Healthy Skepticism Library item: 7192

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

Publication type: news

Big Pharma on a mission to woo Democrats
MSN Money.com 2006 Nov 19
http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=FT&Date=20061119&ID=6210607

Abstract:

The pharmaceutical industry was in the enviable position two years ago of having the right friends in the right places in Washington.

Billy Tauzin, the Republican lawmaker, and Thomas Scully, who ran Medicare during President George W. Bush’s first term, were leaving their respective posts to lobby for the drugs industry after securing the addition of a pharma-friendly prescription drug subsidy in the federal healthcare programme for the elderly.

Another ally in the Senate, Rick Santorum of Pennsylvania, had emerged as a powerful player in Congress and was considered a presidential hopeful.

The industry’s mirrored that of other big companies and trade associations that had strengthened their ties with the Republican majority by hiring only Republican lobbyists for top positions – a practice championed by Mr Santorum that was known as the “K Street project”.

Now the prospects of the industry’s giants have taken a turn. After spending an estimated $10m (£5.3m, €7.8m) on Republican incumbent candidates ahead of this year’s mid-term elections – Democrats received about $4.5m – no other sector is expected to face as hostile a reception on Capitol Hill after the Democrats take over in 2007.

Shares in US and European pharmaceutical companies tumbled in the days after the election, with Pfizer, Eli Lilly and Novartis each down 5 per cent or more. The New York Stock Exchange Healthcare Index recovered slightly last week after a sharp drop.

Nancy Pelosi, incoming Speaker of the House, who once accused Mr Tauzin of “selling seniors down the river” for $2m – the sum the Louisiana Republican was reportedly paid to join the association he now runs, PhRMA – says one of her priorities will be to give the government the power to negotiate Medicare drug prices.

Other lawmakers, including Henry Waxman, the representative, are expected to target the industry by calling hearings on issues ranging from marketing to drug safety. Congress is also expected to increase its scrutiny of the industry’s chief regulator, the Food and Drug Administration. The industry will face this harsh new reality without the support of Mr Santorum, who lost his re-election bid.

“Clearly, it is a new day. After the election, we woke up to a new world and I think you will see industry-wide actions that will reflect that new world,” says Ken Johnson, senior vice-president at PhRMA. “There will be a renewed emphasis on making new friends and reaching out to Democrats, and especially pro-business Democrats,” he says.

The industry has already recruited at least one high-profile Democrat to help it make inroads with the incoming majority party. John Breaux, the former senator and Patton Boggs lobbyist who was also involved in the passage of the Medicare provision, told the Financial Times he was working with clients in the industry on strategies for the upcoming Congress, including spending a “great deal of time” with editorial boards explaining the positive attributes of the Medicare prescription drug benefit.

Steve Jenning, a Democratic drug lobbyist at Capitol Health Group, says the industry is seeking lobbyists who maintained “some semblance of a relationship with the minority” to gain influence, not only with rank-and-file Democrats on important congressional committees but also with the new leadership – Ms Pelosi and Harry Reid, incoming majority leader in the Senate.

Given the barbs the industry has traded with Ms Pelosi, in particular, Mr Johnson says it will “take some time to heal” the “old wounds”.

But for all the emphasis some lobbyists pin on hopes of making new friends in the Democratic caucus, others privately admit that the Democrats’ narrow victory in the Senate means the industry is not in dire straits. Instead of reaching out to Democrats, says one senior lobbyist, the drug industry will simply have to ensure it has 41 votes in the Senate to block harmful legislation, instead of the 60 votes they had been seeking in a friendly Senate.

“The Senate is a killing chamber, it always has been. The game you are going to play is, ‘how do I stop that from happening?’ ” the lobbyist says.

But Mr Breaux disagrees with that strategy. “I would do more than that – not just play defence, play offence and send a positive message about what they [the pharmaceutical industry] do and why they do it. We have a good story to tell,” he says.

Mr Breaux’s task may be made easier by a recent changing of the guard at several big drugmakers, including Pfizer, the world’s largest. Democrats may be more willing to lend an ear to chief executive Jeffrey Kindler than former chief executive Hank McKinnell, who was a large donor to the Republican party.

Records collected by the Center for Responsive Politics show that Mr Kindler donated $10,200 in this election cycle. The beneficiaries were all Democrats.