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Pharma Recalculates

Drug companies reverse course and boost donations to Democrats

by Glenn Hess
September 22, 2008 | APPEARED IN VOLUME 86, ISSUE 38

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Credit: iStock/C&EN
Big pharma is investing in both the Obama and McCain campaigns.
Credit: iStock/C&EN
Big pharma is investing in both the Obama and McCain campaigns.

AFTER CONTRIBUTING almost $8 million to the campaign coffers of Republican candidates before the 2006 mid-term congressional elections—Democrats received less than half that amount—big pharma is shifting its political spending. A review of campaign contributions reveals that drugmakers have dramatically increased donations to Democrats since the party won control of both the House and Senate two years ago. The trend has become even more pronounced in the 2008 presidential contest, where most drug company money is going to the Democratic nominee, Sen. Barack Obama of Illinois.

The pharmaceutical industry, which had become increasingly aligned with the Republican Party, has donated about $5.1 million to GOP candidates running for federal office and nearly $4.7 million to Democrats so far in the 2008 election cycle, a 52% to 48% split, according to the Center for Responsive Politics (CRP), a nonpartisan group that tracks money in politics. In each of the six previous national elections since 1996, the drug industry never gave less than 69% of its total campaign contributions to Republican candidates. The disparity peaked in 2002, when pharmaceutical manufacturers favored Republicans by a four-to-one margin over Democrats.

Political money flows toward power, notes William S. Comanor, a professor of health services at the University of California, Los Angeles, and also a professor of economics at UC Santa Barbara. "It does seem that the drug industry thinks the Democrats are going to continue to control Congress, and they want to get some support there. After all, it's an industry for which government actions have a substantial impact on their profitability. So, I think they are going where the winners are," he remarks.

Pfizer, the world's biggest drugmaker and the largest campaign contributor among pharmaceutical companies in the current election, has evenly divided its $1.1 million in donations among Democratic and Republican candidates, according to CRP. That's a sharp reversal from 2006, when the company contributed $1.7 million to candidates for federal office, with 67% going to Republicans and 32% to Democrats. In 2004, the last presidential-election year, Pfizer directed 69% of its $1.6 million in campaign donations to the GOP, while Democrats received 31%.

"Pfizer supports candidates and policymakers in both parties who share our common goal of expanding access to medicines, improving health outcomes through medical innovation, and delivering value to patients," Christopher Loder, a company spokesman, tells C&EN.

Officials at the Pharmaceutical Research & Manufacturers of America (PhRMA), the brand-name drug industry's main lobbying organization, indicate that the shift in campaign contributions reflects a new focus on bipartisanship, as well as the Democrats' majority status after their victory in November 2006.

"Although today's political and economic climate may pose unique challenges for America's pharmaceutical companies, we will continue to support sound policies that encourage, not discourage, innovation of new therapies and encourage patient access to medicines," says Ken Johnson, PhRMA's senior vice president. "We will also continue to support policymakers on both sides of the aisle who value the important and life-changing work that America's pharmaceutical companies do every day to enhance the lives of patients around the world."

THE SHIFT in the drug industry's political contributions has been most evident in the race for the White House. In the 2004 presidential election, pharmaceutical manufacturers gave $516,839 to President George W. Bush's campaign, nearly double the $280,688 they provided to Sen. John Kerry, the Democratic candidate from Massachusetts. Four years later, drug companies are betting on the Democratic nominee.

According to an analysis of data released by the Federal Election Commission on July 28, CRP says drug industry executives and employees have donated $450,094 to Obama, whereas Republican candidate Sen. John S. McCain of Arizona has received only $132,575. Sen. Hillary Clinton of New York, the early front-runner for the Democratic nomination, received $314,557 from the pharmaceutical sector during her failed bid to become the Democratic Party's presidential nominee. Federal campaign finance law limits how much corporations and individuals can donate to candidates in each election.

"I guess they think Obama is going to win," Comanor says. "Industry is pretty pragmatic about these things. These are intelligent, reasonable people who are trying to promote their objectives. This is perfectly rational behavior on their part."

"As the biggest lobby on [Capitol] Hill, the pharmaceutical industry wields tremendous influence."

At the April annual DTC National Conference—a meeting of pharmaceutical industry marketers, agency executives, and service suppliers in the direct-to-consumer prescription drug advertising sector—attendees participated in a mock election to see how the candidates would fare if the election were held at that time. In that exercise, Obama won a "primary" vote against Clinton by a wide margin (59% to 40%), and in a second round of voting, Obama topped McCain convincingly (53% to 46%).

"Given the Republican leanings of the drug industry, it was somewhat surprising to see Obama so handily defeat McCain," says Bob Ehrlich, chief executive of DTC Perspectives, a Florham Park, N.J.-based publishing and consulting company that analyzes consumer marketing of pharmaceuticals. "Of course, that could be an indication that McCain's frequent anti-industry comments have made him unpopular with drug company marketers."

But when it comes to policies toward the drug industry, there is little apparent difference between McCain's policies and those championed by Obama. Both men have used tough rhetoric against the industry, directing most of their political ire at the high cost of prescription drugs. Americans pay the steepest prices in the world for brand-name drugs, often more than twice what Canadians and Europeans pay for the same medicines.

BOTH CANDIDATES have proposed lowering the cost of drugs for U.S. consumers by allowing the reimportation of U.S.-made drugs from Canada and other developed countries where they are less expensive and by making it easier to bring generic drugs, which are significantly cheaper than their brand-name counterparts, to market.

"The problem is not that most Americans lack adequate health insurance," McCain remarked last October when he first outlined his health policy. "The biggest problem with the American health care system is that it costs too much."

McCain and Obama both voted for the Pharmaceutical Market Access & Safety Act of 2004, which would have allowed pharmacists and wholesalers to reimport Food & Drug Administration-approved drugs from Canada and the European Union. But that measure failed to become law in the face of strong opposition by the Bush Administration and the pharmaceutical industry. FDA has repeatedly warned that it has no system in place to ensure the safety of drugs purchased from foreign sources.

McCain seems particularly hostile to pharmaceutical companies and cites his battles with the drug industry during his long Senate career as evidence that he is willing to confront powerful interests. "Only McCain has taken on big tobacco, drug companies, fought corruption in both parties," boasts the narrator in a television ad that began airing last month.

During a Republican presidential primary debate in New Hampshire in January, McCain asked: "Why shouldn't we be able to reimport drugs from Canada? It's because of the power of the pharmaceutical companies." Former Massachusetts Gov. Mitt Romney chided McCain for his criticism, saying, "Don't turn the pharmaceutical companies into the bad guys." McCain responded, "Well, they are!"

At a town hall meeting in Warren, Mich., in February, McCain praised the drug industry for its heavy investment in research and development, but he added: "They're too powerful in Washington. They have too great an influence."

Both presidential candidates also want the Department of Health & Human Services to be able to negotiate directly with pharmaceutical companies to secure lower prices under Medicare Part D, the voluntary prescription drug benefit that covers some of the cost of approximately 4,400 medicines. An estimated 43 million elderly and disabled Americans are eligible to participate in the program, which took effect in 2006. Enrollment in January 2008 was 25.4 million people.

During congressional debate on the legislation that created the benefit—the Medicare Prescription Drug, Improvement & Modernization Act of 2003—critics condemned it as a giveaway to drugmakers because it prohibits the federal government from negotiating with manufacturers and insurers over drug prices for those enrolled in the program.

The Obama campaign estimates that lifting the negotiating ban could produce annual savings of as much as $30 billion, money that would come out of the drug industry's profits. Last year, the Illinois senator supported legislation that would have struck the 2003 law's "noninterference provision," which prohibits the Health & Human Services secretary from participating in negotiations between drug manufacturers and insurers that sponsor Medicare plans. It would have required the secretary to bargain for the best possible bulk prices for drugs purchased under the Medicare program.

Facing a White House veto threat, the bill failed to become law when it was derailed by a Republican-led filibuster in April 2007. "Once again, a minority of the Senate has allowed the power and the profits of the pharmaceutical industry to trump good policy and the will of the American people," Obama stated on the Senate floor after a motion to cut off debate fell five votes short of the 60 needed. "We have a major crisis in this nation, and that is the rising cost of health care," the senator added. "Allowing the federal government to negotiate for lower drug prices in the Medicare program would have been an important step forward in this regard. Drug negotiation is the smart thing to do and the right thing to do."

Republicans have argued that the current program is working because private health insurers have succeeded in obtaining favorable price deals from pharmaceutical companies. Drug manufacturers fear that granting the government authority to negotiate drug prices could lead to price controls in a future Administration.

McCain was one of only a handful of Republican senators to vote against creating the Medicare prescription drug benefit when it was initially proposed, arguing that it would cost taxpayers too much money, and he has remained critical of the program. In April, he proposed a change that would require affluent Medicare beneficiaries to pay higher monthly premiums for the benefit.

Under McCain's proposal, enrollees with annual incomes of more than $82,000 for an individual, or $164,000 per couple, would pay higher premiums, although he didn't say how much higher. "People like Bill Gates and Warren Buffett don't need their prescriptions underwritten by taxpayers," McCain declared during an address on economic policy at Carnegie Mellon University that month. "Those who can afford to buy their own prescription drugs should be expected to do so. This reform alone will save billions of dollars that could be returned to the taxpayers or put to better use."

James C. Greenwood, a former Republican lawmaker who retired in 2004 after six terms in the House to become president of the Biotechnology Industry Organization (BIO), says McCain and Obama have staked out virtually indistinguishable positions on issues of importance to his sector.

"We will not make an endorsement because there are not great differences between these candidates," Greenwood says. "They've both said some good things about biotechnology. Both candidates have also said some critical things about the drug industry in general, and they have supported a couple of policies that we do not support."

BIO, which lobbies on behalf of about 700 biotech companies and 500 related organizations, has never endorsed a presidential candidate. "It may well be that in another year, the contrasts are so stark" that an endorsement would be appropriate, Greenwood says. "But that's not the case this year."

Nevertheless, corporate dollars favor Obama. "If you look at the overall contributions, Sen. Obama has fared better than Sen. McCain in general," Greenwood points out. "It's a tight race, and I think it's probably a demonstration that our industry is not monolithic. I hope that it shows to some extent an opportunity to get beyond addressing these issues in a very partisan way."

ON A POSITIVE NOTE, Greenwood says he is encouraged by both candidates' support of strong protection of intellectual property rights, increased funding for FDA, and tax credits for research and development. Both candidates also favor expanded federal funding for embryonic stem cell research and promise a return to science-based, rather than ideology-based, policy in this area, according to the industry official.


McCain's commitment to more federal funding for the stem cell research effort, however, has appeared to soften somewhat over the course of the campaign as he has courted support among religious conservatives. But in any case, Greenwood says BIO will work for passage of an embryonic stem cell bill to expand the federal policy next year and adds that it would be "very surprising" if McCain vetoes it if he wins the White House. Bush vetoed similar legislation twice—once in 2006 and again in 2007—that would have loosened current restrictions on federal funding for stem cell research.

Whoever is elected president in November, the drug industry will remain a potent force in the nation's capital. Pharmaceutical manufacturers and their trade groups spent a record $168 million on lobbying in 2007, a 32% jump over 2006, according to the Center for Public Integrity, a nonpartisan public interest research group. According to data obtained from the Senate Office of Public Records, the industry has spent more than $1 billion lobbying the federal government over the past decade.

"As the biggest lobby on [Capitol] Hill, the pharmaceutical industry wields tremendous influence that impacts everything from prescriptions to patents," says Bill Buzenberg, the center's executive director. "The central point is that their massive spending has been highly successful, largely producing the political results the drug industry wants."



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