Election Gives Drug Industry New Influence

WASHINGTON, Nov. 20 - Having spent more than $30 million to help elect their
allies to Congress, the major drug companies are devising ways to capitalize
on their electoral success by securing favorable new legislation and
countering the pressure that lawmakers in both parties feel to lower the
cost of prescription drugs, industry officials say.

The industry's hand appears stronger now than at any other time in recent
years, a result of its large donations to political parties and candidates
and millions of dollars spent on television advertising by industry-financed
groups. The money was spent overwhelmingly on behalf of Republicans, who now
control both houses of Congress.
Executives of the major drug manufacturers met last week at the Westfield
International Conference Center, near Dulles International Airport in
Northern Virginia, to plan ways to turn that influence into legislative
The executives included Robert Essner, president of Wyeth; Peter R. Dolan,
chairman of Bristol-Myers Squibb; Sidney Taurel, chairman of Eli Lilly; and
Raymond V. Gilmartin, chairman of Merck. They discussed specific ways to
leverage their investment in this year's elections to advance their agenda
on Capitol Hill, participants said.
The meeting was described by an industry lobbyist as a "strategic planning
retreat" and "deep philosophical conversations about our message for 2003."
A pervasive theme was how to block proposals that could erode profits by
limiting drug prices or making it easier for people to buy low-cost generic
versions of brand-name medicines.
Drug industry executives who attended the conference, put on by the
industry's main lobbying arm, the Pharmaceutical Research and Manufacturers
of America, said they were delighted with the election results, yet cautious
and apprehensive, given the pressure that Republicans as well as Democrats
face from voters demanding lower drug prices.
"Sure, we will have more access," one executive said. "Our hand is stronger
because of the election results, but who knows how much stronger it really
Already, industry executives have been encouraged by a recent move to insert
a provision in the domestic security bill limiting the legal liability of
vaccine manufacturers like Eli Lilly. On Tuesday, several senators from both
parties said Republican leaders had promised to alter the provision next
year, so it would apply only to vaccines made in the future.
But today, aides to Representative Tom DeLay, the incoming House majority
leader, said Mr. DeLay had agreed only to consider such proposals. Aides to
several Republican senators troubled by the provision said they were
confident that the deal would stand.
Senator Byron L. Dorgan, Democrat of North Dakota, a frequent drug company
critic, said: "With the election, they certainly have more friends in
Congress. They should be feeling their oats these days."
The pharmaceutical industry topped the Fortune 500 list of the most
profitable industries, providing investors with an 18.5 percent return on
revenues last year. But many drug companies report sagging profits in 2002.
The industry's No. 1 goal is to shape legislation that both parties advocate
to provide prescription benefits to the 40 million elderly and disabled
people in the Medicare program. What the industry fears most is price
controls or any federal effort to establish a list of preferred drugs that
leaves out other medications.
Democrats want to give the government a large role in managing Medicare drug
benefits, while Republicans would rely more on competing private health
plans, insurance companies and pharmaceutical benefits managers.
The industry is also fighting legislation that would speed the approval and
marketing of generic drugs. The Senate passed such a bill in July, with
support from 49 Democrats and 28 Republicans, but it died in the House.
So far, most Republicans have backed the brand-name drug industry in its
battle with generic drug makers. But brand-name drug makers worry that the
pressure to limit drug spending, and the cost of Medicare drug benefits,
will lead more Republicans to promote the use of generic drugs.
The industry's agenda also includes these items:
Election Gives Drug Industry New Influence
(Page 2 of 2)
¶Drug companies adamantly oppose legislation making it easier for consumers,
pharmacists and wholesalers to import drugs from Canada, where prices are
usually lower. Such imports could endanger public health, they say.
¶Drug makers oppose Congressional efforts to limit or discourage drug
advertising on television and in newspapers and magazines. Drug makers say
such advertisements convey useful information, but critics say they
contribute to explosive growth in drug spending.

¶Many pharmaceutical companies want to limit damages in lawsuits filed by
people who say they have been injured by the use of certain drugs. Many drug
makers have been named as defendants in class action suits.
Representative Rob Portman of Ohio, part of the House Republican leadership
team, said, "There is a consensus now in Washington, not just in the House
but in the Senate and at the White House, that we need to provide seniors
with a prescription drug benefit under Medicare."
On Oct. 21, President Bush proposed a regulation to get generic drugs to the
market faster. Mr. Portman said, "It's possible we could see legislation
there as well," to codify the president's proposal, or something like it.
Over all, the pharmaceutical and health products industry gave about $20
million this year to House and Senate campaigns and national political
parties, with three-fourths of the money going to Republican candidates and
party committees, according to the nonpartisan Center for Responsive
Politics. Top donors included Eli Lilly, Bristol-Myers Squibb, Pfizer and
While those contributions put the industry among the largest donors, the
totals actually understate its influence in Washington. In the last six
years, according to Public Citizen, the group founded by Ralph Nader, the
industry has spent close to $500 million on lobbying, including 600
lobbyists that includes about two dozen former members of Congress.
The industry has directed much of its largess to lawmakers who control the
fate of legislation affecting prescription drugs. The chairman of the Senate
Finance Committee, Max Baucus, Democrat of Montana, received $114,000 in
contributions from executives of drug companies and manufacturers of health
care products and from industry political action committees through Oct. 21,
according to the Center for Responsive Politics. The panel's senior
Republican, Senator Charles E. Grassley of Iowa, who is soon to be chairman,
took in about $100,000.
In the House, the chairman of the Energy and Commerce Committee,
Representative Billy Tauzin, Republican of Louisiana, received about
$100,000. Representative John D. Dingell of Michigan, the panel's senior
Democrat, received a similar amount.
Through Oct. 21, the largest recipient of direct contributions from the
pharmaceuticals and health products industry - close to $200,000 - was
Representative Nancy L. Johnson, the Connecticut Republican who is
chairwoman of the Ways and Means Subcommittee on Health.
Mrs. Johnson, who won re-election by defeating Representative Jim Maloney, a
Democrat, also benefited from almost $700,000 that United Seniors spent on
television advertisements in Hartford in the last two months of the
campaign, according to the Wisconsin Advertising Project of the University
of Wisconsin in Madison.