[Ip-health] NY Candidate and Pharma Heir Faces Questions on Drug Pricing Independence

Claire Cassedy claire.cassedy at keionline.org
Fri Jun 12 08:01:30 PDT 2020


https://readsludge.com/2020/06/12/ny-candidate-and-pharma-heir-faces-questions-on-drug-pricing-independence/

NY Candidate and Pharma Heir Faces Questions on Drug Pricing Independence

JUN 12, 2020 8:58AM EDT
David Moore

The crowded Democratic congressional primary in New York’s 17th
Congressional District, encompassing some of the wealthy suburbs north of
New York City, was roiled over the past week by a candidate pledge around
divesting from pharmaceutical industry stocks.

The pledge, signed initially by six of seven candidates in the Democratic
field to replace longtime Rep. Nita Lowey, sought to ensure financial
independence of the eventual nominee on issues of prescription drug
affordability. As reported last week by The Journal News, the participating
candidates agreed to “liquidate any direct stock holdings in pharmaceutical
companies before assuming office in January of 2021.”

The one candidate who at first declined to sign was former federal
prosecutor Adam Schleifer, who owns pharmaceutical company stocks worth
between $26 million and $55 million, according to his financial disclosure.
The candidate is the son of Dr. Leonard Schleifer, founder of
pharmaceutical company Regeneron, which is based in the district. This
week, Regeneron announced the start of human trials of its COVID-19
antibody cocktail, the first such tests in the nation.

The issue of pharmaceutical company holdings was raised by the other
campaigns as well as by local activist groups because Schleifer is largely
self-funding his bid, with more than $1.6 million loaned to his campaign,
over two-thirds of its $2.3 million in funding. Schleifer’s campaign had
spent $877,336 as of the end of the first quarter, led by almost $300,000
in media buys placed by high-powered consulting firm SKDKnickerbocker and
close to $100,000 in direct mail, according to FEC data.

The district, which as a recent New Yorker piece about the race put it,
represents “America’s quintessential rich suburbs, once a backdrop for John
Cheever’s short stories,” is rated as safely Democratic by Ballotpedia—so
the primary winner could hold the seat for years, as Lowey has since
entering the U.S. House in 1989.

The other six candidates vying for the NY-17 nomination are as follows:
four-term New York Assemblymember David Buchwald, New York Senator and
former member of the Republican-aligned IDC David Carlucci, military
veteran and Professor at Baruch College Asha Castleberry-Hernandez, former
Obama administration defense official Evelyn Farkas, former NARAL board
chair and author Allison Fine, and activist and attorney Mondaire Jones.

A new poll of the district by Data for Progress found Carlucci, who has
held the region’s Senate seat since 2010, with a narrow lead, followed by a
bunching of Farkas and Schleifer and Jones, and, behind them, Buchwald. A
plurality of 38% are undecided. Analyzing the recent poll, Primaries for
Progress finds that while Schleifer’s high ad spending has increased his
name recognition, his support share among voters who learn more about the
candidates stands on par with Farkas and Jones.

Schleifer’s spending through March was over three times the total outlays
by Farkas and Jones, and nearly five times those of Buchwald and Carlucci,
according to a Sludge review of FEC data.

A “Punch Back” Against The Pledge
After the pledge to divest from pharma holdings was announced, Barrett
Seaman, chair of the Editorial Board of the Hudson Independent, wrote that
Adam Schleifer initially refused to join the pledge as a choice to “punch
back” when confronted by it on short notice.

The Schleifer campaign then put out a statement and video on June 9 calling
the pledge a “coordinated attack” sent to him with only an hour to respond,
writing: “if elected to Congress, I would put in place whatever measures
necessary and appropriate, including a blind trust for holdings, to further
demonstrate the fierce independence I have brought to every job I have ever
had.”

Schleifer had floated the idea of a blind trust in the past. On May 3, in a
video Q&A on Facebook with the Westchester Young Democrats, Schleifer said,
“I would look at something like a blind trust or whatever it would be, and
consider that possibility.”

While Schleifer’s endorsement of a blind trust is short of the pledge’s
call to liquidate all pharma holdings, it could eventually be judged
consistent with the rules of the proposed Ban Conflicted Trading Act that
has been introduced by congressional Democrats (H.R. 6401, S.1393) to
mitigate conflicts of interest. Current congressional rules do not require
members to divest their personal financial investments while in office,
even in industries they oversee on their committee assignments. The Ban
Conflicted Trading Act would require members of Congress to either
liquidate their stock holdings or put them in blind trusts, with cases
judged by the Select Committee on Ethics.

The pledge continued to touch off sparks this week, as Allison Fine
rescinded her participation in it and told Sludge that Schleifer’s
commitment to place assets in a blind trust was “the right move.” Fine
blamed the “political ploy” of springing the pledge on Schleifer on Evelyn
Farkas and said, “The much more important issues are the lack of campaign
finance reform and an unfair tax code that allows so much money to pour
into campaigns and politics.”

Castleberry-Hernandez also withdrew from the pharma liquidation pledge and
said she would explain her reasons on Facebook. The pledge would also
affect Farkas, who when announcing it volunteered to divest pharmaceutical
company stocks she owns that are worth between $2,000 and $31,000.

At the same time, Schleifer acknowledged in his video response to the
Westchester Young Democrats’ question last month about pharma divestment
that voluntary campaign finance pledges can be effective. Schleifer signed
the No Fossil Fuel Money pledge, which eschews large campaign contributions
from fossil fuel industry executives, lobbyists, and PACs in order to
encourage greater independence in elected officials.

The campaign of David Carlucci, a founding member in 2011 of the breakaway
Independent Democratic Conference (IDC) that caucused with Republicans in
the state Senate, did not respond with his reasons for taking the pharma
divestment pledge.

After blocking progressive legislation on a host of fronts including
tuition assistance for the children of undocumented immigrants and a state
single-payer health care system, the IDC was disbanded in 2018 and six of
its eight members were defeated in primaries that year. Carlucci held on to
his seat by 1,892 votes, around 8 percent of the 24,240 votes cast in the
state Senate District 38 primary.

In Carlucci’s current congressional race, 13% of his contributions have
come from donors listing their occupation as “President”—an indication of
continued support from business interests. During the years of New York
Senate gridlock following Gov. Andrew Cuomo’s 2010 election, the real
estate, charter school, and health care industries previously backed IDC
members’ campaigns.

Pharma Pledge Fallout

Asked about the divestment pledge, the Schleifer campaign told Sludge that
“If his opponents approached the question of how to ensure industry does
not have influence over policymaking from a place of integrity, they would
have announced their own divestment for financial interests they have in
companies that build weapons of war and profit off of bombs; they would
have sworn off the thousands of dollars they receive from corporate PACs
and from family members representing coal and fracking companies and,
ironically, ‘big pharma’; and they would have sworn off funding received
from predatory payday lenders.”

Schleifer’s response invokes a recent report by The Intercept on
contributions to former defense official Evelyn Farkas from prominent
individuals in the defense industry. Wellesley Daniels, campaign manager
for Farkas, tells Sludge of last week’s pledge, “Only one candidate in this
race was unwilling to divest from the pharmaceutical industry. It’s the
same one who is using millions of his drug company inheritance to try to
buy this election: Adam Schleifer.”

Nonprofit head and attorney Mondaire Jones has racked up endorsements from
progressive leaders such as Rep. Ocasio-Cortez, Senators Elizabeth Warren
and Bernie Sanders, the Working Families Party and others. On Jones’
reasons for signing the pledge, campaign manager Charlie Blaettler told
Sludge, “Sky-rocketing pharmaceutical prices have deepened the healthcare
crisis in this country and prevented so many Americans from receiving the
treatment they need. Mondaire signed the pledge because voters should know
that their representative is willing to take on the pharmaceutical industry
and isn’t personally dependent on their profits.”

We PAID Act

In an April 20 online town hall, the activist group Rockland United tweeted
that Schleifer did not respond to their question about a drug pricing bill
in Congress—the We PAID Act—and said the candidate disabled the chat
function, tagging the Westchester College Democrats and multiple news
organizations.

In an email to Sludge, Schleifer’s campaign said for the first time that
the candidate “unequivocally supports the We PAID Act.” The bill,
introduced in July 2019 by Democrat Chris Van Hollen of Maryland and
cosponsored by Republican Rick Scott of Florida, would require drug
manufacturers to license drugs developed with federal funding as subject to
price restrictions set by an independent Drug Affordability and Access
Committee.

Before coming out in favor of the bill, Schleifer’s campaign website put
his position in line with that of House Democrats, whose Lower Drug Costs
Now Act (H.R. 3), passed by the House in December 2019, would allow Health
and Human Services to negotiate lower drug prices. Schleifer’s website also
calls for establishing a public option to buy into Medicare, capping
out-of-pocket drug costs for Medicare beneficiaries, and requiring rebates
if drug prices increase faster than the pace of inflation, among other
stances.

But for over a month after the Rockland United question, local activists
had been calling on Schleifer to take a position on the We PAID Act.
Regeneron has been in the headlines for being at the front of the pack in
the development of an antibody cocktail for COVID-19, which has been
financed through a $92 million partnership with the federal Biomedical
Advanced Research and Development Authority (BARDA). Regeneron’s work to
research a COVID-19 treatment that uses monoclonal antibodies is under the
extension of a 2017 contract, in which public funding accounts for 80
percent of costs and Regeneron puts in 20 percent.

If Regeneron were to announce successful trials of its coronavirus drug,
the value of the company’s stock would likely surge—on April 29, for
example, Gilead’s shares jumped 7 percent on positive news of the drug
remdesivir as a potential COVID-19 treatment. A March op-ed in the New York
Times highlighted that despite huge public funding of drug development, the
federal government still lacks mechanisms to ensure that treatments from
taxpayer support are kept affordable, in part due to the lobbying power of
the pharmaceutical industry.

Schleifer has received a total of $42,800 in contributions from multiple
Regeneron executives and employees, and he has received nearly $60,000 from
employees of two of the company’s law firms.

Through the first quarter of 2020, 34 out of Schleifer’s over 300
contributions came in small donations categorized as those of $250 or
under, totaling $8,468. For comparison, Farkas’ campaign had 427 small
donors through March, raising almost $97,000; Jones’ campaign had some 410
small donors as of that same disclosure date, raising nearly $90,000;
Buchwald’s campaign had 139 small donors, raising close to $32,000; and
Carlucci’s campaign had 48 small donors, raising over $11,000.

“Adam Schleifer has continuously tried to deceive voters by obscuring the
source of his campaign’s funding and has only reluctantly supported the We
PAID Act, which would prevent companies from charging the American people
exorbitant prices for drugs developed using federally-funded research, and
only after months of pressure,” Jones campaign manager Blaettler said.
“Voters in NY-17 deserve better than an out-of-touch pharmaceutical heir
attempting to purchase an election.”

Regeneron and Trump National Golf

In March, Dr. Leonard Schleifer attended a White House event with the
coronavirus task force and pharmaceutical company executives, where
President Trump referred to him—by some reports, affectionately—as “Lenny.”
While Regeneron develops a COVID-19 treatment with federal funding, the
company is a member of the largest biotech trade association, BIO, in an
industry that spends millions on lobbying and public relations against drug
pricing measures. Pharmaceutical industry executives and lobbyists mingle
at Trump golf clubs for access to the president and to foster communication
channels with administration officials.

Dr. Schleifer, who was awarded the number one spot atop the City & State
rankings of the Westchester Power 50, told CNBC in March that Regeneron
would keep any COVID-19 treatment “affordable,” saying, “It doesn’t do us
any good, if we want to save lives, to make something that’s not
affordable.”

As Regeneron enters human trials for its COVID-19 treatment in partnership
with an office under the Department of Health and Human Services, Dr.
Schleifer golfs at the Trump National Golf Club Westchester, which he
listed this year as his home club with the PGA Tour.

The Trump Westchester Facebook page features a May 2019 photo of Dr.
Schleifer golfing there, and displays his name on a Club Championship board
in a photo from July 2018. In 2015, the Wall Street Journal reported that
Regeneron was cutting back its executive perks, including Leonard
Schleifer’s $18,500 golf membership, but did not mention which particular
club.

Sludge asked Adam Schleifer’s campaign if Dr. Leonard Schleifer was a
member of Trump’s Westchester country club and the campaign referred the
question to Regeneron’s media department, which did not respond to multiple
requests for comment. The campaign wrote, “Adam is not a member of the
Trump National Golf Club and has never been a member of any golf club.”
Adam’s current residency in the district is at his parents’ house in
Chappaqua, but the campaign would not provide an answer on Dr. Schleifer’s
potential membership——full golf, corporate, or other—at the Trump
Westchester club, where as of 2015 dues ran $9,200 per year.

Dr. Schleifer has criticized pricing practices of other pharmaceutical
companies, telling Forbes in 2018 that a Pfizer executive is “not entitled
to a fraction of the GDP.” Regeneron was recently recognized as a civic
leader by Points of Light, a volunteering organization that runs programs
with companies’ social responsibility efforts. However, Regeneron’s pricing
for a cholesterol drug came under criticism in May 2016 by the independent
Institute for Clinical and Economic Review (ICER). Dr. Schleifer disputed
their calculation that the treatment should cost 67 percent less as
“unscientific.” Dr. Schleifer’s 2018 pay package of $26.5 million put him
in the top three highest-compensated CEO’s in the pharma industry.

Lobbying on Drug Pricing

Regeneron is a member of Biotechnology Innovation Organization (BIO), a
trade group representing over one thousand biotech companies, which has
been lobbying on “reasonable pricing provisions” in relation to the
coronavirus. Adam Schleifer’s financial disclosure lists stock in
pharmaceutical company Gilead, another BIO member, worth between $1 million
and $5 million, his second-highest drugmaker asset. Gilead’s high drug
prices were called out by Rep. Alexandria Ocasio-Cortez (D-N.Y.) in a
congressional hearing last year.

James Love, director of Knowledge Ecology International, an intellectual
property NGO, tells Sludge, “When a drug company executive says he will
make a product ‘affordable,’ it’s almost meaningless, unless it becomes a
legally binding commitment that has some structure. One easy question to
ask is if the US public will have to pay higher prices that the company
charges in other high income countries like Canada, UK, France, Germany.”

According to figures from the Center for Responsive Politics, BIO spent
over $12.2 million on lobbying last year and nearly $3 million so far in
2020. A June 2018 report by the Citizens for Responsibility and Ethics in
Washington (CREW) found that “In 2017, BIO spent more than $9.3 million
lobbying the federal government on issues including drug importation,
Medicare Part D, the 340B drug discount program, and orphan drugs which are
medications for rare diseases.” BIO also put out public relations
campaigns, with videos blaming insurance companies and pharmacy benefit
managers for marking up drug prices.

BIO’s lobbying in the first quarter of this year topped well over $3
million, retaining heavy-hitting firms including Akin Gump, Baker &
Hostetler, Covington & Burling, Farragut Partners LLP, and Steve
Elmendorf’s Subject Matter. As the coronavirus pandemic grew through March,
BIO’s own in-house lobbying touched on two dozen drug pricing measures,
such as H.R. 3 and the Forcing Limits on Abusive and Tumultuous Prices
(FLAT) Prices Act of 2019, which would enable lower-cost generic drugs to
come to market earlier. A 2018 corporate responsibility report from
Regeneron put its BIO membership dues at $375,461.

For its part, Regeneron spent over $1 million in lobbying last year,
retaining two outside firms in addition to its own activity, and is up to
$370,000 so far this year, on “Patent issues relating to biopharmaceutical
manufacturers; intellectual property rights.”

“On the issue of pharmaceutical drug pricing, we have encouraged the
federal government to consider the total revenue from sales, over time, to
determine if the prices should be lowered or the exclusivity reduced,” IP
expert Love said. “This is a different, and sometimes more efficient way to
address the unfair and unreasonable prices of products, since the
reasonableness of prices often is dependent upon how many units are sold,
and when the government was funding the R&D, how deep was the federal
subsidy.”


More information about the Ip-health mailing list