Citizens for Better Medicare: The Truth Behind the Drug Industry's Deception of America's Seniors Designed to Mislead America's

• Full Report in PDF Format •

Executive Summary

Over the last year, the prescription drug industry has buffeted Americans with wave after wave of deceptive advertising, part of a sophisticated campaign to protect the firms' multi-billion-dollar profits. The drug lobby's goal is single-minded: avoid any kind of Medicare drug coverage that reins in skyrocketing drug costs. The campaign's effect so far has been to deny America's senior citizens and people with disabilities a Medicare prescription drug benefit.

To carry out this campaign, the drug companies' regular lobby, the Pharmaceutical Research and Manufacturers of America (PhRMA), created the innocuous-sounding Citizens for Better Medicare (CBM) to serve as its front group. Through CBM, they have budgeted at least $65 million for television advertising since July 1999. This air battle has been supplemented with radio, print and Internet ads, along with direct mail appeals from CBM and its member groups.

In looking at CBM's advertising and the drug industry's lobby disclosure reports, it's clear that the pharmaceutical giants prefer the safety of the status quo and support very little in the way of reform. Two main pieces of legislation are drawing their fire. One is the Clinton prescription drug proposal, which would add a new benefit under Medicare, rather than rely on private insurance companies and HMOs to provide coverage. Industry leaders say a federal benefit will lead to cost-cutting efforts that will cut into their profit margins.

The other bill that the drug lobby opposes is the Prescription Drug Fairness for Seniors Act (H.R. 664/S. 731, also known as the Allen bill for its House sponsor, Rep. Tom Allen, D-Maine). The bill would require drug companies to give deep discounts to local pharmacies for prescriptions that the pharmacies sell to Medicare beneficiaries. The resulting savings for Medicare beneficiaries would be about 40-50 percent, which is about what large purchasers like the Departments of Defense and Veterans Affairs save. It is also close to the amount that individual seniors can save by buying their drugs in Canada.

In CBM's television ads, Americans were first introduced to "Flo," a skeptical senior often spotted with her friends at the bowling alley. She repeatedly tried to scare seniors with the specter of a "big government" program. The drug industry tapped a real Willy Wonka character to play "Flo." The actress, Diana Sowle, played Charlie Bucket's mother in "Willy Wonka and the Chocolate Factory." But no amount of acting or magical television trickery can turn Citizens for Better Medicare into a grassroots organization representing seniors.

Public Citizen researched CBM's self-described "broad-based bipartisan group" and found a collection of shills, seedy direct-mail operatives and industry-funded research and lobby groups working in tight coordination with the drug lobby. Among this report's findings:

  • CBM's so-called "broad-based" coalition is a sham. Its director, Tim Ryan, was the marketing director for PhRMA, before joining CBM, and he admits in interviews that CBM is overwhelmingly funded by PhRMA.
  • CBM is a secretive political group organized under Section 527 of the federal tax code, which covers groups whose purpose is to influence or attempt to influence elections. Taking advantage of a notorious tax loophole, CBM does not have to even report its existence, much less its activities, to either the IRS or the public. So the public can only guess about the scale and cost of its political efforts to protect the prescription drug industry. According to available press reports, which are necessarily incomplete, CBM has budgeted at least $65 million since July 1999 to blanket the airwaves with their misleading message.
  • CBM's members include The Seniors Coalition, the 60 Plus Association and the United Seniors Association. These direct mail specialists have been denounced by Republicans and Democrats alike for their scare tactics, which involve frightening seniors with overblown threats to their retirement benefits and asking them to send money to support the groups' questionable lobbying efforts. This trio has been the subject of numerous investigations in the 1990s.
  • The Seniors Coalition joined CBM in slamming supporters of the Allen bill with a direct mail campaign in Oregon and Minnesota and perhaps in other states, timed to coincide with CBM's television ads. The coalition brazenly promotes its "corporate partnerships," on its website, in effect selling their services to corporate spin doctors. They ask: "Are your expensive education and lobbying efforts hampered due to the lack of effective consumer support? Would an army of more than 3 million seniors -- including 7,000 grass roots activists -- working on important legislative/regulatory issues be valuable? ONE POWERFUL SOLUTION: TEAM UP WITH THE SENIORS COALITION!"
  • CBM has enlisted several seemingly independent disease groups, but their tax returns show that some are highly dependent on funding from the drug industry. For example, the Association of Black Cardiologists received about 80 percent of its revenue from pharmaceutical firms in 1996-97, the last years for which donor information is available. This year, they received a $2.2 million grant from PhRMA member Bristol-Myers Squibb.
  • Other CBM groups with substantial ties to the pharmaceutical industry have been active in state-level fights, publicly opposing Maine's groundbreaking law to bring down the price of prescription drugs. The Alliance for Aging Research has many pharmaceutical industry members on its board of directors, and the Kidney Cancer Association received $493,500 (nearly 19 percent of its revenue) from the pharmaceutical industry from 1996-1998.
  • In addition to CBM, the drug lobby coordinates its activities with a range of conservative organizations that also appear independent on first glance but are heavily funded by the industry. Citizens for a Sound Economy, a conservative think tank, takes corporate grants to produce "research" on topics that directly affect those corporations. CSE has several drug industry donors and took $250,000 from PhRMA member Johnson & Johnson in 1998. It released a study attacking the Allen bill in February 2000.

CBM's campaign has seen four major waves, each precisely calibrated to attack supporters of common sense reform. After President Clinton announced his prescription drug plan in June 1999, the issue of drug prices saw a flurry of media attention. On July 15, drug industry leaders met to coordinate a $30 million advertising buy, and "Flo" was born later that month. In the summer and fall, many members of Congress released studies on price discrimination in their districts, showing how seniors without prescription drug coverage were being price gouged by drug companies. The drug industry responded with a $1.5 million barrage of television, radio, print and Internet banner ads in Oregon, Minnesota, Iowa and Colorado. They targeted vulnerable House Democrats and accused them of "playing politics" with the issue. These ads were followed up with direct mail from the Seniors Coalition. In addition, CBM ran ads supporting one of the industry's chief Democratic champions on Capitol Hill, Rep. Cal Dooley of California, who had a primary fight.

In January 2000, the Clinton administration, tired of the onslaught, threatened to slam the industry in the President's final State of the Union address. The drug industry launched a new, friendlier set of ads, with Flo expressing optimism that Washington could make progress toward a prescription drug benefit. President Clinton went easy on the industry in his January 27 speech, and the drug firms' stock prices got a boost from a relieved Wall Street.

The truce, however, was a sham. The drug industry kept its coalition of shills on task to produce a bevy of studies that cast doubt on the need to reduce drug prices as part of a Medicare proposal. By March, in response to many news reports of bus trips to Canada to buy drugs at a deep discount, CBM responded with new ads that slammed the Canadian health system and attempted to scare seniors with the specter of rationing and supposed threats to research. They also began running ads attacking Montana's Democratic Senate candidate Brian Schweitzer, who led a widely reported bus trip to Canada.

Ironically, by June of 2000, the drug industry has come so far that it has begun to co-opt its opponents' most effective message. In full-page ads around the country, PhRMA is touting a study saying that drug prices can be cut 30-40 percent under a private insurance scheme. This is clearly an attempt to steal the Allen bill's thunder and undermine support for allowing Medicare to negotiate lower drug prices.

Despite the numerous changes of strategy and message one thing has remained consistent about the Citizens for Better Medicare campaign: the drug industry will do whatever it takes — tell lies, distort and spend gobs of money — to block a Medicare drug program that does the one thing necessary to make it affordable — rein in skyrocketing drug costs.