Big Pharma's $800 Million In Political Spending

by Emad Mekay

(IPS) WASHINGTON -- U.S. drug companies spent more than $800 million over the past seven years in campaign donations and lobbying that led to favorable laws and tens of billions of dollars in extra profits, according to a Washington-based watchdog group.

According to a report by the Center for Public Integrity (CPI), a Washington-based watchdog group, the pharmaceutical and health products industry has become the biggest spender on lobbying activities and efforts to influence public policy and decisions in their favor.

"It is astonishing to learn that no other interest has spent more money to sway public opinion in this time period," said Roberta Baskin, executive director of CPI. "We are not accusing drug companies of wrongdoing; however, we do believe that such financial success deserves close scrutiny."

The United States is home to nine of the world's largest pharmaceutical companies and U.S. corporations supply 60 to 70 percent of the world's new medicines. The report sheds light on how drug companies operate here in the local market and internationally where millions depend on U.S. drugs and companies.

Nearly 45 percent of all global pharmaceutical sales, or $248 billion, were in North America in 2004, according to IMS Health, a private consulting company that studies the industry.

CPI said the industry's influence campaign has also led to a more friendly regulatory policy at the Food and Drug Administration, the U.S. agency that approves its products for sale and most directly oversees drug makers. Many developing nations that lack technical evaluation capabilities look to reports by the FDA for approval of drugs in their local markets.

The report says that the U.S. government contributes more money to the development of new drugs -- in the form of tax breaks and subsidies -- than any other in the world.

Among the tactics cited in the report are lobbying to quash laws that could change drug prices and affect profits, including stopping importation of medicines from countries that cap prescription drug prices.

Pfizer, the world's largest drug company with sales in 150 countries, made a profit of $11.3 billion last year, out of sales of $51 billion. The U.S. company had nearly 10 percent of the global drug market share last year.

The second largest company, GlaxoSmithKline Plc, while headquartered in Britain, has major operations in the United States. GSK had 2004 sales of $37.2 billion and a pre-tax profit of $11.1 billion. It controlled seven percent of the global drug market. The company spent $32.4 million in U.S. lobbying since 1998.

The industry spent nearly $128 million in 2003 alone lobbying the government. This has resulted in Congress passing, and President Bush signing, the Medicare Modernization Act of 2003, a law that created a taxpayer-funded prescription drug benefit for senior citizens.

The Pharmaceutical Researchers and Manufacturers of America (PhRMA), an industry trade group, issued a statement charging that the CPI report was biased and one-sided.

"What it fails to acknowledge is one indisputable fact: medicines researched and developed by America's biopharmaceutical research companies save lives and improve the quality of life for tens of millions of patients from around the world," said PhRMA Senior Vice President Ken Johnson.

"Today's regulations and laws encourage companies to take risks as they pursue cutting-edge research and spend nearly $50 billion a year to develop new and better medications that allow people to live longer, healthier lives," said Johnson in his statement.

PhRMA topped the list of pharmaceutical lobbying spending, shelling out $74 million since 1998, according to the report. The group says its members invested an estimated $38.8 billion in 2004 in discovering and developing new medicines.

Its members include 16 of the industry's 20 largest companies and their subsidiaries, such as Hoffman-La Roche Inc., Novartis Pharmaceuticals Corporation, Merck & Co. Inc., GlaxoSmithKline Plc, Amgen Inc, Johnson & Johnson, Pfizer Inc., and Bristol-Myers Squibb Co.

CPI also found that U.S. manufacturers of drugs and cosmetics hired about 3,000 lobbyists, more than a third of them former federal officials, to advance their interests before the House of Representatives, the Senate, the FDA, the Department of Health and Human Services, the Office of the U.S. Trade Representative and other executive branch offices.

Congress tops the list of targets for industry lobbying, with contacts at the House or Senate listed on about 5,500 lobby disclosure reports.

The top 20 drug corporations and the industry's two trade groups, PhRMA and the Biotechnology Industry Organization (BIO), which represents biomedicine companies, disclosed lobbying on more than 1,600 bills between 1998 and 2004.

A third of all lobbyists employed by the industry are former federal government employees, 15 of them are former senators and more than 60 former members of the U.S. House of Representatives.

The two trade groups, PhRMA and BIO, are headed by two former members of Congress: Billy Tauzin and BIO president Jim Greenwood. Both served on committees that regulated drug companies, and each sponsored several bills related to the industry, according to the report.

"My only comment is that 95 percent of our member companies are in the research stage. They do not have a product," said Dan Eramian, vice president of communications for BIO. "We are probably the most research intensive industry sector in the world. To lump U.S. in with other people who are at the marketing issue doesn't make sense any sense to me."