How pharma, under attack from all sides, keeps winning in Washington

WASHINGTON — It does not seem to matter how angrily President Trump tweets, how pointedly House Speaker Nancy Pelosi lobs a critique, or how shrewdly health secretary Alex Azar drafts a regulatory change.

The pharmaceutical industry is still winning in Washington.

In the past month alone, drug makers and the army of lobbyists they employ pressured a Republican senator not to push forward a bill that would have limited some of their intellectual property rights, according to lobbyists and industry representatives. They managed to water down another before it was added to a legislative package aimed at lowering health care costs. Lobbyists also convinced yet another GOP lawmaker — once bombastically opposed to the industry’s patent tactics — to publicly commit to softening his own legislation on the topic, as STAT reported last month.

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Even off Capitol Hill, they found a way to block perhaps the Trump administration’s most substantial anti-industry accomplishment in the past two years: a rule that would have required drug companies to list their prices in television ads.

To pick their way through the policy minefield, drug makers have successfully deployed dozens of lobbyists and devoted record-breaking sums to their federal advocacy efforts. But there is also a seemingly new strategy in play: industry CEOs have targeted their campaign donations this year on a pair of vulnerable Republican lawmakers — and then called on them not to upend the industry’s business model.

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In more than a dozen interviews by STAT with an array of industry employees, Capitol Hill staff, lobbyists, policy analysts, and advocates for lower drug prices, however, an unmistakable disconnect emerges. Even though Washington has stepped up its rhetorical attacks on the industry, and focused its policymaking efforts on reining in high drug prices, the pharmaceutical industry’s time-honored lobbying and advocacy strategies have kept both lawmakers and the Trump administration from landing any of their prescription-drug punches.

“Big Pharma has replaced Big Tobacco as the most powerful brute in the ranks of Washington power brokers,” Sen. Dick Durbin (D-Ill.) said in a statement to STAT. Durbin, who recently saw the industry successfully oppose his proposal to curtail some of the industry’s patent maneuvering, added that, “Pharma’s billions allow them to continue to rip off American families and taxpayers.”

The industry doesn’t get all the credit; it has also benefited from a fractured Congress and discord between President Trump’s most senior health care advisers.

PhRMA, the drug industry’s largest lobbying group here, declined to comment for this article. But industry leaders have broadly argued against efforts to rein in the industry’s practices in terms of price hikes and patents, making the case that that could irreparably stifle medical innovation.

The battle is far from over, and industry representatives and lobbyists are quick to hypothesize that the worst, for them, is yet to come. They point to several ongoing legislative initiatives, including in the Senate Finance Committee, that could take more concerted direct aim at their pricing strategies in Medicare. They’re waiting, too, to see if House Democrats can cut a drug pricing deal with the White House to empower Medicare to negotiate at least some drug prices. Another pending regulation, loathed by drug makers, might tie their pricing decisions in Medicare to an index of international prices.

They’ve also bemoaned the Trump administration’s decision last week to abandon a policy change that would have ended drug rebates — which, the pharmaceutical industry has said, could have given drug makers more space to lower their prices voluntarily.

“We’re getting killed!” one pharma lobbyist told STAT.

Of course, the Trump administration’s supposedly devastating decision to abandon that proposal simply maintains the status quo.

“Big Pharma has replaced Big Tobacco as the most powerful brute in the ranks of Washington power brokers.” Sen. Dick Durbin (D-Ill.), in a statement

On Valentine’s Day, Sen. Thom Tillis (R-N.C.) enjoyed a showering of love that is familiar in Washington: a flood of campaign contributions, many at the federal limit of $2,800 for a candidate or $5,000 for an affiliated political committee.

One donation came from Pfizer’s CEO, Albert Bourla, who donated $5,000 to Tillis and another $10,000 to Sen. John Cornyn (R-Texas) and associated campaign committees. Another came from Kenneth Frazier, the top executive at Merck. The Tillis campaign committee eventually cashed checks from CEOs and other high-ranking executives at those companies as well as Amgen, Eli Lilly, Sanofi, and Bristol Myers-Squibb, plus two high-ranking officials at the advocacy group PhRMA. Six lobbyists at one firm that works with PhRMA, BGR, also combined to contribute $100,000 to a bevy of Republican lawmakers and the party’s campaign arms.

Tillis raised an additional $64,500 from drug industry political action committees in the past quarter, according to disclosures released on Monday.

A Pfizer spokeswoman declined to comment about Bourla’s contributions, and representatives for the other companies did not respond to STAT’s request for comment.

Tills was one of few individual lawmakers — in many cases, the only one — to whom the executives had written personal checks during the current election cycle. While drug industry CEOs frequently contribute to political committees for congressional leadership, the breadth of executives who donated Tillis specifically is notable, particularly considering his outspoken role on pharmaceutical industry issues.

An invitation to a fundraiser PhRMA PAC hosted for Sen. Thom Tillis in January, obtained by STAT. STAT also redacted the phone number and email.

While lobbyists pushed back on the notion that campaign contributions directly influence votes, the donations targeted so specifically to a particular candidate could be seen as a prime example of Washington’s system for rewarding loyalty and how industries protect their interests.

The same PhRMA PAC that donated to Tillis has given generously in recent years: nearly $200,000 in the 2018 campaign cycle, roughly 58% of which was targeted toward Republicans. Drug industry PACs donated $10.3 million in total in that cycle, according to the Center for Responsive Politics. The figure two years before was even higher: a total of $12.2 million from industry-aligned PACs alone.

It is no accident that the pharmaceutical industry has maintained its reputation among the nation’s most powerful lobbies, said Sheila Krumholz, the executive director of the Center for Responsive Politics, an organization that tracks political influence.

“Their access and influence goes beyond this Congress or even the administration,” Krumholz said in an interview, adding that she “was struggling to think of evidence” it had waned.

Pharma has a reputation here for winning on policy — often thanks to the lawmakers who are among the biggest recipients of the millions that drug corporations, employees, and the industry political arms donate each year.

Even as the rhetoric has escalated, the industry has quietly worked to insulate itself from any major legislative changes.

Take, for example, a recent about-face from Cornyn, the Texas Republican who took in some campaign cash alongside Tillis. As recently as February, Cornyn seemed to be positioning himself as a rare Republican figurehead for anti-pharma congressional wrath. At a widely publicized hearing before the Senate Finance Committee, he went head-to-head with AbbVie CEO Richard Gonzalez, pressing him to explain why the company had filed more than 100 patents on its blockbuster arthritis drug Humira.

Cornyn introduced legislation soon after the skirmish to crack down on patent “thicketing,” a term for a drug company tactic to accumulate tens, if not hundreds, of patents to shield a drug from potential generic competition.

Pharma sprung into action. They recruited congressional allies, including Tillis, to pressure Cornyn to significantly rework the bill, and they succeeded. The version of the bill that eventually cleared the Senate Judiciary Committee was stripped of language that would have empowered the Federal Trade Commission to go after patent thicketing. Instead, the bill limited how many patents a drug maker could assert in a patent lawsuit.

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The new version of the bill lost “a lot of teeth” and “solves a narrower problem in a narrow way,” advocates told STAT when the change was first introduced.

It is far from the only example of the industry’s aggressive interventions to water down legislation.

“In lots of ways they’re like the [National Rifle Association], because they have an incredible power to squash out any negative opinion, nor to feel any of the ill effects of those things,” said Pallavi Damani Kumar, an American University crisis communications professor who once worked in media relations for drug manufacturers. “It just speaks to how incredibly savvy they are.”

Pharmaceutical industry lobbyists also successfully fought to keep another anti-drug industry patent proposal from Sen. Bill Cassidy (R-La.) and Dick Durbin (D-Ill.) out of a bipartisan drug pricing package moving through the Senate HELP Committee. The legislation would have allowed the FDA to approve cheaper versions of drugs, even when the more expensive product was protected by certain patents.

Cassidy’s proposal never even made it into the HELP package. As the lobbyist who bemoaned the withdrawal of the rebate rule put it, Cassidy “simmered down” in the face of industry pressure.

In recent weeks, the industry had targeted Cassidy in particular, in recent weeks, for fear he would break with many of his GOP colleagues to support a cap on some price hikes for drugs purchased under Medicare, a proposal so far pushed only by Democrats.

“Sen. Cassidy doesn’t care what lobbyists think — he is going to do what’s best for patients,” said Ty Bofferding, a Cassidy spokesman. “Sen. Cassidy fought for the committee to include the REMEDY Act in the package, despite strong opposition from the pharmaceutical industry.”

The committee eventually included half the bill’s provisions, he added, as well as four other pieces of legislation meant to prevent the industry from taking advantage of the patent system.

The drug industry also notched a win by watering down another proposal in that package from Sen. Susan Collins (R-Maine) that would have blocked drug makers from suing over patents they didn’t disclose to the FDA. The version of the bill that actually made it into the package doesn’t block drug makers from suing, but instead directs the FDA to create a public list of companies that fail to disclose their patents.

“This change is a big win for drug makers,” Michael Carrier, a Rutgers University professor and expert on patent gaming, told STAT. “Shaming is something drug makers don’t seem worried about.”

Matthew Lane, the executive director of the Coalition Against Patent Abuse, likewise added that the altered bill “doesn’t seem to be doing much anymore.”

Not all of the pharma-endorsed changes, however, are self-serving. Patent experts and federal regulators too had raised concerns with some of the bill being proposed. Cornyn’s patent bill was particularly controversial.

“These provisions encourage ‘fishing expeditions’ by zealous bureaucrats, politically motivated by the popularity of efforts to reduce drug prices and garner the political benefits of being seen to be pursuing these ends,” Kevin Noonan, a patent lawyer at McDonnell Boehnen Hulbert & Berghoff wrote in a recent blog post, referring to the original Cornyn bill.

Drug-pricing advocates said lobbyists have even managed to convince lawmakers to introduce some legislation they say has explicitly favored the drug industry, including intellectual property-focused legislation that would allow drug makers to patent human genes.

That particular bill would “undo the bipartisan effort underway to fix pharma’s exploitation of the patent system,” said the Coalition Against Patent Abuse. And they were far from the only group raising concerns. The American Civil Liberties Union and more than 150 other groups wrote to lawmakers last month opposing the bill.

Pharma’s list of policy victories goes on: Drug companies and allied patient groups forced the Trump administration to back off a proposal to make relatively minor changes to Medicare’s so-called protected classes policy. Currently, Medicare is required to cover all drugs for certain conditions, including depression and HIV. The Trump administration proposed in November that private Medicare plans should be able to remove certain drugs in those classes from their formularies, if the drugs were just new formulations of a cheaper, older version of the same drug, or when a drug spiked in price. But drug industry opposition helped convince the administration to spike that effort.

A week ago, the industry struck its biggest blow yet. Three of the country’s largest pharmaceutical companies —Amgen, Eli Lilly, and Merck — prevailed in a lawsuit to strike down a Trump administration requirement that they disclose list prices in television advertisements.

The lack of congressional action — despite the Democratic enthusiasm and bipartisan appetite — is still further evidence of industry’s ability to stave off defeat.

As the dozens of Democrats running for president ramp up their anti-pharma rhetoric, both Trump and progressives have begun to fret that Washington’s efforts have proven to be all bark and no bite. With two weeks remaining before the August recess and an escalating 2020 campaign, some advocates fear that the window for bold action is closing quickly.

“It’s appalling that we are six months into this Congress and we haven’t seen meaningful legislation passed on American’s number one issue for this congress,” said Peter Maybarduk, who leads drug-pricing initiatives for the advocacy group Public Citizen. “Congress needs to get its act together.”

Even some drug industry lobbyists have begun to tell their clients that the end of September is likely the deadline for this Congress to act on drug pricing.

Sen. Thom Tillis (R-N.C.) Alex Wong/Getty Images

Drug industry lobbyists still insist they are not winning.

The incessant focus on drug prices, the volume of policy proposals on the issue, the increasing attention from voters — they argue that it shows the pharmaceutical industry is no longer an untouchable force in Washington.

Several lobbyists pointed out that the industry had recently reversed its stance on the CREATES Act, a bill that would open up drug makers to lawsuits when they’re accused of blocking lower cost competitors from coming to market, for years. Until last year, pharma was staunchly opposed — but in an effort to push a coveted industry priority through Congress, pharma dropped its opposition to the bill. Now, the legislation has already cleared major House and Senate committees and seems all but destined to become law.

“There are a lot of other things that are advancing that pharma would never in a million years would have supported in any other time,” another drug industry lobbyist said. That lobbyist insisted that drug makers’ wins were not self-serving, but were the industry’s attempts at keeping “awful ideas” at bay.

The specter of new sweeping changes also continue to haunt the drug industry. President Trump’s unpredictability further exacerbates that fear. When the president remarked last week that he would be penning an executive order creating a “favored nations” drug pricing policy it sent drug stocks tumbling — and drug lobbyists scrambling.

And with the 2020 presidential campaign heating up, pressure on pharma is all but guaranteed to increase. In the first two Democratic presidential debates, a slew of candidates relished the opportunity to vilify “Big Pharma.” Former Vice President Joe Biden, a frontrunner for the Democratic nominee, released a sweeping drug pricing plan Monday, which includes capping the amount drug makers can charge for certain drugs.

This confluence of factors have left the drug industry’s small army of lobbyists shellshocked.

As the second lobbyist put it: “I do not feel like I am winning.”

Pharma’s savvy lobbying and campaign contributions don’t account for everything — by pure luck, industry has benefited from a fractured Congress and often-chaotic White House.

The Democratic majority in the House of Representatives, for example, has struggled to come up with a coherent plan of attack. The most liberal wing of the Democratic party has openly feuded with House Speaker Nancy Pelosi over the central thrust of the House Democrats’ drug pricing plan, forcing committees of jurisdiction to instead focus on tweaks around the edges.

The administration, too, has been beset by infighting, particularly between health secretary Alex Azar and Joe Grogan, a former Gilead lobbyist who is Trump’s top policy adviser. And it has struggled to convince even Republicans to support some of Trump’s more creative proposals, like a plan to cap U.S. drug payments based on foreign prices.

The Senate deserves some credit, too. Drug industry CEOs talked circles around the Senate Finance Committee during a high-profile hearing this February. That committee has also struggled for months to craft a package of drug pricing reforms that could garner bipartisan support.

The infighting has forced the committee to repeatedly delay a planned markup on that legislation. And Democrats on that committee are growing increasingly impatient — so much so that they’ve begun to pressure the committee to take bold action or risk Democratic support for the overall package.

“It is time for this committee to take action,” all of the committee’s Democrats, sans two, wrote to committee chairs Sens. Chuck Grassley (R-Iowa) and Ron Wyden (D-Ore.) in a July 11 letter obtained by STAT. “We hope to support a final package that ensures meaningful changes to the status quo.”