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PhRMA s Secret Play Book

Jan. 26, 2000

PhRMA s Secret Play Book

“Insider” Documents Show Prescription Drug Industry Continues Campaign to Undermine Support for a Prescription Drug Benefit

WASHINGTON, D.C. — After spending $30 million in 1999 on ads intended to undermine support for an outpatient prescription drug benefit for Medicare recipients, two spokesman for the prescription drug industry’s main trade group, the Pharmaceutical Research and Manufacturers of America (PhRMA), recently told The New York Times that they would accept legislation to provide Medicare drug benefits this year (“Drug Makers Drop Their Opposition to Medicare Plan,” Jan. 14).

However, just five days after the article was published, on Jan. 19, PhRMA s “Public Affairs Section” held a strategy meeting with industry allies to detail plans that appear designed to undermine support for a Medicare prescription drug bill.

“It’s clear that the pharmaceutical industry is talking out of both sides of its mouth and is prepared to spend tens of millions of dollars to ensure that elderly citizens continue to get gouged at the drug store so that wealthy pharmaceutical executives can keep raking in outrageous profits,” said Public Citizen President Joan Claybrook.

PhRMA’s battle plan includes a calendar of events for January and February, as well as other documents, revealing that the industry s strategy is to work in a highly coordinated way with allied organizations and front groups. The activities include releasing reports, conducting a major grassroots public relations and lobbying campaign, initiating state media tours to challenge increased publicity about how much cheaper drugs are in Canada, and opposing the “Allen” bill (H.R. 664/S. 731), which is the most popular Medicare prescription drug bill pending in Congress. Specifically, PhRMA and its allies will:

Undertake a Major Grassroots Public Relations and Lobbying Campaign

In mid-January PhRMA was to begin running ads on television. And Citizens for Better Medicare (CBM), a front group formed and funded largely if not exclusively by PhRMA to lobby on the prescription drug issue, also was to begin running ads again after letting up at the end of last year. (Trade publications previously reported that up to $35 million in additional ads were to run in 2000.) Moreover, a major direct mail and phone bank operations were to begin, polls were to be released and extensive lobbying of Capitol Hill was to occur.

Conduct State Media Tours to Challenge Lower Canadian Drug Prices

To counter the growing wave of Americans traveling across the border into Canada to buy the same drugs at a 25 percent to 50 percent discount from the prices they pay in the United States, PhRMA planned to begin state media tours in key border states in late January. Targeted states were Maine, Massachusetts, Michigan, Minnesota, Montana, Oregon, Vermont, and Washington. In early February, state media tours on “price controls” are also planned.

Intensify Opposition to the Allen Bill

The Prescription Drug Fairness for Seniors Act (H.R. 664/S. 731), sponsored by Reps. Tom Allen (D-Maine) and Henry Waxman (D-Calif.) in the House and Sens. Tim Johnson (D-S.D.) and Edward Kennedy (D-Mass.) in the Senate, is the most popular Medicare prescription drug bill in Congress with 138 House co-sponsors and 12 Senate co-sponsors as of Jan. 24, 2000. The Allen bill would allow 39 million Medicare beneficiaries to buy prescription drugs at up to 40 percent off current retail prices. A June 1999 Merrill Lynch report found that, at most, the impact of the legislation would be to cut drug company revenues by 3.3 percent a modest cut given the enormous profits generated by the industry.

Release reports by allies and front groups to bolster the industry s position

As revealed by the trade association s calendar of events, the reach of PhRMA is substantial when it comes to working with some of Washington s most well-funded conservative think tanks and lobbying organizations, many of whom receive substantial financial support from PhRMA and allied corporate patrons. Here is a list of scheduled activities on the PhRMA calendar. (An asterisk * indicates membership in Citizens for Better Medicare):

Jan. 10 “Goldberg study: Canada access; HIAA [Health Insurance Association of America] Hill briefing: drug costs.” The reference appears to be Dr. Robert Goldberg, whose Jan. 17 communication with PhRMA seeking financial support is discussed below.
Jan. 14 “CSE [Citizens for a Sound Economy] paper.”
Jan. 16 “NCPA [National Center for Policy Analysis] paper.”
Jan. 17 “CBM [Citizens for Better Medicare] ads begin.”
Jan. 20 “Hispanic BRT [Business Round table] Survey.”
Jan. 23 “Two Heritage [Foundation] papers: Canada & Clinton plan.” Please note that the CBM Web site links you to the Heritage Foundation Medicare studies.
*Jan. 26 “CAI [Council for Affordable Health Insurance] press conference
Jan. 28 “AEI [American Enterprise Institute] Price control overview book released.”
Feb. 2 “NTU [National Taxpayers Union] study release.”

*Feb. 9 “CAGW [Citizens Against Government Waste] study on MoC [Members of Congress] plan vs. Clinton.”
*Feb. 16 – “Release of 3rd Millennium study on Clinton plan.”
*Feb. 21 – “Small Biz [Business] Survival Committee roll-out begins.”

Feb. 27 – “HIMA [Health Industry Manufacturers Association] Studies: Value of Tech; Reimbursements”
Feb. 28 – “Tozzi Study.” This reference appears to be Jim Tozzi, who was listed as a lobbyist for the Health Benefits Coalition in 1998, the most recent year for which online records are available on the Center for Responsive Politics Web site. According to its mission statement, the HBC was “formed out of concern that federal health care mandates proposed in Congress under the guise of patient protections would increase health care costs .& ” Tozzi, a former senior official at the Office of Management and Budget (OMB) during the Reagan and Carter administrations, previously has worked to discredit the risk of second hand smoke on behalf of Phillip Morris and its allies.

Moreover, two communications contained in the PhRMA meeting documents shed some light on how PhRMA sponsors, or considers sponsoring, supposedly objective researchers and commentators:

Jan. 7, 2000 Betsey McCaughey Ross, senior fellow at the Hudson Institute, wrote a letter to Alan Holmer, PhRMA president and CEO, in advance of a scheduled meeting “asking PhRMA to support my work at the Hudson Institute, because my writings on health care policy can make a substantial difference in public opinion and in the nation s capitol. My track record proves it.” McCaughey is the former Lieutenant Governor of New York State under Governor George Pataki.

Jan. 17, 2000 Dr. Robert Goldberg, senior research fellow at the Ethics and Public Policy Center, sent a memorandum to Alixe Mattingly, PhRMA s senior vice president for public affairs, noting that “last year I put out a steady stream of articles (see attached samples), did dozens of radio interviews and participated in a number of live and televised forums on the issue of prescription drug coverage…Ironically I have been so busy that I have not had time to reach out to the right people for such additional funding. So now I am asking your help to help me contact the appropriate individuals in various companies to support my research and writing.”

Statement of Dr. Sidney Wolfe on Lowering Drug Costs for Elderly