Democratic candidates. (A Brigham Young University study of key House and Senate races said: "Although claiming not to engage in election-related activity, Citizens for Better Medicare ran a vast majority of ads (80 percent) that clearly opposed or supported a candidate…")5

What few of the Americans who saw CBM ads realized was that the group was created by the industry, funded by the industry and staffed by industry veterans. As a study by the Annenberg Public Policy Center at the University of Pennsylvania stated succinctly: "‘Citizens for Better Medicare’ is not a grass-roots generated group of citizens but an arm of the Pharmaceutical Research and Manufacturers of America."6

To grasp how prominent CBM was in the 2000 election, consider that in the eight months leading up to election day, CBM ran 27 percent of all issue ads broadcast in the country by non-party groups – by far the most of any independent non-party group. (The AFL-CIO was a distant second with 15 percent of all issue ads.)7

CBM dominated the airwave discussion about health care, which was the most heavily advertised issue in the election. And it may have played a part in protecting Republicans who were vulnerable on the issue because they did not support prescription drug coverage under Medicare.

The Annenberg Public Policy Center studied issue advertising in the election and concluded this about issue ads in the nation’s 75 largest TV markets: "About two-third of the ads about prescription drug coverage airing after Super Tuesday [March 7] opposed prescription drug coverage under Medicare. This may have tipped the Medicare discussion in favor of Bush."8

Moreover, academic studies reported that CBM appeared to be most active in key congressional races, as it tried to help Republicans retain a majority in the House.

According to the Brennan Center for Justice at New York University, CBM spent more than any non-party group on U.S. House races from June 1, 2000 to November 7, 2000 – and during one crucial week, October 17-24, CBM spent $1.9 million on key House races.9

In addition to Citizens for Better Medicare, the drug industry also funneled $10 million to the U.S. Chamber of Commerce so it could run TV ads on the industry’s behalf. The Wall Street Journal reported that Chamber ads were "underwritten substantially by drug companies" because some industry officials felt the Chamber had more credibility with voters and therefore, greater freedom to run attack ads.10

The ads seemed to contribute to the Republican margin of victory in several key races.

·         In Pennsylvania’s Fourth District contest for an open seat, Republican Melissa Hart defeated Democrat Terry Van Horne, although the district itself voted solidly for Al Gore in the presidential contest. In defeating Van Horne 59 percent to 41 percent, Hart benefited from $173,537 in TV ads by CBM and $256,663 by the Chamber of Commerce. These two campaigns gave Hart an approximately 20-1 advantage in independent group TV ads. This helped swell Hart’s large advantage in out-of-state soft money.11

·         In Kentucky’s Sixth District, Republican Ernie Fletcher defeated former three-term Democratic congressman Scott Baesler by nearly 50,000 votes – a much wider margin than political experts had expected. CBM spent $388,798 on TV "issue ads" favoring Fletcher, supplemented by $281,000 in similar Business Roundtable ads concerning a prescription drug benefit for seniors, and $221,476 in Chamber of Commerce ads. These were the largest media expenditures made by pro-Fletcher independent groups during the election. According to a report by the Center for the Study of Elections and Democracy, Fletcher’s wide margin of victory was partly due to "more significant help from [outside] groups."12

It appears that Citizens for Better Medicare focused on key House races because it was coordinating its expenditures with the Republican National Committee and the campaign of George W. Bush.

In October 2000, CBM had to file an expense report with the IRS under the new law governing 527 groups. CBM’s IRS report revealed that 98 percent of its expenditures from July through September 2000 went to one company that produced campaign ads for the RNC and Bush as well.13

That company, National Media Inc., is headed by Republican ad guru Alex Castellanos. Known for his attack ads, Castellanos also made campaign ads for Bush and the Republican National Committee last year. The fact that Castellanos’ three clients had similar objectives raises the question whether Bush, the RNC and the drug industry were coordinating their campaigns. The curious threesome of clients also raises the question of whether CBM is truly an independent group, or a surrogate primarily benefiting Republican candidates.14

Soaring Campaign Contributions Benefit GOP

In addition to increased lobbying and issue advertising, drug companies also dramatically boosted their campaign contributions in the last election cycle. Drug company contributions totaled $20.1 million in 1999-2000 – which was more than double what the industry contributed in the last presidential cycle. (See Table 8) That figure includes both soft money (unlimited contributions to party committees from corporations, unions and individuals) and hard money (limited contributions to candidates, PACs and parties from individuals and political action committees). While the industry’s $20.1 million in contributions seems small compared to its lobbying expenditures, the contributions are nonetheless critical because the money goes directly to politicians (unlike the lobbying expenditures) and it improves access for lobbyists.

As the drug industry’s campaign cash reached new heights, so did the share of those contributions flowing to Republicans, who controlled both the House and Senate for the last six years until Sen. Jim Jeffords (I-Vt.) quit the GOP this spring.  

Table 8: Drug Industry Total Campaign Contributions (1993-2000)

Source: Center for Responsive Politics data (www.opensecrets.org) analyzed by Public Citizen.

Killing Us Softly

Much of the drug industry’s hike in campaign contributions can be traced to a huge surge in soft money, which has become the contribution of choice for drug companies. Soft money accounted for 59 percent of all industry donations in the 1999-2000 cycle. This shift to soft money is easy to explain – drug company executives know soft money enables them to maximize their influence over congressional and executive branch leaders who help raise party money and determine the legislative and executive branch agenda.

In the 2000 election cycle, drug companies contributed far more soft money than in the past, with a growing share going to the Republicans. For instance:

·         In the 2000 election cycle, the industry contributed $11.8 million in soft money. (See Table 9 and Figure 1) That was almost three times more soft money than drug companies contributed in the 1996 cycle and seven times more than the industry’s soft money contributions in 1993-1994. 

Table 9: Drug Industry Soft Money Contributions (1993-2000)

Source: Center for Responsive Politics data (www.opensecrets.org) analyzed by Public Citizen.

Figure 1

Source: Center for Responsive Politics data (www.opensecrets.org) analyzed by Public Citizen.

·         Drug industry soft money also has gone increasingly to Republicans. For instance, in 1996, Republicans received 72 percent of the industry’s soft money. In the 2000 cycle, the GOP’s share climbed to a whopping 80 percent. This lop-sided distribution of soft money helps explain the overwhelmingly partisan vote last summer for the House Republican leadership’s prescription drug bill, which the drug companies favored but most health and consumer groups opposed.

Hard Cash

Drug industry hard money contributions (these are contributions from individuals, now limited to $1,000 per election, and political action committees, now limited to $5,000 per election) also reflected the pro-Republican party tilt of the drug industry. (See Table 10)

Table 10: Drug Industry Hard Money Contributions (1993-2000)

Source: Center for Responsive Politics data (www.opensecrets.org) analyzed by Public Citizen.

Overall, Republican candidates received more than two-thirds (70 percent) of all 1999-2000 contributions. While strongly biased toward Republicans, this split is not as extreme as the distribution of drug industry soft money to Republicans (80 percent in 1999-2000). That’s because the drug industry has friends among individual Democratic office holders, such as Sen. Joe Lieberman (D-Conn.), Sen. Chris Dodd (D-Conn.) and Rep. Cal Dooley (D-Calif.). Dooley was especially aggressive in opposing a popular Democratic bill (H.R. 664) that would have allowed senior citizens to purchase drugs at the same low price that drug makers charge to federal agencies such as the veterans health care system. In return, the drug industry ran TV ads praising Dooley for his position.

Still, the top recipients of drug industry hard money in the last election were Republicans: Sen. Orrin Hatch of Utah ($278,024), who was the chairman of the Judiciary Committee, which oversees drug patent laws, President George W. Bush ($267,633) and Rep. Bill Thomas of California ($109,000), Chairman of the House Ways and Means Committee, which has jurisdiction over the Medicare program.

The Future Looks Bright

It’s no wonder Fortune magazine recently said about the drug industry, "There’s Still Gold in Them Thar Pills."15

The forecast for the industry looks good – particularly in Washington, D.C. One ex-drug company executive, Mitch Daniels (Eli Lilly), runs the Bush administration’s Office of Management and Budget. Another former pharmaceutical executive, Donald Rumsfeld (Searle) sits in Bush’s cabinet. A one-time drug industry lobbyist, Nick Calio, is Bush’s chief liaison to Congress.

Still, there is much work to be done. Most Americans believe Medicare should offer an outpatient prescription drug benefit. So the industry that employed 625 lobbyists in 2000 is adding more horses to its stable in 2001.

New lobbyist registrations this year show some influential additions to the Big Pharma lobbying team. For example, former Newt Gingrich aide Missy Jenkins has gone to work for PhRMA, as has Ed Buckham, former chief of staff for House Majority Whip Tom Delay (R-Texas). Nick Littlefield, former staff director for Sen. Edward Kennedy (D-Mass.) on the Senate Health, Education, Labor and Pensions Committee, is now lobbying for Amgen. Eli Lilly now employs Anne Urban, a former aide to Senators Bob Kerrey (D-Neb.) and Joe Lieberman (D-Conn.). Steve Richetti, who was deputy chief of staff for President Clinton, has set up his own lobbying firm and already has landed Eli Lilly, Novartis and Pharmacia as clients.

The industry has also tried to solidify its standing with the executive branch and Congress by continuing its generous contributions to federal lawmakers. The industry started 2001 by giving $625,000 to the Bush-Cheney inaugural committee. By the end of April, the industry had pumped $1.2 million more in soft money into party committees ($1.1 million to Republicans) – and that’s an incomplete figure because not all party committee reports were available. Drug companies have contributed another $473,886 in hard money (69 percent to Republicans) to candidates and committees in 2001.

And powerful members of Congress continue to invoke the drug industry’s favorite arguments against legislative restraints on profits, patents or any other aspect of its lightly taxed, highly subsidized business.