George Bush - Top Lobbyist For Pharmaceutical

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George Bush - Top Lobbyist For Pharmaceutical
Evelyn Pringle
January 28, 2005

As the debate over importation of cheaper drugs from other countries heats up, keep an eye on the politicians listed below. In the year leading up to the passage of the Medicare Prescription Drug Bill, the drug company PACs, employees, and their families gave more than $3 million in political contributions to these eleven elected officials, largely credited with negotiating the bill, and also responsible for inserting the provision that specifically barred importation to begin with.

How much did these industry lobbyists earn? Plenty! Bush $891,208; Senate Majority Leader Bill Frist (R-TN) $123,957; Sen Orrin Hatch (R-UT) $433,324; Sen John Breaux (D-LA) $59,150; Sen Max Baucus (D-MT) $145,372; Sen Charles Grassley (R-IA) $217,921; House Speaker Dennis Hastert (R-IL) $194,700; House Majority Leader Tom DeLay (R-TX) $78,250; Rep Billy Tauzin (R-LA) $211,249; Rep Nancy Johnson (R-CT) $336,908; and Rep Bill Thomas (R-CA) $322,514

Overall, Bush is the highest paid lobbyist. According to a 2004 report by Public Citizen, twenty-one industry and HMO executives, or lobbyists, rank among Bush’s Rangers and Pioneers - titles given only to those people who have raised at least $200,000 or $100,000, respectively, for one of his presidential campaigns.

For example, Pfizer’s CEO, Hank McKinnell, was a 2004 Ranger and until last year, was chairman of the board for Pharma, the group that represents most major drug companies. Pfizer is one of the most profitable companies in the US and produces 14 drugs that are top sellers. In 2003, it spent $3.7 million on Washington lobbying and lead the industry’s effort against importation. It has threatened to blacklist any Canadian pharmacies that sell drugs to Americans.

The prescription drug bill that was crafted by these officials is a gold mine for the pharmaceutical industry for 3 reasons: (1) it expands their paying customer base for brand-name drugs; (2) it protects the industry from importation; and (3) it bars the government from negotiating price discounts.

The industry definitely got its money’s worth when this bill was passed.

How Many Dumb Excuses Can Bush Dream Up?

In April 2004, Bush argued that allowing the importation of drugs would lead to a loss of jobs. He had Commerce Undersecretary Grant Aldonas, advise a Senate panel that if Congress allows importation, "There will be disinvestment in the United States, a loss of employment opportunities and frankly a loss of an industry that is a huge multiplier" in terms of benefits to the overall US economy," according to Reuters on April 27, 2004.

The truth is, the overall US economy doesn’t benefit all that much from this industry anyways being half of the drug purchased in this country are already made elsewhere. Dr Marcia Angell, former editor-in-chief of the New England Journal of Medicine, and author of the book, "The Truth About the Drug Companies", says people are under the belief that “drugs that are sold in the United States are made by only American companies,” according to the AP on Sept 11, 2004. “It’s not that way anymore,” she explains, “Pfizer, for example, has 60 manufacturing sites in 32 countries. So the drugs are made all over the world. They’re sold all over the world,” Angell says.

For instance, most of Pfizer’s popular drug, Lipitor, is made in Ireland. Angell explains, “...that these drugs, while they’re made by global companies all over the world, are sold in this country for about double what they’re sold for everywhere else.”

Dr Peter Rost, a pharmaceutical company executive who has spent 20 years marketing drugs, says that half of the large companies are foreign corporations, and lists Novartis, Switzerland, Aventis/Sanofi, France, Astra-Zeneca and Glaxo from the UK. "Why should we allow them to come in and gouge the American consumers," he asks.

The next lame excuse invented by the top lobbyist, was to have FDA Official, Lester Crawford, claim that tampering with drugs imported from Canada could be a way for terrorists to attack Americans. And Lester added a nice touch of his own by warning that action by terrorists was the most serious of his concerns. Te American Progress Action Fund quickly denounced this excuse as a way for the administration to use "the fear of terrorism," and called it a "cynical, baseless and transparent" tactic.

Next Bush came up with the assertion that the decline in profits for drug makers, if importation was legalized, would force them to reduce spending on research and development, and ultimately deprive consumers of important new drugs.

The report, Will Lower Drug Prices Jeopardize Drug Research? by Donald Light, Joel Lexchin, in the American Journal of Bioethics in 2004, provides a documented fact sheet, that shows, "Prices can be lower without jeopardizing basic research for new drugs. More exposure to global price competition would encourage more innovative research and less of the derivative me-too research that now dominates," it explains.

The report basically says that the industry’s claim that outrageous profits are necessary to cover the high costs of R&D does not hold up for a number of reasons: (1) industry giants spend much more money on marketing and advertising than on R&D; (2) a large part of research is publicly funded; (3) by way of creative accounting, R&D costs are made to appear higher that they actually are; and (4) it is the artificially high drug prices and strict patent laws that protect the industry’s profits.

For example, while drug companies claim to spend 17% of domestic sales on R&D, more objective data shows they spend only 10%, the National Science Foundation determined in 2003.

But besides that, taxpayers pay for most research costs. In 2000, the industry spent 18% of its $13 billion budget for R&D on basic research, or $2.3 billion the Foundation found. All of that money was subsidized by taxpayers through deductions and tax credits.

Bush Spends Our Tax Dollars For Reports Supporting Industry

In 2004, two reports were commissioned by Congress after Republican leaders blocked efforts to pass legislation that would have legalized the importation of cheaper prescription drugs from other countries.

The reports do little more than substantiate the claim that Bush never had any intention to abandon his cronies in the drug industry and legalize importation, no matter what comments he may have made on the campaign trail while he was running for reelection.

The director of the advocacy group Families USA, Ron Pollack, criticizes the report for this very reason. "Rather than taking a year and spending taxpayer dollars to write a report that simply repeats the pharmaceutical industry’s arguments against reimportation, the administration should have focused on developing a system to provide Americans with access to affordable prescription drugs," he said.

For anyone wondering how far Bush will go to protect the profits of the drug companies, read the threat that was issued to Congress, in a letter accompanying the 2 reports, from HHS Secretary Tommy Thompson, and Commerce Secretary Donald Evans: "If Congress were to pass legislation that did not address the serious safety concerns . . . or if Congress were to pass legislation that discouraged innovation or stifled competition . . . the President’s senior advisers would recommend a veto," they said.

Pharma, maintain the reports "substantiate that importation proposals represent a false promise to American consumers," according to the Dec 22, 2004 Washington Post. What a dumb comment. Why wouldn’t the report substantiate the claims of the industry when everybody knows Pharma wrote the damn thing.

Too Dangerous & Too Expensive

The report from the Task Force on Drug Importation, stated that in 2003, nearly 5 million shipments, consisting of about 12 million prescription products entered the US from Canada, and that a comparable amount entered the country from the rest of the world.

The report claims the FDA could never achieve proper oversight of so many individual shipments. It says the agency could oversee a system of bulk shipments from Canada; but claims the $100 million-plus cost of such a system, and the added cut that new middlemen would take, would leave consumers saving only 1 to 2%.

Dr Rost disagrees with those figures. Based on the data in the report, Rost did an analysis of the potential savings available through importation, and claims the report contains the right data but reached the wrong conclusion. He maintains the research in the report actually indicates the possibility of saving 17.5%, or $37.8 billion, annually in the US.

Rost also strongly disagrees with the report’s dire safety warnings, "It is outrageous to claim ... that the United States wouldn’t be able to safely and cost-effectively handle reimportation. A key trade association for European pharmaceutical companies claims there has never been a confirmed case in Europe of a counterfeit medication reaching a patient as a result of reimportation," Rost reports.

Rep Gil Gutknecht (R-MN) makes the same argument for the US. "The authors of this report don’t cite a single example where an American has been harmed by an imported drug, and we have thousands of examples now where Americans were harmed by FDA-approved drugs," he said.

Gutknecht’s charge was verified recently when it was revealed that an estimated 40,000 deaths have now been attributed to Vioxx, a drug long ago approved by the FDA.

How could the task force be trusted to render a balanced report when, as the Watchdog advocacy group, Public Citizen, noted, "the administration included no independent outside experts on the task force."

Prices Controlled By Greedy Corporations

I don’t think many Americans realize how much more they are paying for drugs than people in other countries. We pay the highest prices in the US for one reason - greed.

Drug company profits have long been more than double the profits of other Fortune 500 corporations. In recent years they have jumped to triple and even quadruple the profits of other major companies, according to a report by the National Institute for Health Care Management 2000.

In fact, between 1994 and 2002, the industry’s profitability ranged between 14 and 19% whereas the median profitability for all Fortune 500 companies ranged between 3 and 5%.

We all end up paying the high costs in one way or another. For instance, high prescription costs have a trickle-down affect on other industries and raise the cost of company benefits. "They shift profits from other industries to the drug industry," according to the report, Will Lower Drug Prices Jeopardize Drug Research?

Lower prices, the report maintains, would save other Fortune 500 companies billions of dollars in benefit costs, and bring drug company profits in line with the profits of the companies forced to pay for their drugs.

What’s $100 Million Anyways?

What’s $100 million to an industry that gave its CEO’s an average compensation package of $12.5 million during 2001-2003? The compensation rate was the result of a study conducted on 7 companies, Pfizer (highest $20.5 million), Merck, Bristol-Meyer, Abbott, Wyeth, Eli Lily, and Schering-Plough, by Graef Crystal reported by Bloomberg News.

The assertion that the program wouldn’t be worth a $100 million to set up doesn’t make sense. The prescription drug bill contains close to $140 billion in profits for drug companies. Common sense says the money would go a lot further if drugs were cheaper.

As a result of the Medicare bill, over the next 8 years, drug companies will receive $139.2 billion in profits, or 61% of the spending in the bill allotted for prescription drugs, according to an April, 2004, study by Alan Sager, of the Health Reform Program of Boston University School of Public Health.

In reaching that figure, Sager estimates that $228 billion will be used to buy medications that patients previously could not afford. The remainder, or $172 billion, will go for drugs that people used to pay for privately.

Sager reports that retailers and wholesalers will take about 25% of that $228 billion right off the top, leaving $171 billion. But after deducting the expense of manufacturing and distributing of about $8.5 billion, there would be $162.5 billion remaining, he explains.

After subtracting administrative expenses, and some earnings as they negotiate discounts with HMOs at about $23.5 billion, that still leaves $139 billion in new net profits for Pharma, Sager notes.

The bottom line is this. If Bush can hand the pharmaceutical industry $140 billion, we can afford to spend $100 million of our tax dollars to set up an importation program. In fact, if we want to save the lives of many American citizens who require life-saving drugs which are overpriced and out-of-reach in the US, we can’t afford not to.