Healthy Skepticism Library item: 1488

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Publication type: news

Hallam K.
Merck Leads Industry in Spending to Lobby on Medicare
Bloomberg News 2003 Nov 20

Full text:

Health-care companies, led by drugmakers Merck & Co. and Eli Lilly & Co., spent a record $139.1 million in six months to lobby Congress on a Medicare bill that will help the elderly buy their prescription medicines.

Pharmaceutical companies were the biggest spenders in the health-care industry in the first half of 2003, according to PoliticalMoneyLine.com, a group that tracks contributions to political campaigns. Goldman Sachs Group Inc. has said the bill would increase drug sales over time by $13 billion a year as more people are able to afford medicine.

``The pharmaceutical industry is one of the biggest money players in town,’‘ said Fred Wertheimer, president of Democracy 21, a group that advocates revamping campaign finance rules. ``It gives it a huge edge in the legislative process.’‘

The compromise legislation would offer to cover as much as 75 percent of drug costs for seniors who pay a premium and co- payments. After 17 negotiators approve the bill, it would go to the House and Senate for a vote. The bill may cost less than $400 billion over 10 years, Representative Bill Thomas said. Bush has said he wants to sign it before the 2004 election year.

The health-care industry, including doctors and hospitals, spent more money to influence Congress and other policy makers than any other industry group in a six-month period, according to the group. Full-year figures will be available in February.

Merck Is Top Spender

Drugmakers led spending on lobbying among health-care companies, accounting for $37.7 million of the total.

Merck led the group, spending $4.4 million in the first half of 2003 and paid $4.7 million in all of 2002, according to PoliticalMoneyLine. Ian Spatz, executive director of the Washington office of the Whitehouse Station, New Jersey-based drugmaker, has 11 staffers and uses eight lobbying firms. Eli Lilly & Co. had the second-highest spending, with $2.9 million.

The Medicare compromise legislation will increase drug sales, one investor said.

``The markets will expand greatly,’‘ said Fredric Russell, whose Fredric E. Russell Investment Management Co. owns shares of Merck, Johnson & Johnson and other drugmakers.

Republican leaders in Congress said they want to keep the drug benefit from swelling the cost of Medicare, the federal health-insurance program for the elderly and disabled. Senator Edward Kennedy, a Massachusetts Democrat, has taken a stand against the compromise bill after supporting a Senate version, saying it will undermine the traditional Medicare program.

Doctors and Hospitals

Pfizer, the world’s largest drugmaker, spent $1.8 million on lobbying. The New York-based company has 10 lobbyists and uses 23 outside firms, including Patton Boggs LLP, Washington’s biggest lobbying firm, and Barbour Griffith & Rogers, the firm founded by Mississippi Governor-elect Haley Barbour.

The Standard and Poor’s 500 Pharmaceuticals index has risen 4.6 percent this month, while the S&P 500 Index has fallen 1.04 percent. Pfizer spokesman Paul Fitzhenry didn’t return two phone calls seeking comment. Merck spokesman Tony Plohoros wouldn’t comment specifically on the Medicare bill.

Lobbying by hospital groups cost $23.6 million, second only to drugmakers in the health-care industry. Hospital operators such as HCA Inc. and Universal Health Services Inc. will benefit this fiscal year from Medicare reimbursement increases that match inflation for only the second time in 20 years.

The Medicare bill increases payments to physicians by 1.5 percent next year, reversing a planned 4.5 percent cut. In 2005, payments will increase another 1.5 percent, according to documents on the House Ways and Means Committee Web site.

Group Pressure

Merck, Pfizer and other drug companies relied on their trade group, the Pharmaceutical Research and Manufacturers of America, for the most lobbying. The group was the fourth-biggest spender, paying $8.5 million to influence lawmakers with 56 lobbyists, or more than one for every two U.S. senators, and hiring 32 outside firms.

Shares of Merck fell 11 cents to $46.04 as of 10:16 a.m. in New York Stock Exchange composite trading. Pfizer fell 20 cents to $34.22. The Standard and Poor’s 500 Pharmaceuticals Index fell 2.1 points to 339.09.

The companies also gave $4 million to candidates this year through Sept. 30, using political action committees and executive donations, according to the Center for Responsive Politics, a nonprofit group that tracks campaign finance. Republicans received 67 percent of that money, the Center said.

Campaign Contributions

The U.K.‘s GlaxoSmithKline Plc used its political action committee to contribute more money directly to candidates than any other drugmaker, donating $441,296 through Sept. 30, according to PoliticalMoneyLine.com.

Pfizer was second, giving $311,950 to 110 senators, congressmen and candidates, with 63 percent of contributions made to Republicans, according to PoliticalMoneyLine. House Majority Leader Tom DeLay was the only member of Congress to get the legal maximum, a $10,000 Pfizer donation.

Merck’s political action committee contributed to 101 members of Congress and candidates. Republicans got 69 percent of its $253,849 in funding. Mike Ferguson, a New Jersey Republican, received $8,999, the biggest Merck donation.

Alan Holmer, president of the drug trade group, praised the Medicare compromise.

``We commend the members of the conference committee for their tireless efforts in producing a bipartisan, compromise plan,’‘ Holmer said in a statement earlier this week. ``America’s seniors and disabled persons deserve a meaningful prescription drug benefit.’‘