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New Investigative Study Reveals How Congress Addiction to Drug Industry Money Threatens Medicare Drug Bill

July 6, 2000

New Investigative Study Reveals How Congress Addiction to Drug Industry Money Threatens Medicare Drug Bill

Report Being Released in 50 Cities as Groups Protest Drug Industry
Price Gouging and Passage of U.S. House Republican Rx Bill

WASHINGTON, D.C. — The prescription drug industry, using its connections and campaign cash, is well on its way toward blocking comprehensive Medicare drug coverage for America s seniors and people with disabilities, Public Citizen shows in an in-depth investigative report released today.

The report is being released in more than 50 cities in 25 states today as seniors, health, labor and consumer groups conduct a national day of action to “Fight for Independence from Drug Industry Price Gouging” and protest U.S. House passage of the Republican drug bill.

“By deploying an army of lobbyists and making huge campaign contributions, the drug industry has succeeded in blocking a comprehensive Medicare drug benefit that reins in sky-high drug costs,” said Frank Clemente, director of Public Citizen s Congress Watch.

The report, Addicting Congress: Drug Companies Campaign Cash & Lobbying Expenses, is especially timely as the U.S. House of Representatives last week approved a pro-drug industry bill (H.R. 4680, the Medicare Rx 2000 Act) by the narrowest of margins — 217 to 214, largely along party lines. Crafted by House Republican leaders in a matter of weeks, this proposed expansion of Medicare benefits has serious shortcomings: It depends on the private insurance industry and HMOs, rather than the Medicare program, to provide coverage, and it will do little to contain escalating costs.

Among the report s chief findings are the following:

The drug industry is spending vast sums on lobbying to hire well-connected former members of Congress and key staff to promote its financial interests before Congress. Overall, the drug industry spent $235.7 million from 1997 to 1999 to lobby officials in Congress and the executive branch. This amount does not include tens of millions more spent on television, radio and newspaper ads, direct mailings and telemarketing efforts.

1999 drug company spending on lobbying put the industry at the top of the Washington heap: Spending rose from $74.3 million in 1998 to $83.6 million in 1999 — a 13 percent increase — as public pressure to pass a Medicare prescription drug benefit mounted. On the Medicare drug benefit and pricing issue alone, companies have hired 297 lobbyists — the equivalent of one lobbyist for every two members of Congress, an astonishing rate of coverage.

Since 1993, the drug industry has given $33.4 million in campaign contributions to candidates and parties. Moreover, its giving has grown exponentially. Contributions are projected to reach $13.8 million for the 2000 cycle — a 43 percent increase over 1998 and a whopping 147 percent increase over 1994.

The industry s campaign spending has become more and more partisan in favor of Republicans. Overall, 69 percent of the contributions ($23 million) have gone to Republicans and 31 percent to Democrats ($10.4 million). The Republican share has risen from 60 percent in the 1994 cycle to 73 percent thus far in the 2000 cycle.

“Soft money” — unlimited contributions from the companies and their executives to the political parties — has become the favorite form of campaign contribution for the drug industry. It accounts for 55 percent of all donations thus far in the 2000 cycle. Soft money enables industry honchos to maximize their influence over congressional leaders who help raise party money and determine the legislative agenda. Eighty percent of all drug industry soft money is now being directed to Republican Party committees.

The drug industry s soft money contributions nearly tripled from the 1994 cycle ($1.7 million) to the 1998 one ($4.6 million). If drug industry soft money spending for the 2000 elections continues to rise at the rate it did in the last election, the final 2000 figure is projected at $7.5 million — a 344 percent jump from 1994 and a 65 percent jump from 1998!

To work its will in Congress where Medicare prescription drug legislation is written, the drug industry has redirected the bulk of its soft money away from the two national party committees to the congressional campaign committees. Republican congressional committee collections rose from 39 percent of the total given to all Republican Party committees in the 1994 cycle to 61 percent in this cycle. Soft money to Democratic congressional committees went from 13 percent of the total given to all Democratic Party committees in 1994 to 85 percent in 2000.

Drug industry “hard money” contributions to candidates from company employees and political action committees help explain the recent House vote. The average drug industry contribution to proponents of the pro-industry House Republican bill was $18,984, which is 78 percent more than the $10,667 average contribution to opponents.

Moreover, the report reveals the cozy working relationship between Republican leaders and the drug industry and between the drug industry and “renegade” Democrats, including strategy sessions, close collaboration to craft legislation favorable to the industry and attack consumer-oriented bills, and a revolving door between Congress and the industry that will make your head spin.


Key Fundraising Activities of the Blue Cross and Blue Shield Association (1997-2000)