Policy

Health Industry Reports Lobbying Costs the Size of a Grapefruit — Drugmakers Lead

Expenses on track to surpass 2017 numbers

Pharmacist Hank Wedemeyer fills prescriptions as generic diabetes medicine awaits distribution at a community health center for low-income patients on December 1, 2009 in Aurora, Colorado. (John Moore/Getty Images)

Prescription drugmakers are on track to exceed their lobbying spending from last year, according to third quarter disclosure forms that were due Monday.

In 2017, the industry spent $171.6 million. During the first half of 2018, drugmakers spent almost $95.4 million, putting them on pace to top last year’s total.

The lobbying by the pharmaceutical industry and other groups came as Congress discussed appropriations, opioid abuse, efforts to rein in rising drug prices and Medicare drug spending. Although lobbying by the nation’s largest doctors’ group dipped after Republican efforts to repeal the health care law faded last year, spending by groups representing hospitals and insurers remained high amid the administration’s efforts to adjust Medicare payments and take deregulatory action to promote cheaper insurance plans.

The lobbying spending disclosed in quarterly reports by insurers, hospital associations and others was still more modest than the record-breaking totals some spent at the start of this year, but the greater cumulative amounts spent at this point than in previous years reflected a busy summer in Washington.

An $855 billion spending bill for defense, labor, education and health, which was also the vehicle for stopgap spending for most of the government, was debated during August and September. The opioid bill was finalized in September after both chambers passed different versions and was cleared in October. President Donald Trump is expected to sign it on Wednesday.

The Pharmaceutical Research and Manufacturers of America, the drug industry’s main trade group, spent just under $6 million in the third quarter, outpacing its spending from 2017. The group has so far spent nearly $21.5 million this year, including a first quarter where it spent nearly $10 million lobbying. Last year, it spent $25.5 million throughout the full year. The group declined to comment further on its spending.

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Individual drugmakers also spent large amounts on lobbying as the administration considered proposals related to drug reimbursements and price transparency. Pfizer, the top-spending individual company in the sector, spent nearly $2.8 million in the third quarter, bringing its total for 2018 to $9.4 million and putting it on pace to outspend itself for 2017, when it spent $10.5 million.

The drug industry was also paying attention to the defense authorization act for fiscal 2019, which has implications for drug spending in the military health care system. The discussions over a revised North American Free Trade Agreement, which emerged in August and September, was also important to drugmakers, since it would extend monopoly periods in Canada and Mexico for an expensive class of biotech drugs.

The Biotechnology Innovation Organization, another major drug industry trade group, is also on pace to eclipse last year’s lobbying spending. It spent nearly $2.5 million in the third quarter, for a total of $7.5 million so far this year, compared to $9.4 million in total last year.

Members of that trade group took more of an interest in the farm bill and policies surrounding pesticides, crops and renewable chemicals. The group also seems to be preparing for more administration and congressional involvement in the regulation of gene-editing technology.

The pharmaceutical industry was also seeking changes related to who pays for drugs that fall into a coverage gap in Medicare Part D, the prescription drug benefit program. In February’s bipartisan two-year spending agreement, Congress decided that starting in 2019, drug companies should pay 70 percent of the cost of the drugs that fall into the gap, with insurance plans paying 5 percent and patients paying 25 percent.

Because plans are reimbursed by Medicare, reducing plan costs translates to savings for the government. Now drugmakers want to reduce their share to closer to 60 percent, with insurers paying the difference. The drug industry is also trying to get Congress to address a similar issue related to a threshold for Medicare Part D’s catastrophic coverage, which caps patients’ costs.

Drugmakers also lobbied on bills to make it harder for brand-name drugmakers to restrict sales of samples to potential rivals seeking approval for cheaper generic versions. Those bills have bipartisan support in both chambers and are often considered as a money-saving offset for other bills. But some branded drugmakers oppose it, citing concerns about safety if drugs with dangerous side effects aren’t subject to strict supply-chain controls.

There were also significant bills with lower profiles winding through Congress during this time, including a measure related to approvals of veterinary medicine and a still-pending bill to renew billions of dollars for research on vaccines, antibiotics and other products needed in emergencies.

Other parts of the drug industry are also bracing for increased oversight or other changes that could affect their business models. Cardinal Health, a drug distributor under investigation by the House Energy and Commerce Committee for its role in shipping excessive quantities of prescription opioids, has already spent more in 2018 than it did in 2017. In the first three quarters, it spent $1.85 million compared to $1.75 million last year.

Medical provider groups

The American Hospital Association, facing the potential of reimbursement cuts from the Trump administration, spent $5.2 million, the most it has spent in a single quarter since the end of 2014. The hospital association has so far spent nearly $14.5 million this year, putting it on pace to exceed the $17.5 million it spent on lobbying last year.

Various hospital industry groups, nursing home industry lobbyists and individual hospitals spent $49 million in the first half of this year, and $102 million in 2017.

The Federation of American Hospitals revealed that it lobbied against bills that would expand Medicare for all U.S. residents — which the hospital federation described as an approach that would “impose single-payer health care delivery.”

The American Medical Association spent $4.1 million in the third quarter, slightly less than the $4.3 million it spent in the second quarter. AMA is burning less money than it did last year, totaling $15 million so far compared to the $17 million it had spent by the third quarter of 2017. The group focused largely on expanding telehealth policies while advising on opioid and drug pricing legislation.

America’s Health Insurance Plans shelled out $1.5 million in the third quarter, driven largely by the nation’s opioid debate. The group spent nearly $5.2 million so far this year, outpacing the $4.8 million it had spent by the third quarter last year and on track to meet the $6.5 million it spent overall.

AHIP devoted resources to a wide array of policies affecting the commercial markets, Medicaid and Medicare — particularly Part D. One example is the issue of surprise medical bills, in which patients receive out-of-network bills for providers at in-network facilities. The problem has the potential to garner momentum in a new Congress after fervor surrounding drug prices dies down.

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