It was the “ugliest night” the late Rep. Walter Jones, a North Carolina Republican, said he had witnessed in two decades in politics. That came when members of his party allied with Big Pharma orchestrated a daring late-night coup in 2003, ramming through a bill written by industry lobbyists that would shower hundreds of billions on drug companies. Health care advocates experienced flashbacks this week when Sen. Kyrsten Sinema, D-Ariz., and a group of House Democrats aligned with pharmaceutical lobbyists effectively torpedoed their own party’s efforts to claw back more than $400 billion in prescription-drug costs for consumers and taxpayers.
The White House on Thursday dropped a plan to at least partially reverse the 2003 Republican-backed law banning Medicare from negotiating drug prices after progressives balked at a last-minute bid by Sinema and other pharma-allied Democrats to add industry-friendly protections and massive restrictions on any potential negotiations.
“I am not going to sell out my district,” vowed Rep. Rashida Tlaib, D-Mich., for a bill championed by lawmakers “who bow down to Big Pharma.”
Leslie Dach, chair of the health care advocacy group Protect Our Care, accused the group of “moderate” Democrats who killed the bill this week of “basically doing the handiwork of pharma and standing against patients.”
The new White House framework marks a massive setback to years of Democratic efforts to undo the damage from an 18-year-old provision championed by pharmaceutical industry ally Rep. Billy Tauzin, a Louisiana Democrat-turned-Republican who then wielded immense power as chairman of the House Energy and Commerce Committee. The legislation extended prescription drug coverage to tens of millions of Medicare recipients — but required them to buy drugs from private insurers and banned Medicare from negotiating bulk price discounts. After months of negotiations, Tauzin and Republican leaders backed by the drug companies dropped the 1,000-page bill in the middle of the night and gave members just hours to vote on it.
“The pharmaceutical lobbyists wrote the bill,” Jones told “60 Minutes” in 2007. “The bill was over 1,000 pages. And it got to the members of the House that morning, and we voted for it at about 3 a.m. in the morning.” (Jones died in 2019.)
Republican leaders even allowed hundreds of lobbyists onto the House floor to whisper promises or threats in members’ ears, after realizing there were not enough votes to pass the legislation. Lobbyists made their way around the chamber, allegedly promising retribution against lawmakers who opposed the vote. One member broke down in tears, Jones recalled. The vote, which was supposed to take 15 minutes, stretched to nearly three hours as industry forces tried to cajole enough members into backing the bill.
Republican leaders ordered the C-SPAN cameras in the chamber to be shut off during the stunning session. “A lot of the shenanigans that were going on that night, they didn’t want on national television in primetime,” former Rep. Dan Burton, R-Ind., told “60 Minutes.”
The episode underscored the immense power of the pharmaceutical industry, which had contributed nearly $1 million to Tauzin, and the lengths the industry was willing to go. The Medicare non-negotiation rule was a enormous boon to the industry, allowing it to charge Medicare recipients far more than it charges other government agencies like the Department of Veterans Affairs, which, like all other agencies, is allowed to bargain with its contractors and vendors. The cost of the program also ended up being far higher than the price tag sold to lawmakers after Bush administration Medicare chief Tom Scully, himself a former lobbyist, ordered his agency to conceal an analysis that projected the true cost of the bill from lawmakers. Several members of Congress said later they would not have supported the legislation if they knew the real price tag — but what was done was done.
Just 10 days after the bill was signed, Scully landed a job as a pharmaceutical lobbyist, a position he had negotiated while working on the bill. Weeks after that, Tauzin negotiated a new job as the chief lobbyist for Pharmaceutical Research and Manufacturers of America, the industry’s leading lobbying arm. After finishing his current term in Congress, he went to work for PhRMA with an annual salary of $2 million. At least 15 fellow Republican lawmakers and congressional staffers who worked on the bill also landed lucrative industry lobbying jobs not long after the bill was signed.
When Sinema and pro-pharma allies like Reps. Scott Peters, D-Calif., Kurt Schrader, D-Ore. and Kathleen Rice, D-N.Y., staged a last-minute push to undermine the party’s plans to reverse the 2003 law — amid another all-out lobbying blitz — some patient advocates said they couldn’t help experiencing déjà vu.
The lawmakers are “taking orders from pharma,” David Mitchell, the founder of the patient advocacy group Patients for Affordable Drugs Now, said in an interview with Salon. “What did they get for that? We know that pharma will do anything unethical, immoral.”
Sinema, Schrader and Rice did not respond to questions from Salon. A spokesperson for Peters, whose Southern California district contains a significant number of pharmaceutical corporate facilities, pushed back on Mitchell’s characterization.
“Rep. Peters is committed to reducing the cost of drugs for seniors and all consumers; his plan does that and still preserves the incentives needed to fund American science and future cures,” Allie Polaski, a spokesperson for Peters, said in a statement to Salon. “Rep. Peters represents one of the three leading biotechnology clusters in the country, with 68,000+ jobs supported by it in San Diego County. It should be no surprise to anyone that his campaign supporters include the researchers, scientists and administrators that work in those fields.”
PhRMA responded by attacking Mitchell and noting that his group has received a majority of its funding from hedge fund billionaire John Arnold, a longtime critic of the industry who has tried to counter Big Pharma’s financial influence in Congress.
“While his organization is supposedly committed to ‘patient affordability,’ he refuses to hold insurance companies and middlemen accountable for discriminating against sick patients who need life-saving medicines,” Debra DeShong, PhRMA’s head of public affairs, said in an email to Salon.
“Our organization works every day fighting for policies to help make sure patients have access to life-saving treatments with out-of-pocket costs they can afford. And our researchers and scientists work tirelessly on behalf of patients, and in fact, are the reason why Congress can even meet in person because of their life saving vaccines and therapies. People who throw around hateful rhetoric like this have no place in serious policy debates.”
PhRMA has led a massive lobbying blitz to kill President Biden’s proposal to scrap the non-negotiation rule, a change that could raise more than $460 billion over the next decade to pay for health care priorities in his Build Back Better plan that now also appear to be on the chopping block. The group has already spent more than $22 million on lobbying on drug pricing and other issues this year, while the pharmaceutical industry as a whole has spent an unprecedented $171 million on lobbying so far in 2021, according to data from OpenSecrets.
PhRMA has particularly focused on lobbying Democratic holdouts on Biden’s proposal, including Sinema, Sen. Bob Menendez of New Jersey and Sen. Tom Carper of Delaware. The industry has also showered cash on lawmakers looking to block Medicare negotiation from making it into the Democrats’ reconciliation bill, donating $1 million to Sinema, Menendez and Peters through September, according to OpenSecrets data. Sinema reached a deal with the White House on a plan aligned with Peters’ proposal, according to Politico, but progressives rejected the deal, leading the Biden administration to drop it from a framework released on Thursday.
“It’s been eviscerated,” Rep. Lloyd Doggett, D-Texas, who chairs the House Ways and Means health subcommittee, told Politico last week. “At some point you have to ask: Is it worth it to pass it at all if it’s going to be some meaningless thing?”
House Democrats said Thursday that they were cut out of Sinema’s deal-making with the White House but vowed to press forward to include Medicare negotiation in the final bill. “If we don’t, it’s only because [the pharmaceutical industry]’s really trying to kill everything and try to convince their lackeys, as they call them in Congress, not to do anything,” House Energy and Commerce Chairman Frank Pallone, D-N.J., who sponsored a House version of the original legislation, told the outlet.
Nearly all the lawmakers opposed to the legislation are from areas with a large pharmaceutical presence and have received eye-popping contributions from the industry. Sinema has collected more than $500,000 from the industry throughout her career. Peters has received more than $850,000. Menendez has taken more than $1.1 million, no doubt reflecting the numerous pharmaceutical companies headquartered in New Jersey.
Mitchell drew a distinction between Menendez and Carper, on the one hand, and Sinema and her House allies on the other. Menendez and Carper, he said, were “trying to slim it down,” while Sinema and the group of House Democrats were “trying to wreck it, they’re trying to defeat it completely.”
“They are the handmaidens of the industry,” he said. “At this moment, they are working for the drug companies. They’re not working for their constituents.”
Mitchell cited Tauzin’s intervention on behalf of the pharmaceutical industry, raising the specter that history could be repeating itself.
“What the hell do you think might be going on if they were willing to do that then? Now prices are much bigger, the program is more expensive, the market for drugs has grown,” he said. “What is pharma doing now? This is an amoral industry.”
Although members of Congress and staff are now required to disclose when they interview for jobs with lobbying firms, the Congress-to-lobbyist pipeline is still extremely active, Sarah Bryner, the research director at OpenSecrets, said in an interview with Salon. Lawmakers who have chaired important committees or subcommittees, she said, are often sought out by K Street firms for their experience on key issues. “That kind of thing does happen fairly regularly, that’s just a very straight line,” Bryner said.
But some cases of apparent or real corruption are much less obvious.
“It’s tricky” to identify when members of Congress may be crossing the line, Bryner said, “because any activity that they do is going to be observed by people who might ultimately want to hire them as a lobbyist. The execution of your duties as a member of Congress is in and of itself something that lobbying firms are looking at almost like a job interview. … So it’s kind of a difficult relationship to call out explicitly.”
At least 448 former members of Congress now work as federal lobbyists, according to OpenSecrets. Former Rep. Charlie Dent, R-Pa., a longtime critic of Obamacare who collected more than $500,000 in donations from the pharmaceutical industry throughout his career and once backed an effort to privatize Medicare, registered as a lobbyist and has at least three clients in the health care field, including the major insurer Blue Cross/Blue Shield. Former Rep. Ed Whitfield, R-Ky., who once chaired the House Energy and Commerce subcommittee on energy and power, resigned in 2016 before his term ended and soon signed on as a lobbyist for top pharmaceutical companies.
“There is a common type of member of Congress who expects that they will become a lobbyist when their days in elected office come to an end,” said Jeff Hauser, the founder of the Revolving Door Project at the Center for Economic and Policy Research, a progressive think tank. “Their incentives are not necessarily to sell out thoroughly on all matters, because a low-credibility ex-politician is not necessarily the most effective mercenary lobbyist. But these aspiring lobbyists do have an incentive to appear ‘reasonable’ to business interests, rather than ardently populist.”
That trend is hardly limited to the pharmaceutical industry. Former House Armed Services Chairman Buck McKeon, R-Calif., who received more than $800,000 from the defense industry during his political career, now works as a lobbyist for the defense contractor Lockheed Martin. Hauser also pointed to former Rep. Joe Crowley, D-N.Y., “a business-friendly member with tremendous interpersonal skills who has gone from being a ‘reasonable Democrat’ opposing higher taxes on the financial services industry on the Ways and Means Committee to … a lobbyist protecting the financial services industry from higher taxes.” (If Crowley’s name sounds familiar, it might be because he lost his seat in a 2018 Democratic primary — to Alexandria Ocasio-Cortez.)
Lawmakers are subject to a one-year “cooling off” period before they can lobby on behalf of an industry they oversaw in Congress. But former lawmakers often get around this rule by joining lobbying firms without “technically lobbying,” Bryner said.
“To be a lobbyist, you need to meet certain criteria, including actually meeting with members of Congress or staff,” she explained. “But if you don’t do that — if you just sort of engage in creating the campaign and coming up with material — you may not necessarily disclose as a lobbyist and you’re allowed to do whatever you want.”
Returning to the prescription drug issue, patient advocates argued that the supposed compromise proposal pushed by Sinema and Peters would be a gift to the industry, and might even be worse than the status quo. The Peters bill would limit Medicare negotiations to Part B drugs, which are typically only administered by health care providers, and would also prohibit Medicare negotiations on drugs still in their period of exclusivity.
“Their bill isn’t an alternative,” Mitchell said. “It is a bill to defeat negotiation the way it’s written. It pretends to be a Medicare negotiation bill that excludes all the drugs that need to be negotiated.” He called the central proposal of the bill a “fraud” because competition from generics is likely to reduce the price of drugs by 85% to 95% once the period of exclusivity ends anyway. “You don’t need to negotiate over the drugs that are no longer in exclusivity,” he said. “We have a process that lowers the price and it works pretty well.”
The Biden administration seemed to agree. White House officials told The New York Times that limiting negotiation to drugs that are not exclusive “would make negotiating power pointless.”
In fact, it may be worse than that. Rep. Peter Welch, D-Vt., a member of Democratic leadership, told reporters in a press call this week that Peters’ bill would allow drug companies to seek additional patent protection after their drug is approved by the FDA, potentially extending the period when negotiations are banned to as long as 21 years.
“The cure here is worse than the disease” because of those potential extensions, Welch said. “Pharma once again is trying to leverage this into not only avoiding fair pricing but advancing price gouging.”
Without negotiation, taxpayers and employers would continue to be at the “mercy of the monopoly pricing power,” Welch said, citing the example of the recently approved Alzheimer’s drug Adulhelm. Though there is little evidence the drug actually works, Adulhelm maker Biogen set the price at around $60,000 for a year’s supply in in-patient settings, far higher than the $10,000 to $25,000 cost Wall Street analysts had projected. If that drug were administered to one-third of the 6 million Americans with Alzheimer’s eligible to receive it under Medicare, it would cost taxpayers $110 billion per year, Welch said — which would exceed spending on all other medication through Medicare part B.
Lawmakers allied with the industry claim that cutting into drug companies’ profits will hurt innovation. Mitchell, who suffers from multiple myeloma, an incurable blood cancer that he treats with a combination of drugs that carry a list price of $900,000 a year, calls that argument “bullshit.”
The Congressional Budget Office has estimated that the reduced profits under Medicare negotiation would result in two fewer drugs entering the market per year over the next 30 years. But in that possible cumulative total of about 900 drugs, only 10% to 15% would represent true therapeutic advancement. Mitchell argues even that can be mitigated by increasing funding to the National Institutes of Health, whose research contributed to all 365 drugs approved by the FDA between 2010 and 2019.
“You have an industry that gets taxpayer support for research, gets governmental protection — giving it monopoly pricing power — and the government sets up the market,” Welch said. “No other industry enjoys that amount of special privilege.”
A recent survey from the Kaiser Family Foundation found that 83% of adults support allowing Medicare to negotiate lower costs. Only 6% of respondents said they believe that drug companies need to charge high prices to fund innovative research, while 93% said they believed drug companies would “still make enough money to invest in the research” needed to develop new drugs.
“The fear in the country among voters is not that Congress is going to go too far in regulating the price of drugs, but that it won’t go far enough,” veteran Democratic pollster Geoff Garin told reporters on Monday. That view crosses party lines, he added, and has persisted for years, .
Welch, a leading proponent of Medicare negotiation, said it was “political malpractice” to keep the Medicare non-negotiation rule on the books to appease a handful of Democrats backed by Big Pharma’s money.
“Pharma is powerful,” Welch said, but “it’s totally, completely, utterly irresponsible for us not to do it.”