Democrats Take Aim at Big Pharma

Posted September 5, 2008 at 11:34am

Congressional Democrats came to power last year with twin targets in their eyes: Big Oil and Big Pharma. Since then, the drug industry has faced its share of heat on Capitol Hill, but deft political maneuvering, and some fortuitous real-world developments, have spared it what could have been a pile-up of hostile legislation.

But as Democrats look to expand their majorities in

both chambers and possibly retake the White House, pharmaceutical companies are braced for a reckoning that will test the resolve of their hastily built political defenses.

On a host of fronts, lawmakers are looking to draft new bills, or revive stalled ones, that could take a bite out of the drug industry’s bottom line.

Drug lobbyist nightmares include requiring Medicare to negotiate drug prices with the industry; authorizing reimportation of drugs from Canada; limiting the ability of drug companies to market directly to consumers; and expanding companies’ legal liability for their products.

Rep. Bart Stupak (D-Mich.), who has been an aggressive critic of the industry from his perch as chairman of the Energy and Commerce Subcommittee on Oversight and Investigations, said it is only a matter of time before pharmaceutical companies are brought to heel.

The industry dodged bullets this Congress because Democrats were working with slim majorities and needed time to investigate and “set the table” for future action, Stupak said.

“Our first term back in the majority, we were not going to rewrite legislation that we feel strongly about until the American people have trust in our ability to govern and hold these people accountable,” Stupak said. “You have to show the need for new legislation … Now Members of Congress are demanding action, and I look forward to giving them that stronger accountability.”

Adding to industry anxiety, both parties’ presidential candidates have staked out unfriendly positions.

Democratic presidential nominee Sen. Barack Obama (Ill.) backs forcing the government to negotiate drug prices under Medicare Part D. Both Obama and GOP presidential nominee Sen. John McCain (Ariz.) support allowing the reimportation of drugs from Canada.

Indeed, while the Bush White House has offered the industry a backstop against the threat of tough legislation, drug lobbyists are not counting on a McCain administration to offer any such fail-safe.

At a January debate with his rivals for the GOP nod, McCain asked, “Why shouldn’t we be able to reimport drugs from Canada? It’s because of the power of the pharmaceutical companies.”

When former Massachusetts Gov. Mitt Romney admonished him not to cast drug makers as “the big bad guys,” McCain responded, “Well, they are.”

McCain isn’t the only Republican lawmaker causing heartburn for drug makers. Senate Finance ranking member Chuck Grassley (R-Iowa) has teamed with House Energy and Commerce Chairman John Dingell (D-Mich.) to craft an overhaul of the Food and Drug Administration to toughen the agency’s regulation of the industry. That legislation is expected to move next year. Sen. David Vitter (R-La.), meanwhile, has emerged as a champion of reimportation.

While the industry certainly still has more friends than opponents among GOPers on Capitol Hill, one senior drug company lobbyist, a longtime Republican who spoke on condition of anonymity, said drug makers are at a potential turning point with their partisan allegiance.

“It’s a unique moment in which the entire industry is in play between the parties,” this lobbyist said.

He pointed to drug makers’ growing reliance on the government as a source of revenue — the implementation of the Medicare drug benefit meant government sources picked up the tab for 34 percent of all retail drug purchases in 2007, up from 28 percent in 2005.

Since Democrats typically want to offer the needy more and better benefits while Republicans want to limit them, the lobbyist argued the new majority party could find common cause with pharmaceutical companies.

If Democrats continue to take a hands-off approach to the drug program — that is, not mandating that the government negotiate for lower prices — that “would be a huge signal to the industry that Democrats want the pharmaceutical industry as part of their base, part of their coalition, that they want to take it away from the Republicans,” the lobbyist added.

If not yet embracing a wholesale realignment of its loyalty, the drug industry has moved quickly this Congress to build bridges to Democrats.

It earned major points with Democrats last fall by helping bankroll a multimillion- dollar campaign promoting the party’s drive to expand children’s health insurance.

And the industry has been looking for chances to link arms on issues with patient groups and labor unions, more traditional Democratic allies.

Drug makers have been reaching out in more traditional ways as well — with their wallets, for example.

From 1994 until Republicans lost power in 2006, the industry directed two-thirds of its $147 million in political contributions to the GOP, according to the Center for Responsive Politics. But so far this cycle, the industry has split its donations evenly between the parties.

The industry has also dramatically ramped up its lobbying activity. The Pharmaceutical Research and Manufacturers of America, the industry’s trade group, last year boosted its lobbying spending by a quarter to $22.7 million, making it the third-highest-spending organization in town.

Part of that budget went to adding lobbyists with ties to top Congressional Democrats to its army of outside consultants.

Over the past year and a half, Billy Tauzin, the group’s president and a former Republican Congressman from Louisiana, used his still-functioning campaign committee to dole out contributions to lawmakers on both sides of the aisle, including Democratic Reps. Steny Hoyer (Md.), Sheila Jackson Lee (Texas) and Albert Wynn (Md.), who has since resigned.

“We took the approach when the new majority was sworn in that with new challenges come new opportunities,” PhRMA Senior Vice President Ken Johnson said.

“We’ve been listening to Democratic leadership and trying to work with a larger base of Democratic Members,” one drug industry lobbyist said, striking a hopeful note. “A better conversation has been taking place.”

Stupak, who by his own count has held 15 hearings looking into the industry, acknowledged its political efforts have had an effect.

“They have some seats at the table they might not have had before,” he said. “They certainly have increased their presence within our Democratic ranks when we’re discussing these issues.”