Rep. Stupak: “You know you’re hitting a nerve when the halls are flooded with their lobbyists.” | John Shinkle/POLITICO Dems ready for revenge on drug companies

Once Democrats seized the committee chairmanships on Capitol Hill, the big drug companies sharply aligned with Republicans knew a period of reckoning was coming.

Now it has begun.


The Democrats’ investigations range from the drug-approval process to television advertising to the bilking of Medicare. And their targets include the world’s largest drug makers — and the Food and Drug Administration itself.

“You know you’re hitting a nerve when the halls are flooded with their lobbyists,” Rep. Bart Stupak (D-Mich.), chairman of the House Oversight and Investigations Subcommittee of the Energy and Commerce Committee, said as he prepared Tuesday for his fifth hearing on the drug approval process. “The whole safety net designed to protect the American consumer has been shredded.”

Since the Democrats took power, the subcommittee has sent out 39 requests for information from drug companies and the agencies that oversee them, and has also issued two rounds of subpoenas.

Drug industry lobbyists are not surprised by the scrutiny.

“We generally expected that when the Democrats regained control of Congress, that they would closely scrutinize some of the industries that they believed had been particularly favored by the Republicans and unreasonably benefited in certain ways,” said Bret Koplow, a pharmaceutical industry lobbyist at Patton Boggs.

“There was the perception that certain industries, including pharmaceuticals, were getting away with a lot,” he said.

The broad nature of the inquiries, though, has the drug industry nervous. As another industry lobbyist put it: “Once they start asking for things, you don’t know where it will go.”

Faced with a seemingly daily barrage of headlines about lawsuits and investigations into the drug industry, the pharmaceutical manufacturers’ trade association has adopted a conciliatory stance.

“I don’t fault my former colleagues for looking into these cases. I’d be looking at them, too, if I was chairman, because they are such highly publicized cases,” said former Rep. Billy Tauzin (R-La.), who in 2004 stepped down as chairman of the House Commerce Committee to head the Pharmaceutical Research and Manufacturers of America.

“We are not only anxious but anxious and willing to make some changes to these real or perceived problems.”

Despite its conciliatory stance, the drug industry lobbying group maintains one of the most potent posses of hired guns in Washington.

PhRMA has 36 lobbying firms on retainer and spent more than $10 million on legislative advocacy last year, according to the Center for Responsive Politics.

One lobbyist for a company under investigation, who spoke on the condition of anonymity, attributed the barrage of investigations to “pent-up hatred by the Democrats for the long-standing bankrolling of the Republicans by the pharmaceutical industry.”

The Democrats dismiss the idea they are acting out of spite, as does their former colleague Tauzin, and say they are trying to protect the public interest.

Still, there is no doubt that the industry has given overwhelmingly to Republicans over the years: Over two-thirds of the more than $90 million the drug industry has contributed to Congress since 1994 went to Republicans, according to the campaign finance watchdog group.

And the pressure is not just coming from Democrats.

The House Commerce Committee has had bipartisan cooperation in its investigations.

And in the Senate Finance Committee, the ranking Republican, Sen. Chuck Grassley of Iowa, has been leading the charge, continuing investigations that began when he was chairman.

Amid all of the scrutiny, the industry is seeking allies where it can find them.

Industry lobbyists said they are looking to members in New Jersey and New York with substantial pharmaceutical companies in their districts to defend them, at least behind the scenes.

Among the hoped-for allies, according industry lobbyists, are Democratic Reps. Edolphus Towns of New York and Frank Pallone Jr. of New Jersey and Republican Reps. Joe Barton of Texas, Mike Ferguson of New Jersey and Michael Burgess of Texas.

But finding allies may be difficult in an industry as embattled as pharmaceuticals, which even the Republican presidential front-runner, Arizona Sen. John McCain, recently referred to as “the bad guys.”

“Sometimes the political downside for coming to an industry’s defense is too strong for even the most ardent supporter,” noted a senior GOP staffer for an oversight committee.

“You don’t want to be seen as obstinate,” the aide said. “You don’t want to be the one to catch their attention.”

Tuesday’s House oversight hearing focused on the fraud scandal surrounding the drug Ketek, an antibiotic that in some cases was found to cause liver damage.

After the clinical trials conducted by the drug’s manufacturer, Sanofi-Aventis, were found to have been fraudulent, Congress started asking who knew what — and when.

“There were sirens, red flags and bull horns, but it looks like the company and the FDA kept earplugs and blinders on,” said Grassley, who testified before the committee about his investigation into Ketek when he was chairman of the Senate Finance Committee. “I smelled a coverup.”

The House Commerce Committee chairman, Rep. John Dingell (D-Mich.), was particularly incensed about evidence that the FDA knew about the fraud and tried to hide it — particularly from his committee.

In his opening statement, Dingell said the committee had “repeatedly been stonewalled,” and the administration had engaged in “bad faith and obstruction.”

Paul Herbert Chew, president of research and development at Sanofi-Aventis, told the committee that the company has since revised its drug research procedures.

The company has “undertaken a comprehensive review of the lessons learned,” Chew said.

“In retrospect, Aventis could have been more proactive in bringing the issues” to the FDA’s attention.

Officials and lobbyists for the various drug companies insist they are being fully open with congressional investigators. But Stupak said most of the companies are far from cooperative.

They are playing “What nut is the pea under?” he said. “They’re always moving it around. You have to try to figure it out. It’s a constant dance.”

One of the committee’s most high-profile investigations has focused on one of the industry’s cash cows, an anti-cholesterol drug, Vytorin, which last month was revealed to perform no better than a cheap generic — a fact that committee investigators say the companies covered up for more than 18 months.

Meanwhile, the investigators say, the drug was being heavily marketed, earning the Merck/Schering-Plough joint venture an estimated $5 billion last year.

“It was obvious there was a coverup going on,” Stupak said, noting the committee’s investigation forced the revelation of the data.

In the wake of the revelations, Schering-Plough’s stock dropped by 25 percent and Merck’s, by 15 percent, according to news reports.

Stupak said that affecting the companies’ share price was not a goal, but he does not regret it. “If it does affect their stock price after the stuff becomes public, I guess that the only pressure point the American public has,” he said.

His subcommittee is also looking into whether company executives made millions of dollars by selling off stock options ahead of the release of the results.

The drug’s makers said the study was time-consuming and took longer than they had anticipated.

Among the troubling findings were “biological implausibilities,” that made it difficult to interpret the data, said Skip Irvine, a spokesman for the Merck/Schering-Plough joint venture that produced the drug.

“We have received a series of letters from the committee. We are cooperating fully with the committee, and we stand behind our products, as we have done nothing wrong,” Schering-Plough said in a written statement.

The two drug companies have also revealed they are facing more than 50 class action lawsuits alleging fraud, which they say they intend to fight.

The companies have taken out a national “patient education” campaign in local and national newspapers trying to reassure consumers.

At the same time, they “temporarily” suspended its television and Internet ad campaign.