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October 5, 2000, Thursday, Late Edition -
Final
SECTION: Section A; Page 1; Column
3; National Desk
LENGTH: 3670 words
HEADLINE: MEDICINE MERCHANTS/Cultivating Alliances;
With Quiet, Unseen Ties, Drug Makers Sway Debate
BYLINE: By JEFF GERTH and SHERYL GAY
STOLBERG
DATELINE: WASHINGTON, Oct. 4
BODY:
Elizabeth Helms arrived on Capitol Hill on a
warm Tuesday afternoon in July with a simple message for Congress:
Drug stores, not drug makers, are to blame for
the high cost of prescription medicines.
Under the hot glare of
television lights, Ms. Helms, a former hairdresser from Folsom, Calif., implored
a panel of senators not to "kill the golden goose -- the pharmaceutical
industry." Then she presented her evidence: a survey of 80 pharmacies that
showed consumers could cut their drug bills by more than half
simply by shopping around.
"The argument that the industry is gouging
consumers with prices is completely unfounded," Ms. Helms declared.
A
consumer activist, Ms. Helms came to the Senate hearing representing three
grass-roots organizations, including the patients' group that sponsored her
survey and a consumer coalition, Citizens for the Right to Know. What her
audience did not hear, however, was that she also works full time for a public
relations company whose clients include the Pharmaceutical Research and
Manufacturers of America, the drug industry's trade group.
Six years ago, the industry trade group provided the seed money and
public relations expertise to help create Citizens for the Right to Know; it
still pays the group's telephone bills. And a spot check of Ms. Helms's survey
found it overstated the differences in pharmacy prices.
In an interview,
Ms. Helms defended the survey and said that working for the trade group was only
a small part of her job. "I'm as grass roots as they come," she said.
The story of how a woman schooled in cosmetology wound up offering
testimony on drug prices to the United State Senate is a small,
but telling, example of the pharmaceutical industry's broad and sometimes unseen
reach into the debate about prescription drug prices.
The industry is one of the United States' most lucrative and powerful
businesses. And in this election year, with prescription drug
prices at the center of the political debate, it has so far staved off what it
fears most: a government-run prescription drug plan for the
elderly, which drug makers say could lead to price controls.
With drug companies concentrated in a few states, they
lack a broad constituency. And although they make life-saving products, they are
not always warmly embraced by the patients who take them.
So they have
worked hard over the past 15 years to cultivate alliances with people like Ms.
Helms. They have created large coalitions from scratch and financed hundreds of
existing patient advocacy groups. They contribute to public policy groups of all
political stripes, from state legislators' organizations to the Democratic
Leadership Council, whose chairman is Senator Joseph I. Lieberman of
Connecticut, the Democratic vice-presidential candidate.
Today, the
companies need allies more than ever. In the prescription drug
benefits debate, they face well-financed opposition from labor and citizens'
groups, notably AARP, as well as the insurance industry, which typically runs
neck-and-neck with the pharmaceutical industry as the business that spends the
most money on lobbying.
But after a decade of legislative successes,
including tax breaks, speedier approval of drugs and patent extensions,
the drug makers are suffering some defeats.
Members of
Congress, anxious to show voters that they have taken action, are poised to
enact a bill that would allow lower-priced medicines to be imported from foreign
countries. Maine has adopted a law that gives the state authority to negotiate
discounted prices on drugs, and the right to prosecute
companies for profiteering.
Helping elderly people pay for their
medicine is a hot topic in presidential politics; in the debate on Tuesday, the
candidates clashed repeatedly over how to accomplish that. The companies,
fearing that a government-run plan would lead to price controls, are siding
squarely with Gov. George Bush of Texas and other Republicans who want to keep
the government out of the drug insurance business.
The
drug makers' message is emotional and simple: don't interfere
with our ability to save lives. To get it across, the top 15 pharmaceutical
companies spent nearly $60 million last year, up from $45 million in 1998. They
have hired a high-profile group of former government officials as lobbyists,
have financed studies to advance their views, and run expensive advertising
campaigns to soften their image.
"We have refused to play only defense
and serve as a punching bag for those who want to attack the industry as a means
of pursuing their own political agendas," Gordon Binder, the president of Amgen,
said in April, in his farewell address as chairman of the industry trade group.
"We have succeeded in changing the substance and nature of the debate."
But the companies' hand in the debate is not always readily apparent.
Last spring, for example, a study by the Lewin Group, a consulting firm,
helped persuade House Republicans to pass a prescription drug
benefits bill the industry favored. The study examined the potential savings
from private drug insurance. The trade group heavily advertised
it -- without mentioning it had paid for the study. And when the study's own
author re-examined the data at the request of The New York Times, she determined
it had overstated the potential savings.
The drug
companies have also spent millions over the past decade to create seemingly
independent groups that promote their agenda. Last year, the industry trade
group created Citizens for Better Medicare, which has been waging a $50 million
advertising campaign against a government-controlled prescription
drug benefit. And lobbying records show that
drug companies are major backers of Alliance for Better
Medicare, which describes itself as "a coalition of nearly 30 organizations
representing seniors, patients, medical researchers and innovators, doctors,
hospitals, small businesses and others."
"We advocate our positions in
every way that we can," Alan Holmer, president of the trade group, said in an
interview. "We do it directly and we do it indirectly and we seek allies in that
effort."
Mr. Holmer is passionate in his defense of the industry; his
two children have cystic fibrosis, an incurable disease, and they have benefited
from new medications. But while he is passionate, he is also guarded. He
volunteered that the trade group is spending $22 million on advertisements this
year, but declined to disclose its support for allies, arguing that industry
critics would "misconstrue, misinterpret and twist" the information "to villify
America's premier high technology industry."
But some
drug company executives say the industry has not been open
enough, hurting their public image.
"As an industry, we bear a great
deal of the blame for the public anger aimed our way," Lodewijk De Vink, a
former chairman of the board of the trade group, said to his colleagues in a
speech in 1995. "To too many people, our industry is like a tall building with
no windows. Important, imposing, even inspiring -- but also mysterious,
secretive, frightening."
The Argument
Research Is Put At
Heart of Costs
For much of the 1900's, the officials of the "ethical
pharmaceutical companies," as they were once called, worried little about the
image of their industry. "The companies dealt exclusively with doctors and
pharmacies," said John Baruck, a former member of the trade group's board. "They
didn't have to worry about what people thought."
That began to change in
1984, when Congress passed a bill to promote generic drugs. The
trade group for the brand drug makers, then called the
Pharmaceutical Manufacturers Association, responded by bringing in new
management: Gerald Mossinghoff as president and Robert Allnutt as his deputy.
The pair built an image campaign around a single word: "research."
Today, that word is at the center of the prescription
drug benefits debate. The United States is the last free market
for pharmaceuticals; other developed nations control either prices or profits.
But the drug companies say price controls in the United States
would lead to cutbacks in research.
The argument resonates strongly on
Capitol Hill.
"Even the people that talk about the outrageous prices,
the people opposed to the industry," Mr. Allnutt said, "they temper their
statements by saying we don't want to hurt research."
The message was so
powerful that in 1994, on the advice of a focus group, the Pharmaceutical
Manufacturers Association inserted the word "research" into its name, creating a
new, if grammatically awkward, moniker: the Pharmaceutical Research and
Manufacturers of America, or PhRMA.
Mr. Mossinghoff and Mr. Allnutt also
created an "ally development" plan, making friends with groups representing
patients and doctors, minorities and associations representing businesses. "As
you get further away from people who are hired to say things,' Mr. Allnutt said,
"you have a much more believable spokesman."
The effort paid "rich
dividends," Mr. Mossinghoff said. In 1993 the Clinton administration proposed
saving money on Medicaid by restricting coverage of certain medications. The
trade group responded by hiring Apco Associates, a Washington public relations
firm, to organize its allies into a new group, the Coalition for Equal Access to
Medicines. The plan was defeated.
Last year, again with Apco's help, Mr.
Holmer assigned the industry trade group's advertising director, Tim Ryan, to
pull together allies in the drug benefits debate. The result
was Citizens for Better Medicare. Financed mostly by drug
makers, the group is run by Mr. Ryan and leases spaces in Apco's Washington
office.
Most of the coalition's members are small organizations with a
relatively narrow mission; many receive pharmaceutical company contributions.
But coalition members say concern for the future of pharmaceutical research, and
not money, drives their alliance with the pharmaceutical industry.
"If
you mean, 'Does Alan Holmer get on the phone and call me and say, 'Go to Maine,'
the answer is no," said Carl F. Dixon, executive director of the Kidney Cancer
Association, a coalition member. "I'm more likely to call over there and say,
'What are you doing in Maine?' " For the trade group, these are valuable
relationships, and forging them has taken years of hard work.
Mr.
Mossinghoff said: "It's very labor-intensive. You have to help them with their
fund-raising dinners."
As Mr. Allnutt, who left the trade group in 1995
but still acts as a consultant to it, said, "You've got to become friends with
people, and not everybody wants to be your friend.
The Advocate
From a Jaw Ailment, A Lobbying Force
Elizabeth Helms was just
the kind of friend Mr. Allnutt envisioned: an articulate and strong-minded
consumer advocate who commanded attention from California's politicians and
press.
Her activism began in 1993, when Ms. Helms owned a hair salon in
Northern California. Ms. Helms's managed-care company had refused to pay for
surgery to correct a jaw condition, temporomandibular joint disorder; she
founded a support group, the TMJ Society, for other people with the condition,
and soon became acquainted with more experienced patient advocates.
About that time, the drug industry's trade group hired
a firm in Northern California to "initiate an education and empowerment campaign
for consumers regarding managed care and disclosure," said Kassy Perry, a
Sacramento public relations woman who now has the trade group's account.
That campaign led to Citizens for the Right to Know, with Ms. Helms and
the other advocates as its steering committee. Their agenda eventually expanded
to include pressing insurance companies to cover most prescription
drugs, a goal shared by the drug industry.
Ms. Perry, a former adviser to two Republican California governors, took
over the trade group's account, and with it, Citizens for the Right to Know,
about five years ago. Her firm, the Perry Communications Group, specializes in
health care, and it has represented an impressive list of clients, including
drug makers and nonprofit groups.
With Ms. Perry's
help, Citizens for the Right to Know has grown to include 80 organizations, from
AIDS advocacy groups to a clinic for poor pregnant women.
But it is Ms.
Helms, and not Ms. Perry, who has been the public face of Citizens for the Right
to Know. A few years ago, she joined the Perry Group to work full-time as
director of advocacy and patient outreach.
Among the fellow advocates
Ms. Helms teamed up with was Lenny Van Pelt, a lawyer in Bellevue, Wash., who
suffers a rare hereditary disorder. Like Ms. Helms, Mr. Van Pelt founded a
patients group, the International Patient Advocacy Association.
Mr. Van
Pelt's health depends on a drug made by the Genzyme
Corporation. The medication grew out of an invention by federal scientists at
the National Institutes of Health, which licensed the idea to Genzyme. The
drug is extremely expensive -- $170,000 a year, on average --
and so both Genzyme and Mr. Van Pelt work to persuade insurance companies to
cover it. And Mr. Van Pelt is active in managed-care issues, with Citizens for
the Right to Know.
In California, Citizens for the Right to Know takes
credit for managed-care legislation and a state investigation into accusations
that managed-care companies unfairly restricted access to certain medications.
The group operates out of Ms. Perry's office; Ms. Perry said the group's bills
were covered by a medical association, biotech companies, a pharmacists
association and the drug industry's trade group, which she said
provides $2,000 a year for the telephone and fax.
Mr. Van Pelt said his
group's backers included drug and biotech companies, among them
Genzyme. But he declined to disclose further details, saying, "It's none of your
business."
In the States
Price Relief Along the Border
Perhaps nowhere is the drug manufacturers' need for
allies as strong as in the states along the Canadian border. In Maine, Vermont
and Washington, Mr. Van Pelt's home state, residents do not just look enviously
at Canadian pharmacies, with their low drug prices, they also
drive across the border to shop there. Politicians, mostly Democrats, organize
some of the trips.
One industry critic is Chellie Pingree, majority
leader of the Maine Senate. Ms. Pingree, a Democrat, sponsored Maine's new
prescription drug-pricing law that permits the state to
negotiate with drug makers for lower prices for the uninsured.
The drug makers' trade group has sued in an effort to block the
law from taking effect.
Over the years, Ms. Pingree had been befriended
by drug lobbyists -- relationships that, she said, have been as
difficult to give up as the campaign contributions from the industry she no
longer receives. "They take you out to dinner, they make friends with you,
invite you to parties," she said.
They also donate money. In Washington,
the drug makers donate overwhelmingly to Republicans. That also
holds true in Maine; in July, drug makers gave $10,000 to Maine
Republican leaders, their biggest source of money, records show. In the past,
Maine Democrats have also received contributions from the pharmaceutical
industry. But in a recent note to Maine Democratic leaders, provided by Ms.
Pingree, a Pfizer lobbyist complained that he had seen her and Maine's
Democratic speaker of the House "attack our companies" and so could "no longer
be a supporter."
A Pfizer spokesman, Andrew B. McCormick, said the
company donated to both political parties but withdrew financing from the Maine
Democratic leadership committee because of "misleading attacks."
But Ms.
Pingree's idea is spreading. In Vermont, Peter Shumlin, the Senate president,
pushed for similar legislation, and organized a caucus of New England state
legislators to work for lower drug prices.
The
companies are working hard to oppose Mr. Shumlin, whom they view as an advocate
of price controls. When Mr. Shumlin was to moderate a panel on
drug pricing at a meeting of the National Conference of State
Legislatures, in June, the drug makers' trade group complained,
sending a letter that noted each drug company's financial
support to the conference's foundation. The panel was reorganized.
Industry lobbyists say the drug companies are outmanned
in Northern states, particularly Maine, where labor unions promote bus trips to
Canada and where there are no drug manufacturing sites. In
Maine and elsewhere, the drug industry and its opponents are
waging a daily battle to sway public opinion.
Allies of the industry
trade group, people like Mr. Van Pelt, and Mr. Dixon of the Kidney Cancer
Association, are especially important in this fight. In Maine, they joined to
urge the governor to veto Ms. Pingree's bill. In Vermont, the Kidney Cancer
Association paid for a poll to demonstrate opposition to controls on
drug prices.
Mr. Van Pelt, meanwhile, turned his
attention to his home state, where Senator Slade Gorton, a Republican, broke
party ranks in April and introduced a bill that would bar drug
companies from charging different prices to wholesalers in different countries.
Soon afterward, Ms. Perry and Mr. Van Pelt conducted a survey to examine
the variation in domestic drug prices -- the survey that Ms.
Helms eventually took to the nation's capital.
The telephone poll, which
Ms. Perry said was conducted by her employees, canvassed 80 Washington State
pharmacies. It reported that prices varied an average of 101 percent.
The 101 percent variation was based on extremely high prices from one
pharmacy. In an interview on the day Ms. Helms presented her survey, the
pharmacy's owner said those prices were incorrect. Using the lower figures he
provided, the actual variation dropped to 59 percent.
Asked about the
survey, Ms. Perry said she stood by the original numbers.
On July 18,
Ms. Helms, appearing on behalf of Mr. Van Pelt, presented the survey to the
Senate. On July 20, Mr. Van Pelt released it at a crowded news conference in
Seattle. The survey made the local newspapers and was broadcast on the evening
news.
That same day, as part of a campaign to defeat another
prescription drug bill, the drug makers' trade
group began running advertising critical of Senator Gorton. In a recent
interview, Mr. Gorton said that such attacks are inhibiting his fellow senators.
"They are extremely reluctant to step out as I have," Mr. Gorton said,
"because they don't want to be trashed."
The Capital Fight
Standing Behind Questionable Figures
In April, the nation's
pharmaceutical executives gathered at the Ritz-Carlton in Laguna Niguel, Calif.,
for their annual meeting.
"One year ago, most in Washington said we
could never achieve expanded drug coverage for seniors through
the private sector," Mr. Binder, the trade group chairman, said then. "And now,
that is exactly what key members of Congress are proposing."
Around that
time, to give its allies in Congress some ammunition, the trade group
commissioned the Lewin Group, the consulting company, to examine the potential
savings from private drug plans.
Published in April,
the study found that discounts from private plans would average at least 30
percent and as much as 39 percent. On June 13, Mr. Holmer of the trade group
testified in the Senate and cited the Lewin group study, without mentioning who
paid for it.
That same day, the manufacturers' association featured the
study in an advertisement in The Washington Post, again without mentioning its
own role. When asked about this, an official of the trade group said that the
group's use of the study "implicitly makes clear" that it paid for it.
The Lewin study came in handy for Republicans when, on June 28, they
passed an industry-backed bill that calls for the government to pay subsidies to
insurance companies that offer drug coverage for the elderly.
"This played into our hand," said Greg Maurer, health aide to
Representative Cass Ballenger, a North Carolina Republican who cited the study
in support of the bill. "It just gave us some numbers, the numbers we were kind
of looking for anyway. It worked well."
But when a reporter later asked
the study's author, Katharine Harrington, a Lewin Group vice president, for a
further analysis, she lowered her estimates for potential savings to 23 percent
to 33 percent for brand and generic drugs, and to 20 percent to
30 percent for brand-name drugs only.
Robert J. Rubin,
president of The Lewin Group, said his firm stood by the study. "The point of
substantial discounting is still valid," he said.
Dirksen Lehman spends
a considerable amount of time sorting out conflicting information in the
pharmaceutical pricing debate. As the health counsel to the Senate Committee on
Health, Education, Labor and Pensions, it was up to Mr. Lehman to find witnesses
for the July 18 hearing that brought Elizabeth Helms to Washington.
Mr.
Lehman knows the pharmaceutical industry well; he once worked for a law firm
that lobbied for its trade group, a job that he says helps him in his current
position. Mr. Lehman knew that the companies were trying to explain medicine
prices by pointing to variations in pharmacies. He wanted someone to present a
study on the topic. But he did not want one paid for by the
drug industry.
That is a tall order, said Dr. Stanley
S. Wallack, executive director of Brandeis University's health policy institute.
At the July 18 hearing, Dr. Wallack complained that it was difficult to find
independent research on pharmaceutical pricing. "Almost all the studies are
being conducted by the pharmaceutical companies," he said.
Mr. Lehman's
search led him to Ms. Helms. Her connection to the drug makers'
trade group did not entirely surprise him.
"You can find folks all over
the place to come out and criticize the industry," Mr. Lehman said. "But to find
people who are pro-industry on some of these positions, and completely
independent of the industry, is difficult."
http://www.nytimes.com
GRAPHIC: Photos:
Elizabeth Helms testifying in July for the pharmaceutical industry. She did not
disclose her tie to the industry at the time. (C-Span); Senator Chellie Pingree
of Maine sponsored a pricing law on prescription drugs that
permits the state to negotiate. (pg. A28)
Chart: "Advocating
Positions, Developing Allies"
With an annual budget of more than $50
million, the Pharmaceutical Research and Manufacturers of America advances the
drug industry's agenda through lobbying, research and
education. It represents roughly 100 companies, which together make up a $100
billion industry that consistently ranks as America's most profitable. The
drug makers and their trade group provide financial support to
hundreds of outside organizations, including these:
BIOMEDICAL
RESEARCH ADVOCACY GROUPS
National Pharmaceutical Council
California Healthcare Institute
Healthcare Institute of New Jersey
Texas Healthcare and Bioscience Institute
DISEASE ADVOCACY
GROUPS
Alliance for Aging Research
Cystic Fibrosis Foundation
National Kidney Cancer Association
International Patient Advocacy
Association (pg. A28)
Chart: "An Industry Seeks to Promote Its
Views"
The pharmaceutical industry has increased its spending on lobbying
over the past few years, as the industry has been criticized for rising
drug prices. The industry often acts though its trade group,
the Pharmaceutical Research and Manufacturers Association, known as PhRMA.
DRUG INDUSTRY VS. OTHER INDUSTRIES
Spending on lobbying by industry in 1998; in 1997, the pharmaceutical
industry spent the most on lobbying of any industry.
INDUSTRY
SPENDING (MILLIONS)
Insurance: $77.2
Pharmaceuticals/health
products: 73.8
Telephone utilities: 67.9
Tobacco: 67.4
Electric
utilities: 63.7
Oil and gas: 57.7
Health professionals: 45.8
Business associations: 44.8
Other ideological or single-issue groups:
39.7
Computer equipment and services: 39.0
SPENDING ON
LOBBYING BY INDUSTRY INCREASES
Lobbying expenditures by the 15
pharma-ceutical manu-facturers with the highest spending on lobbying in 1999
DRUG MAKERS THAT SPENT THE MOST
Spending on
lobbying by pharmaceutical manufacturers and the industry trade group, 1996
though 1999.
COMPANY/ORGANIZATION SPENDING (MILLIONS)
PhRMA (trade group): $19.8
Merck: 19.7
Eli Lilly: 17.7
Schering-Plough*: 17.7
Glaxo Wellcome: 14.6
Bristol-Myers Squibb:
13.2
Pfizer: 13.1
Procter & Gamble*: 11.7
American Home
Products: 11.6
Abbott Laboratories*: 10.4
*Includes both
federal and state expenses.
(Sources: Campaign Study Group
pharmaceutical industry spending, 1996-99 ; Center for Responsive Politics
industry comparison, 1998 )(pg. A28)
LOAD-DATE: October 5, 2000 
