Members of Congress and their aides accepted more than $600,000 in free travel from pharmaceutical interests during a 5½-year period in which drug company profits climbed, in part due to federal legislation favorable to the industry.
Dozens of the trips were approved by lawmakers, who had significant personal interests in the pharmaceutical industry or later worked with drug-makers. Almost all of those same legislators voted in favor of the 2003 Medicare Prescription Drug Act, which led to a windfall of profits for the industry.
“It’s been a highly profitable trade-off” for pharmaceutical companies, said James Love, a drug industry critic and the director of the nonprofit Consumer Project on Technology. “They give out some free perks, hand out some [rides on] private jets, sponsor some trips and give some campaign donations. And in return, they make billions.”
Treated to a dose of travel
The Center for Public Integrity found that from January 2000 through June 2005, lawmakers and staffers accepted at least 325 trips ranging from one day to several days long — with an average cost of nearly $1,900 — from pharmaceutical companies or trade groups that count drug-makers among their members. Nearly 60 percent of those trips were taken by Republican lawmakers or their aides.
More than 80 other trips were co-sponsored by pharmaceutical companies and non-pharmaceutical interests. The cost of those trips was not included in the Center’s total.
Pharmaceutical industry-sponsored travel seems to be on the increase. In 2000, drug companies and related trade groups spent $53,000 on trips by members of Congress or their aides. That figure rose in each full year of the Center’s study, peaking in 2004, with expenditures of $181,000.
Trade groups’ spending accounted for nearly 80 percent of the industry’s total expenditures, at least $478,000 worth of travel.
The drug industry’s largest and most influential lobbying group, Pharmaceutical Research and Manufacturers of America (PhRMA), paid for 45 trips worth at least a combined $92,000. Nearly half of the PhRMA-sponsored trips were taken in 2003, prior to the November vote on the Medicare prescription drug bill. The legislation created a taxpayer-funded prescription drug benefit for senior citizens and effectively continued a ban on imports of lower-cost drugs from Canada.
During those first nine months of 2003 PhRMA spent $50,000 hosting 21 trips, including excursions to San Francisco, San Diego and Naples, Fla.
“America clearly has the best health care in the world, but it can only remain that way if policymakers make good policies and PhRMA continues to educate others about the important work our industry does to help improve patient care,” PhRMA Senior Vice President Ken Johnson told the Center in an e-mailed statement.
The Center provided PhRMA with a number of detailed questions about trips the group funded, but spokesman Arturo Silva declined to answer them, saying that it is PhRMA’s policy not to respond to questions about specific trips it has sponsored.
Washington-based Advanced Medical Technology Association (AdvaMed) sponsored the most trips — 58, valued at $165,000 — among organizations examined in the Center’s study.
While AdvaMed represents the interests of medical device manufacturers, the group counts several major pharmaceutical companies, including Pfizer, Roche and Johnson & Johnson, among its members.
Regina Hall, AdvaMed’s director of communications, said the group’s interests are different from those of drug industry organizations such as PhRMA. Hall said AdvaMed does not belong in the Center’s study and refused to comment about the travel it sponsored.
One of the most frequent beneficiaries of AdvaMed trips was the office of Rep. Jim Ramstad, R-Minn., whose aides accepted five trips worth more $16,500. The travel can be attributed to Ramstad’s role as founder of the Medical Technology Caucus and to the high number of medical device companies based in his home district, said Karin Hope, the congressman’s legislative director. Hope accepted an AdvaMed trip to Germany and the Czech Republic in 2004.
While trade groups represent the bulk of the money spent on congressional travel, individual drug-makers spent $135,000 on 84 trips, including pricey excursions to Europe, the Caribbean and Las Vegas.
Leading the way was GlaxoSmithKline, the world’s second-largest pharmaceutical company. The firm hosted 24 trips — many to Belgium, where its vaccine research center is located — with expenditures in excess of $44,000. Among the purposes for travel reported were attending a conference on vaccine policy and discussing “vaccine shortage, safety, world health, and bioterrorism policy issues.”
Pfizer, the world’s highest-grossing drug company, sponsored 12 trips valued at more than $21,000.
A helpful ally
He was one of only two Democrats — Sen. Max Baucus of Montana being the other — allowed to participate in the Republican-controlled negotiations during which the 2003 prescription drug bill was drafted, according to media accounts.One of the most reliable allies of the pharmaceutical industry in Congress was then-Sen. John Breaux of Louisiana. During his nearly two decades in the Senate, Breaux developed a reputation as a Democratic emissary who could broker deals and gather votes from either side of the aisle, even on the most divisive of issues.
At around the same time Breaux was working with House and Senate negotiators to draft the final bill, Pfizer flew him to New York for a one-day meeting.
The trip was nothing new for Breaux, whose office accepted 15 trips — including six he took from Pfizer — from drug-makers and their allies. The portfolio of pharmaceutical trips from Breaux’s office, with expenditures in excess of $30,000, far exceeds that of the next most-traveled office, Rep. Bill Thomas, R-Calif, whose aides accepted eight trips.Although Breaux is now retired from Congress, his relationship with Pfizer has continued to flourish.
In June 2005, he launched the Ceasefire on Health Care campaign, bringing together leading Republicans and Democrats to discuss the nation’s health care system. The campaign is underwritten by a grant from Pfizer.
Breaux declined to comment about his travel or Pfizer’s relationship with the Ceasefire on Health Care campaign. Pfizer spokeswoman Darlene Taylor confirmed the company’s involvement with the campaign but refused to discuss details.
A personal connection
For example, Sen. Orrin Hatch, R-Utah, and his aides took seven trips, totaling $12,000, sponsored by Pfizer and GlaxoSmithKline, as well as two industry trade groups, the California Healthcare Institute and the Healthcare Leadership Council. As of May 15, when Hatch filed his 2005 financial disclosure form, the senator held at least $18,000 worth of stock in Pfizer and Novartis, the Swiss-based manufacturer of Ritalin, the attention-deficit drug.Some lawmakers have had a personal financial interest in certain drug manufacturers.
Meanwhile, aides to Rep. Nancy Johnson, R-Conn., traveled five times courtesy of the drug industry or its trade groups, including a $4,400 trip to learn about the German health care system sponsored by AdvaMed. Johnson holds stocks in numerous pharmaceutical companies, including at least $19,000 worth combined in Johnson & Johnson, GlaxoSmithKline, Gilead and Amgen, according to her 2005 financial disclosure statement, also filed on May 15.
The Senate and House ethics manuals state that having personal assets or holdings, such as stocks in industries that also have significant legislation pending, is not automatically considered a conflict of interest. The manuals state that legislation spans a wide range of business and economic endeavors, and they specifically do not require complete divestiture.
Many drug industry critics disagree, arguing that maintaining a personal interest in legislation creates a clear bias. That potential conflict is heightened when a lawmaker accepts trips sponsored by an industry with business before Congress, critics say.
“It’s obvious,” said Dr. Arnold S. Relman, emeritus professor of medicine and social medicine at Harvard Medical School. “There’s a conflict of interest whenever legislators that are going to write legislation affecting the future of the industry are entertained and wined and dined by the industry that they are writing about.”
The debate over possible conflicts of interest is highlighted by the Medicare Prescription Drug, Improvement and Modernization Act of 2003.
Relman, a former editor-in-chief of the New England Journal of Medicine, said the pharmaceutical industry’s bottom line already has increased by billions because of the bill, thereby increasing profits for stockholders. Consequently, members of Congress who held stock in pharmaceutical companies stood to benefit financially from the passage of the Medicare bill.
Still, many members sponsoring bills have elected to maintain their personal holdings. Johnson co-sponsored the Medicare bill in the House during the same period in which she held thousands of dollars worth of shares in Johnson & Johnson. The congresswoman’s office did not return repeated calls for comment.Although the House and Senate ethics manuals state that having stock holdings in industries that have pending legislation is permissible, House guidelines indicate that the ethics committee has occasionally counseled members, in private advisory opinions, that it would be inappropriate to introduce or co-sponsor legislation that would directly affect their personal financial interests. “Sponsorship implies a degree of advocacy above and beyond that involved in voting,” the guidelines read.
Hatch co-sponsored the Medicare bill in the Senate while holding at least $3,000 worth of shares in Pfizer and Novartis, according to his 2003 financial disclosure forms.
In e-mailed statements to the Center, Hatch’s office defended the senator’s stock holdings, saying they represent a small percentage of his investment portfolio. The statements also characterized Hatch’s pharmaceutical travel as “legitimate activity under Senate rules,” and said, “He likes to have open communication with industry leaders.”
According to Love of the Consumer Project on Technology, such communication should not lead to personal financial gain.
“People shouldn’t be taking money from drug companies, because if they’re taking money, they’re not looking out for the interests of the taxpayers; they’re looking out for the drug companies,” he said.
Stocks and privately sponsored trips are not the only ways members have been connected to the pharmaceutical industry.
Staffers for then-Sen. Don Nickles, R-Okla., took six trips from the pharmaceutical industry, from GlaxoSmithKline, Biotechnical Industry Organization, Healthcare Leadership Council and the California Healthcare Institute. Nickles told the Center that he does not recall authorizing any pharmaceutical travel but that fact-finding trips are generally beneficial to the legislative process.
“I authorize the trips to get people better educated on things,” he said. “Do I think it was advantageous? Yes.”
Between 2000 and 2003, when five of the trips were taken, Nickles reported holding tens of thousands of dollars worth of shares in drug companies, among them Merck, Amgen, Johnson & Johnson and Genentech — each members of at least one of the trade groups that sponsored travel for his aides. Nickles said his stock holdings were “paltry” and did not affect how he voted on drug industry legislation.
In fact, Nickles voted against the Medicare bill he helped draft, arguing that the final bill did not go far enough in reforming the Medicare system.
Despite his vote, Nickles’ relationship with the pharmaceutical industry has persisted.
After leaving office in January 2005, he opened his own lobbying firm, the Nickles Group. His firm’s clients have included PhRMA, as well as Bristol-Myers Squibb and Pfizer, also members of some of the same industry trade groups from which Nickles’ staffers accepted trips.
Nickles bristled at the suggestion of any conflict of interest, saying that the pharmaceutical companies he represents are “first-class companies.”
“I think they hired me because they think our firm can help navigate the challenges that confront them in D.C., but nothing was implied when I was in office that when I left would help them once I was out of office,” Nickles said.
Others who have preserved professional ties with the drug industry after leaving Congress include Billy Tauzin, R-La., and Jim Greenwood, R-Pa., who have each landed lucrative positions in the pharmaceutical business.
Tauzin’s office took three pharmaceutical-funded trips, notably a PhRMA-sponsored $4,200 excursion he took with his wife in March 2003 to Naples, Fla., where he spoke at a conference. Shortly after, Tauzin was a co-sponsor and key negotiator of the Medicare bill. In 2005, he became the chief executive officer of PhRMA, with an annual salary of about $2.2 million, judging from PhRMA tax filings for mid-2004 through mid-2005, which listed Tauzin’s salary for the first half of the year.
Greenwood’s staffers took four trips, totaling $7,700, courtesy of AdvaMed, California Healthcare Institute and Biotechnology Industry Organization. In 2005, Greenwood became president of Biotechnology Industry Organization, with an annual salary reported to be $650,000.
Once lawmakers added the prescription drug benefit for senior citizens to Medicare, the pharmaceutical industry found a reliable consumer for its products. Meanwhile, a provision in the law — for which the pharmaceutical industry lobbied heavily — prevents the federal government from negotiating price discounts with drug companies.
A 2003 study by Boston University researchers Alan Sager and Deborah Socolar found that 61 percent of Medicare money spent on prescription drugs would become profit for pharmaceutical companies.
Meanwhile, the first prescription drug coverage under Medicare is likely to cost the government more than $1 trillion between 2006 through 2015, according to a March 2006 Congressional Budget Office estimate.
“Clearly, this legislation was tailored extraordinarily to the interests of the drug industry,” said Ron Pollack, executive director of Families USA, a group that lobbies for affordable health care. “This legislation was the pharmaceutical industry’s dream, to the detriment of the taxpayers.”