[Ip-health] Wall Street Journal: How the Drug Lobby Lost Its Mojo in Washington

Thiru Balasubramaniam thiru at keionline.org
Wed Feb 19 22:05:56 PST 2020


How the Drug Lobby Lost Its Mojo in Washington

A rift between the GOP and its longtime pharmaceutical-industry allies is
shaking up policy, as Republicans and Democrats join to overhaul price

By Brody Mullins and Stephanie Armour
Feb. 19, 2020 12:15 pm ET

WASHINGTON—The drug industry doesn’t pack the lobbying punch it once did,
and one sign is something rare in the capital today—a dose of

Sen. Chuck Grassley (R., Iowa) joined Sen. Ron Wyden (D., Ore.) to write a
bill last July to regulate prescription-drug prices, an idea the industry
has bottled up since the 1960s. Sen. John Cornyn (R., Texas) with Sen.
Richard Blumenthal (D., Conn.) sponsored a bill in May to block drug
companies from using patent laws to delay lower-priced drugs.

President Trump and House Speaker Nancy Pelosi (D., Calif.) each has
criticized the drug lobby and championed proposals to lower costs, though
they disagree on approaches. Mr. Trump backs a plan to peg some U.S. drug
prices to their costs abroad, a change PricewaterhouseCoopers LLP’s
health-research institute estimates could cost five big drugmakers $500
million a year; Mrs. Pelosi’s own bill, which passed the House, would let
the government negotiate costs of some costly Medicare drugs.

A growing rift between the GOP and longtime drug-industry allies is shaking
up pharmaceutical policy, and for the first time in a generation, some
Republicans and Democrats are joining to overhaul drug-price regulation.

Most Republican lawmakers still side with the powerful drug-industry
lobbying arm, the Pharmaceutical Research and Manufacturers of America.
PhRMA and drug companies might still squelch the overhaul efforts, and the
drug-price bills are still up for debate with no clear indication whether
they will pass. Industry lobbyists are out in force, and drug companies
remain big donors to key Republicans and Democrats.

Mr. Trump told a crowd of retirees this October he wouldn’t be surprised if
the drug lobby was behind the effort to impeach him. “We’re lowering the
cost of prescription drugs, taking on the pharmaceutical companies,” he
said at the Florida event. “They come at you from all different sides.”

“I guess PhRMA must have stepped in,” Mrs. Pelosi said in a news conference
this month when asked why Congress hadn’t approved a drug-pricing bill.

The onslaught of new measures and proposals, though, shows the industry has
lost some of its influence in Washington. PhRMA once had the muscle to
block nearly any policy. When Barack Obama was president and Democrats
controlled Congress, PhRMA defeated all major proposals to regulate drug

Now, voter dismay about drug prices, backlash over the opioid crisis,
miscalculations by the drug industry and its lobbyists, and the populist
wave that carried Mr. Trump to the presidency, are loosening Republicans’
ties to the industry and opening the door to regulation.

In January, Mr. Trump signed a revamped trade treaty for the U.S., Mexico
and Canada after Congress stripped from it a plan backed by PhRMA to keep
certain top-selling drugs free from competition for years.

For PhRMA, it is no longer enough to just say no. “In the past PhRMA had a
reputation for rolling the tanks against every proposal irrespective of
industry impact,” says PhRMA Chief Executive Officer Stephen Ubl. “We are
now taking a more proactive approach of coming to the table to offer policy
makers solutions that would address patient affordability challenges.”

PhRMA’s Mr. Ubl says the drug industry could be open to a deal that
combines elements of bills from Mr. Grassley, Mrs. Pelosi and House
Republicans, saying there “are provisions in all three bills that have
bipartisan support and could meaningfully improve affordability for
patients without including price controls.”

‘In the past PhRMA had a reputation for rolling the tanks against every
proposal,’ says PhRMA CEO Stephen Ubl.

PhRMA last year dropped its resistance to a bill from Sen. Patrick Leahy
(D., Vt.)—after a few changes—to bring generic drugs to market faster to
provide competition for brand-name drugs. The measure became law in

Drug-cost worries

Americans are generally happy with their health-care coverage but worry
about rising costs, surveys show.

Prescription drugs are a particular sore point because consumers typically
see the tab directly. Prescription-drug spending by individuals and payers
rose to $1,025 in 2017 from $819 in 2010, according to an analysis of
federal data by the Peterson Center on Health Care and the Kaiser Family
Foundation, though they have dropped somewhat since then. Nearly eight in
10 Americans blame drug-industry profits for increased health-care costs, a
Kaiser poll in October found.

Public perception of drug companies is the lowest since Gallup began
polling about industries in 2001. Scandals like that around Martin Shkreli,
the hedge-fund manager dubbed “Pharma Bro” who raised one drug’s cost to
$750 from $13.50, have also fanned ire. Hospital chains, insurance
companies and prescription-drug-benefit managers have united to call for
legislation to rein in drug-industry profits.

Republicans—many, free-market conservatives—are caught between opposition
to regulation and constituents angry about drug prices. “If I go to church
and there is a Bernie Sanders supporter and a Donald Trump supporter
pulling on my lapels,” says Sen. Bill Cassidy (R., La.), a
gastroenterologist before running for Congress, “it’s probably about drug

At a Senate hearing last February, he and other Republicans grilled CEOs of
seven drug companies on pricing. “Something is fundamentally broken in our
system” if consumers abroad pay far lower prices for drugs, Mr. Cassidy
told the executives.

Mr. Cassidy also told the executives drug companies need financial
incentives to invest in finding groundbreaking treatments, a point the
industry executives at the hearing echoed. AbbVie Inc. CEO Richard Gonzalez
said at the hearing that requiring drugmakers to match European prices
would mean his company wouldn’t “be able to invest in the level of R&D that
it invests today.”

Mr. Cassidy later voted for Mr. Grassley’s bill to limit drug prices.

Simple formula

The drug industry long relied on a simple formula in Washington: Maintain a
lock on Republican lawmakers while winning support from enough Democrats to
block policy changes. PhRMA owed its record of policy wins to deep pockets,
droves of lobbyists and the industry’s importance to the U.S. economy.

PhRMA’s lobbying force is among Washington’s biggest. It has 47 lobbying
firms on retainer and 183 registered lobbyists. It employs lawyers,
economists, political strategists, pollsters, media advisers and other
consultants. PhRMA’s budget is double that of the oil industry’s Washington
trade organization. One division spends tens of millions a year to recruit
doctors, seniors and patients who have benefited from drugs to lobby

So far in the 2020 campaign, the industry has donated $7.5 million to
lawmakers, mostly to Republicans, data from the nonpartisan Center for
Responsive Politics show, including Senate Majority Leader Mitch McConnell
of Kentucky and House Republican Leader Kevin McCarthy of California.

In 2003, PhRMA persuaded President George W. Bush and the
Republican-controlled Congress to approve a law letting millions of seniors
get access to prescription drugs through Medicare. The law forbade the
government from setting prices Medicare paid for them.

An early split with Republicans came in 2010, when the industry supported
Mr. Obama’s Affordable Care Act after Democrats dropped efforts to limit
drug prices.

Pharmaceutical executives began to sense waning political strength around
2015. Consumers were complaining about rising prescription-drug costs, and
Mr. Shkreli was making headlines. The industry feared the 2016 presidential
election would go to Hillary Clinton, who called for eliminating
drug-company “price gouging” and letting the government negotiate lower
prices for seniors.

PhRMA shifted strategies in late 2015, hiring Mr. Ubl as CEO. He promised
to shed the lobby’s fearsome reputation and work with Democrats and others
on policies the industry could support.

Mr. Ubl faced some philosophical differences after he hired one of the
industry’s most formidable figures, Rodger Currie. Mr. Currie, a PhRMA
lobbyist in the 2000s who left to work for Amgen Inc., had led several of
the industry’s most successful lobbying efforts. He is a tall, domineering
figure who volunteers for the Washington, D.C., police and sometimes leads
Mr. Trump’s motorcade through downtown Washington on his Harley-Davidson

In lobbying, Mr. Currie believed in strength over negotiation. Mr. Ubl
sought to polish the industry’s brand and portray drug companies as
innovators of cures.

In 2016, drug companies agreed to double their PhRMA dues and fund a
roughly $100 million advertising campaign to tout their products’
lifesaving benefits. Mr. Ubl kicked out nearly two dozen drug firms that
the association decided weren’t spending enough to develop drugs.

PhRMA’s budget grew to $456 million in 2017 from $271 million in 2016, tax
records show. That made it the largest U.S. industry trade association,
double the U.S. Chamber of Commerce.

Drugmakers were relieved when Mr. Trump prevailed, but not for long. In a
press conference a week before his inauguration, he said drug companies
were “getting away with murder” by refusing to let the government bargain
for lower Medicare drug prices.

After meeting with pharmaceutical representatives a few weeks later in
2017, he reversed course and likened government involvement to “price
fixing.” Lowering drug prices “remains a top priority” for Mr. Trump, says
a White House spokesman.

That year, PhRMA donated $2.5 million to America First Policies, a
nonprofit that Trump allies set up to promote his agenda. The group
declined to comment. And the drug industry was heartened when Mr. Trump
named several former industry executives to top posts, including Alex Azar,
who headed the U.S. division of Eli Lilly & Co., to run the Department of
Health and Human Services.

An $11 billion tab

A 2018 episode showed PhRMA’s hard-line approach was failing. Republican
lawmakers writing the government budget faced a shortfall for Medicare
spending and wanted drug companies to help cover the gap.

Aides to Republican Paul Ryan, then House speaker, didn’t share the details
with PhRMA because they were afraid Mr. Currie would lobby to kill the
plan, say people familiar with the episode. When the budget bill was
unveiled, PhRMA learned that Congress required drug companies to pay $7

Mr. Currie was livid, blaming Mr. Ryan’s health-care aide for blindsiding
the industry, say the people familiar with the episode. Mr. Currie told
other lobbyists the aide had lied to PhRMA, they say. Word of Mr. Currie’s
claim reached Mr. Ryan’s top staff, who defended the health-care aide among
drug-industry lobbyists, say some of the people.

Making matters worse, Congress had erred in calculating drug companies’
payments. Because PhRMA wasn’t shown the provision before the bill’s
introduction, no one caught the error, PhRMA and Mr. Ryan’s office
say—resulting in a $11 billion bill instead of the forecast $7 billion.

Mr. Ryan’s office acknowledged the error and agreed to try to fix it, but
it was too late, say the people familiar with the episode. Congress passed
the bill. Mr. Currie left PhRMA last year to join a startup
cancer-detection firm.

Further trouble came after Mr. Grassley took over the Senate Finance
Committee in early 2019 and began an effort to draft bipartisan drug-price
legislation. Rick Scott of Florida and seven other Republican senators sent
a letter to PhRMA in June asking for solutions to “soaring drug prices.”
When PhRMA wrote back in July, Mr. Scott tweeted that the response “does
not provide a single answer to our questions. That’s unacceptable.”

Mr. Scott’s office says PhRMA “still can’t come up with a single solution
or idea. It’s sad, but not surprising.” PhRMA’s Mr. Ubl says the group has
“offered a number of concrete solutions that would lower what patients pay
at the pharmacy counter.”

The Trump administration announced a plan in May to require drug companies
to disclose list prices on TV commercials. A month later, Amgen Inc., Merck
& Co. and Eli Lilly sued to block it. When a federal court in July ruled in
their favor, Mr. Trump was upset, telling health-care advisers to
accelerate work on a measure letting U.S. consumers pay the same for drugs
as people abroad, says a person familiar with the episode. PhRMA created a
website to disclose list prices of its drugs.

Other White House proposals are now in the works, as Mr. Trump focuses on
moving Mr. Grassley’s bill. “Many excellent provisions are being considered
on Capitol Hill, including Grassley-Wyden which is a genuine bipartisan
approach,” the White House spokesman says.

The legislation has drawn some Republican support, and the
Democratic-controlled House approved its own plan last year. The Grassley
bill’s Senate prospects are uncertain—it is up to Mr. McConnell, a longtime
industry champion, to bring it to the floor. He hasn’t scheduled Mr.
Grassley’s bill for a vote.

In his State of the Union address this month, Mr. Trump called for
drug-pricing legislation. “Get a bill on my desk,” he said, “and I will
sign it into law immediately.”

Write to Brody Mullins at brody.mullins at wsj.com and Stephanie Armour at
stephanie.armour at wsj.com

Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International
41 22 791 6727
thiru at keionline.org

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