Drug Industry Stalks the US Corridors of Power

[Guest guest]

http://www.mercola.com/2001/feb/24/drug_industry.htm

Drug Industry Stalks the US Corridors of Power

By n Borger

Washington teems with a thousand industrial lobbyists.

They cluster around the band of luxury offices and

expensive restaurants which stretches from the White

House to the Capitol building - a two-mile axis along

which money and power are constantly traded.

In this pantheon of corporate muscle, no industry

wields as much power as the Pharmaceutical Research

and Manufacturers Association (PhRMA), a pressure

group breathtaking for its deep pockets and

aggression, even by the standards of US politics.

There was a time not long ago when the corporate

giants that PhRMA represents were merely the size of

nations. Now, after a frenzied two-year period of

pharmaceutical mega-mergers, they are behemoths which

outweigh entire continents.

The combined worth of the world's top five drug

companies is twice the combined GDP of all sub-Saharan

Africa and their influence on the rules of world trade

is many times stronger because they can bring their

wealth to bear directly on the levers of western

power.

Until recently, the industry hedged its political

bets, backing the Democrats and Republicans more or

less evenly at election time. But at the last

election, it gambled. With billions at stake in a

heated debate over prescription drug prices at home

and a growing number of patent disputes abroad, the

drugmakers stacked their chips disproportionately

behind Bush.

The industry spent nearly 70% of its unprecedented

$24.4 million campaign war chest on the Republicans.

The wager paid off - just - and PhRMA has emerged at

the apotheosis of its political clout, with grateful

Republicans running the White House, Senate and House

of Representatives. Politicians it has supported are

now in key positions and it deploys 297 lobbyists -

one for every two members of Congress.

'Super Profits'

The pharmaceutical industry is therefore well-placed

to defend profits which have soared in recent years to

36% (measured as a return on equity). That rate of

return on investment is more than twice the US

average. It is far and away the most profitable major

industry in the country.

These " super-profits " have been generated by the

proliferation of new pharmaceutical discoveries and

the parallel spread of worldwide patents. They are

also a measure of PhRMA's success in using its

influence in government to fight off the threat of

domestic price caps and competition from generic

manufacturers producing cheap copies of its drugs.

The industry defends its hard-nosed approach by

pointing to the cost of research and development (R & D)

and by the high risks involved in such a pioneering

field. Jeff Trewitt, PhRMA's spokesman, said: " Patents

are the lifeblood to innovation. It costs about $500m

to develop each pill and the arbitrary abrogation of

patents is going to kill that off. "

While the past decade has undeniably been a period of

extraordinary and vigorous innovation, the link

between the development of new drugs and the

industry's breathtaking profit margins is not

necessarily as straightforward as PhRMA maintains.

Creative Accounting

Drug prices in Europe are about 60% of US prices, yet

European firms spend a larger share of their revenues

on R & D than their American counterparts.

The US companies spent more on marketing than on R & D

in 1999 (the last full year figures are available) and

set aside more for profits.

Moreover, with a little creative accounting, all

manner of expenditures have been lodged under the R & D

title, partly in the pursuit of tax rebates.

In fact, much of the R & D work on new drugs is

government-funded. A study by the Boston Globe

newspaper in 1998 found the

National Institutes of Health (NIH) laboratories spent

$1 billion on drug and vaccine development in the 1996

tax year, but only took in $27 million in royalties.

The real debate has arguably not been put before the

American public with any clarity, because the extent

to which the pharmaceutical industry in the US has

been able to set the policy-making agenda remains

invisible to the average voter.

Ten years ago, its modest campaign contributions of

$2.9 million were evenly shared between the two

parties and all in the form of " hard money " -

federally regulated donations for use in a specific

election campaign.

In the 2000 election cycle, 60% of the drugmakers'

$24.4 million contributions were in the form of " soft

money " - legal unregulated cash paid to the parties'

national committees for supposedly general use.

One of the biggest players in the soft money game is a

group with the public-spirited title of Citizens for

Better Medicare. For an organization which

commissioned an estimated $35 million in advertising

in the last election, Citizens for Better Medicare,

maintains a remarkably small office in downtown

Washington.

Citizens for Better Medicare (CBM) was founded and is

funded by PhRMA and the drug industry. When it

registered itself for non-profit status, CBM declared

itself as a PhRMA affiliate.

CBM does not need a big staff or extensive premises

because 98% of the money coming in from the industry

is funneled straight out to a single advertising

producer, Castellanos. Mr Castellanos's other

main clients last year were the Bush election

campaign and the Republican National Committee.

He was responsible for the most notorious

advertisement of the 2000 election, in which the word

Rats flashed subliminally on the screen during a

discussion of Al Gore's healthcare proposals.

Key Positions

There are other examples of how the distinction

between the interests of the pharmaceutical industry

and the Bush presidency have blurred. There is a

fast-spinning revolving door between government and

the pharmaceutical industry.

Mitch s, the new director of the office of

management and budget in the White House, was formerly

the vice-president for strategy and policy at the

pharmaceutical giant, Eli Lilly. Two members of the

Bush transition team, Anne Marie Lynch and Bill

Walters, are PhRMA members. Three others were seconded

from big pharmaceutical firms.

" The PhRMA doesn't need to lobby, " Democratic

congressman Sherrod Brown said in a memo to staff last

month.

" The industry is in the White House already. "

The industry has sympathetic politicians in key

positions in Congress. Behind Bush, the biggest

recipient of pharmaceutical funding in the last

election was Orrin Hatch, a conservative Republican

from Utah, who chairs the Senate judiciary committee

and is therefore well-placed to influence patent

disputes.

The industry backed Senator Hatch to the tune of

$340,000 and provided a plane for him to travel about

the country in his quixotic bid for the Republican

presidential nomination last year

The Guardian February 13, 2001

--------------------------------------------------------------------------------

Dr. Mercola's Comment:

Some interesting observations from the other side of

the Atlantic regarding the new administration in the

US. It does not look like the drug industry's

influence will be lessening anytime in the near

future. This makes it even more important to be

diligent about pursuing natural options, so you don't

have to be in the position where you will need their

drugs.

For more information about political contributions

from phamaceutical corporations and to see graphically

the disturbing trend, check out the Opensecrets.org

website.