June 23, 2004

Drug Industry and HMOs Deployed an Army of Nearly 1,000 Lobbyists to Push Medicare Bill, Report Finds

Study Shows Special Interests Spent $141 Million in 2003, Hired 431 Lobbyists With “Revolving Door” Connections to Congress and the White House

WASHINGTON, D.C. – In the final push for Medicare prescription drug legislation, the pharmaceutical industry, HMOs and related interests spent more money and hired more lobbyists in 2003 than ever before, according to a report issued today by Public Citizen.

The pharmaceutical and managed care industries spent a combined $141 million last year, according to Public Citizen’s analysis of newly released federal lobbying disclosure records. Drugmakers and HMOs hired 952 individual lobbyists in 2003 – nearly half of whom had “revolving door” connections to Congress, the White House or the executive branch. That’s nearly 10 lobbyists for every U.S. senator.

“The Medicare Modernization Act, a top priority of President Bush, promises to safeguard industry profits at the expense of America’s taxpayers,” said Frank Clemente, director of Public Citizen’s Congress Watch. “Considering the legion of lobbyists unleashed by pharmaceutical companies, HMOs and allied industry front groups, no wonder taxpayers ended up with a bill tailor-made to serve these special interests instead of senior citizens.”

Since 1997, Public Citizen has conducted an annual study of Washington lobbying by the pharmaceutical industry. Today’s report, The Medicare Drug War, exposes the extent of the drug industry’s latest lobbying barrage. Among its findings:

• In 2003, the drug industry spent a record $108.6 million on federal lobbying activities and hired 824 individual lobbyists – both all-time highs. In 2002, based on a more narrowly defined survey, the drug industry spent $91.4 million and hired 675 lobbyists.

• This army of lobbyists helped ensure that the new drug benefit will be administered by private companies. The new law expressly prohibits the government from using its bargaining clout to negotiate lower prices and effectively bans the “reimportation” of cheaper drugs from Canada.

• The Pharmaceutical Research & Manufacturers of America (PhRMA), which represents more than 40 brand-name drug companies, shelled out more than $16 million last year on lobbying, a 12.5 percent increase from the year before. PhRMA alone hired 136 lobbyists.

• HMOs and other managed-care health plans mounted an extensive lobbying effort. Managed care companies that lobbied on the Medicare bill spent $32.3 million on federal lobbying in 2003. HMOs and health plans hired 222 lobbyists to work   on the Medicare bill.

• Managed care lobbyists helped ensure their clients got a windfall in the bill – $531.5 billion over 10 years based on data from the Medicare actuary – as enrollment in managed care plans is expected to climb from 12 percent to 32 percent of all Medicare beneficiaries.

• The Blue Cross Blue Shield Association spent more on lobbying than any other health plan in 2003, shelling out $8.1 million. The two major industry trade associations – the American Association of Health Plans (AAHP) and the Health Insurance Association of America (HIAA), which merged in October 2003 – spent a combined $8.3 million.

Both the pharmaceutical and managed care industries relied heavily on lobbyists with “revolving door” connections. In all, 431 lobbyists employed by the drug industry or HMOs – or 45 percent of all their lobbyists – previously worked for the federal government. Among them were 30 ex-U.S. senators and representatives – 18 Republicans and 12 Democrats.

• At least 11 top staffers who left the Bush administration lobbied for the drug industry and HMOs in 2003. White House and administration insiders working as lobbyists on the Medicare bill included several former top advisers to Bush, Vice President Dick Cheney and Department of Health and Human Services (HHS) Secretary Tommy Thompson.

• The exodus from the administration has accelerated since Bush signed the new Medicare law. At least four key Bush administration officials – most notably Tom Scully, administrator of the Centers for Medicare and Medicaid Services (CMS) – have exited to help industry clients benefit from the Medicare bill that they wrote or promoted. Another six top congressional staffers at the center of negotiations over the Medicare bill now lobby for drug companies or HMOs.

• The revolving door spins both ways. Three prominent drug industry and HMO lobbyists have recently moved into senior health policy positions at HHS. Another is now a spokesman for the Bush campaign. And the lead White House negotiator on the Medicare bill – presidential adviser Doug Badger – previously represented half a dozen drug companies as a lobbyist.

• Drug industry and HMO executives and lobbyists ranked among Bush’s elite fundraisers. Twenty-one executives and lobbyists achieved “Ranger” or “Pioneer” status by collecting at least $200,000 or $100,000, respectively, for Bush in the 2000 or 2004 campaigns. (In addition, two of presumptive Democratic nominee John Kerry’s biggest backers were lobbyists on the drug industry payroll in 2003.)

“The revolving door between the White House and K Street has made the Bush administration indistinguishable from the industry,” said Craig Aaron, senior researcher for Public Citizen’s Congress Watch and lead author of the report. “If it wasn’t bad enough that most of the key negotiators working on the Medicare bill were preparing to cash in on K Street as soon as it passed, Bush has brought in more drug industry and HMO insiders to implement and promote this disastrous new law.”

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