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Investigations   11.14.2017

Drug industry association gives millions, gains friends

The Pharmaceutical Research and Manufacturers of America, the main trade association for the drug industry, wrote $14.3 million in checks in 2015 to a panoply of nonprofit think tanks, disease advocacy groups and charities.

The money is spread around liberally to win friends, to win influence, and to win the influencers to its side so that when legislation comes up in state capitals or in Congress, PhRMA can rely on this coalition to make the phone calls and write the emails that support the bills it wants to pass and oppose the ones it wants to kill.

Let’s take a closer look at this money trail.

PhRMA’s $14.3 million went to 303 organizations in 2015, according to the group’s most recent IRS 990 filing.

That comes to an average of $47,195 per recipient group. The majority of gifts, however, were smaller – $5,000 to $10,000. But if you’re a modest-sized patient advocacy group or local charity, $5,000 or $10,000 is a memorable check.

PhRMA’s beneficiaries ranged from groups that advocate for cures for specific diseases to universities to Washington D.C. think tanks to local civic organizations to political action committees that give money to candidates running for office.

PhRMA officials did not respond to requests for interview.

(It’s important to note that this analysis does not include direct donations from individual member companies of PhRMA, like Amgen, Bayer, Eli Lilly or others outside the association. The manufacturers can and do give money to these same groups, which, in many cases magnifies the industry’s influence with these organizations. Those donations are more difficult to track because recipients are not required to publicly disclose the sources of their funding.)

The single largest check that PhRMA wrote was $758,495 to the Council for Affordable Health Coverage, a coalition of insurers, drug companies and employers. The organization has vigorously opposed the Medicare Drug Price Negotiation Act of 2017, which would allow the government to negotiate with drug manufacturers to get lower prices on drugs for elderly patients using Medicare’s Part D prescription drug benefit.

The proposed law has little traction on Capitol Hill, in part because of opposition from Big Pharma-friendly groups like CAHC.

The council blasted the proposed act, using an argument frequently heard when an organization opposes a change in law – fear of burdensome regulation. “With this proposal, Senator Sanders (I-VT) and Representative Cummings (D-MD) are attempting to fix what isn’t broken,” said council President Joel White in a statement in October. “Part D’s success is driven by market competition, not government control.”

The Medicare Drug Price Negotiation Act of 2017, introduced in both the House and Senate, is unlikely to pass.

PhRMA doesn’t give money to just conservative groups, or liberal groups, it gives to all. PhRMA’s strategy appears to be more shotgun than laser: Make as many friends as possible – everywhere.

On the conservative side, The Koch Brothers’-funded American Legislative Exchange Council received $149,900 from PhRMA. ALEC is an organization of, and think tank for, conservative state lawmakers. The right-leaning Americans for Prosperity — also a Koch brothers-funded group — got $20,000, as did Grover Norquist’s Americans for Tax Reform Foundation, which is opposed to all tax increases as a matter of principle. The free-market Hudson Institute think tank in Washington D.C. received $200,000. The Republican GOPAC, which Newt Gingrich founded to help Republicans get elected to Congress, got $305,000.

Across the aisle, the Democratic Governor’s Association, which raises money for Democratic candidates in gubernatorial races, received $352,500 (The GOP equivalent received nearly the same amount). The Human Rights Campaign Foundation, a group that advocates for LGBT issues, took in $37,000 and the Gay and Lesbian Medical Association, an organization of LGBT health care professionals got $15,000.

PhRMA also supports key ethnic groups. The Congressional Black Caucus Foundation, which helps young African Americans seeking to enter government, received $20,000, the National Urban League, a civil rights group that advocates on behalf of African Americans who live in cities, took in $25,000, and the National Medical Association (comprised of African American doctors) got $65,000. The League of United Latin American Citizens (LULAC) received $10,000 and the National Hispanic Medical Association got $20,000. Even the National Italian American Foundation got some love: $12,500.

Groups that advocate for cures for specific diseases also are big beneficiaries of PhRMA largesse – $2 million in total in 2015. The Juvenile Diabetes Research Foundation received $43,800, the Amyotrophic Lateral Sclerosis (ALS) Association took in $66,020 and the Lupus Foundation of America got $108,500.

The allegiances are highly strategic. These foundations and associations are driven by the family members of patients with often difficult and debilitating diseases. These family members of course want cures as fast as possible for their loved ones. And these moms and dads and sisters and brothers are effective and compelling advocates when meeting with their representatives in Congress or in State Houses.

And each of these groups supported the 21st Century Cures Act, a huge bill that passed into law in 2016 that was a prime objective last year of PhRMA. The bill, among other things, boosted federal funding for disease research but also eased the drug approval process for pharmaceutical companies at the Food and Drug Administration.

Among the law’s supporters was Rep. Robin Kelly (D-IL), chairwoman of the Congressional Black Caucus Health Braintrust: “Investments in scientific and medical innovation are the crux of achieving health equity. The 21st Century Cures Act is timely, critical, and will benefit individuals, families, and our nation for generations.”

Even contributions to smaller groups can pay off. PhRMA gave $10,000 to the National Grange, an alliance of rural farmers, $50,000 to the Society for Women’s Health Research and $25,000 to Citizens Against Government Waste, a conservative-leaning group that advocates for smaller, less expensive government.

The first two organizations are part of a coalition critical of the federal 340B drug discount program, which requires pharmaceutical companies to provide discounted medications to hospitals that treat high numbers of indigent patients. The drug industry forgoes $6.1 billion each year in profits to fund the program, according to the trade association 340B Health. Not surprisingly, PhRMA has been trying to shrink the size of the 340B program.

The watchdog group CAGW has occasionally attacked safety-net hospitals in the 340B program (a key target of PhRMA) in missives on its website: “Congress needs to fix the program and there will certainly be objections to any modifications to the law that would cut off the hospitals’ 340B ATM, which is working too well in fattening their wallets.”

The group doesn’t mention that the 340B program is not taxpayer funded. CAGW did not respond to requests for an interview.

The drug association’s largesse appears to be equally effective at keeping interest groups on the sidelines of the drug price issue.

In 2015, PhRMA paid the American Cancer Society’s Cancer Action Network, its advocacy and lobbying offshoot, $66,500. The network advocates for more cancer research money. But a search of its website indicates the group hasn’t actively advocated for lower drug prices, even though chemotherapy costs are skyrocketing. Instead, the group focuses on the overall high cost of cancer care, among other issues. The cost of oncology medicines made in the U.S. has increased by 88 percent to $44.1 billion over the past five years, according to Quintiles IMS, a health care technology company.

The Cancer Action Network did not respond to requests for comment on the drug-price issue.

The National Alliance on Mental Illness received $100,000 from PhRMA and appears to be similarly reticent on directly addressing high drug prices. A NAMI spokesperson said she could not provide an interview by our deadline.

“Large, responsible patient organizations are caught between a rock and a hard place, said David Mitchell, president of a new group calledPatients for Affordable Drugs. “They rely on pharma funding for services.”

Mitchell is himself a cancer survivor. He and his wife launched the organization with their own money in January because they didn’t see any real patient involvement in the drug price debate. The group does not accept any pharmaceutical industry funding.

“I think of PhRMA as an octopus with many tentacles and at the end of each is a pile of cash,” Mitchell added. Their goal is to “chill and inhibit people from speaking out.”

Solutions Database

High drug costs: What you can do

  1. AARP advocates for Medicare prescription drug price negotiation and reimportation of medicines. If you are an AARP member, you can send a message to Congress. Share your story.
  2. Patients for Affordable Drugs is an advocacy group that does not accept money from pharmaceutical companies. It is collecting stories about people facing high medication costs. Email them.
  3. PhRMA is the PR and lobbying group for pharmaceutical companies. It is running a campaign it says pushes to lower drug prices. Call them at 202-835-3400.
  4. The Medicare Prescription Drug Price Negotiation Act of 2017 would give the government the ability to bargain with drug manufacturers for Part D medicines. Read the bill. Call your member of Congress.
  5. The Creating and Restoring Equal Access to Equivalent Samples (CREATES) Act would require name brand drug companies to play nice with generic manufacturers. Read the bill. Call your Senator.
  6. The Creating Transparency to Have Drug Rebates Unlocked (C-THRU) Act would require pharmacy benefit manager companies to be transparent about how they handle rebates and where that money goes. Find out more. Call your Senator.
  7. Sen. Bernie Sanders wants Medicare for all. You can find out more and volunteer to help his effort on his website if you agree. Volunteer.
  8. Reputable online pharmacies in Canada supply medicines at a steep discount to what Americans normally pay. While technically not legal, Uncle Sam is not prosecuting individuals who do so. Check Canadian prices.

Tarbell is nonpartisan. We do not endorse you taking these actions. But sharing them with you is part of our commitment to helping you find solutions. Email questions to questions@tarbell.org. And learn more about these solutions here.