Does $800 million still buy what it used to? According to the Center for Public Interest (CPI), it certainly does especially if you are the pharmaceutical industry and are shopping for favorable treatment on Capitol Hill.
In 2004, the top 20 drug makers had a staggering $332.5 billion (U.S. dollars) in combined sales. Clearly, this is a goldmine well worth protecting. In order to do just that, the pharmaceutical industry has spent $800 million over the past seven years on federal and state lobbying and campaign contributions.
According to CPI: “Its lobbying operation, on which it reports spending more than $675 million, is the biggest in the nation. No other industry has spent more money to sway public policy in that period. Its combined political outlays on lobbying and campaign contributions is topped only by the insurance industry.”
In a comprehensive analysis (http://www.publicintegrity.org./rx/report.aspx?aid=723&sid=200) dated July 7, CPI has demonstrated strong evidence of a cause and effect between these enormous “investments in Washington” and “a series of favorable laws on Capitol Hill and tens of billions of dollars in additional profits,” fending off “measures aimed at containing prices,” and seeking patent protections and extensions, tax credits, and measures that would weaken the FDA.
While Roberta Baskin, CPI’s executive director, pointed out that: “We are not accusing drug companies of wrongdoing; however, we do believe that such financial success deserves close scrutiny.” A spokesman for Pharmaceutical Research and Manufacturer of America (PhRMA) said the report was “clearly biased and one-sided.”
Currently, the pharmaceutical industry spends about $60 billion annually on drug marketing which is almost double what it spends on research and development.
In demonstrating it is more than simply coincidence that massive political-related spending and highly favorable treatment by the very politicians the spending is directed at, CPI makes the following points:
• Although nine of the 20 largest pharmaceutical companies are based in the United States, drugs are more expensive there than anywhere else in the world and global drug companies make the bulk of their profits in the U.S.
• Of the 3009 lobbyists hired by the drug industry since 1998, more than one-third (1,014) were former government officials and 75 were former members of Congress including such high-profile names as Bob Dole, Lloyd Bentsen, Bob Livingston, Tom Foley, and Billy Tauzin (currently the President of PhRMA).
• The industry employs 1,291 registered lobbyists in Washington, D.C., which is more than any other industry. Over 50% of these lobbyists are former government officials.
• FDA warning letters to drug makers dropped by 84% between 1997 and 2004.
• The drug industry lobbied over 1,600 bills in Congress between 1998 and 2004.
• In 2003, the industry spent $116 million on lobbying and political campaigns. That year Congress approved the prescription drug benefit under Medicare which prohibits Health and Human Services from negotiating drug prices with the industry.
• The industry spent $128 million in 2004 to lobby for such things as tax breaks as part of a corporate tax relief bill.
• According to a study by professors at Boston University, 61% of Medicare money spent on prescription drugs will become profit for drug companies. That translates to $139 billion increased profits over eight years beginning in 2006.
• “The U.S. government contributes more money to the development of new drugs—in the form of tax breaks and subsidies—than any other government.
• Standard operating procedure is for the industry to hire former government officials to lobby their former bosses regarding pending legislation.
From the research presented in CPI’s report, it is evident that, unless there are drastic changes in the rules relating to lobbying and campaign contributions, the pharmaceutical industry will continue to “invest” hundreds of millions of dollars to ensure its “continuing prosperity.”