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Drugmakers spent a record $262 million to halt Medicare drug benefit

Fearful that a drug benefit would lead to discounted prices in the lucrative senior citizen market, the pharmaceutical industry spent a record $262 million during the 1999-2000 election year cycle to stop Congress from enacting a Medicare drug benefit, a new consumer report claims.

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The United States drug industry spent $177 million on lobbying, $65 million on "issue" ads, and $20 million on campaign contributions in 1999-2000.

According to Public Citizen, the United States drug industry spent $177 million on lobbying, $65 million on "issue" ads, and $20 million on campaign contributions in 1999-2000 more than any other industry in its effort to stop lawmakers from passing prescription drug legislation.

"The drug industry is one of the more hypocritical industries around," says Frank Clemente, director of Public Citizen's Congress Watch. "It claims to be working for consumers when in fact it uses profits from sales to buy access to lawmakers and defeat pro-consumer prescription drug legislation."

The Public Citizen report comes on the heels of a Families USA study that concludes that hefty profits and enormous executive compensation packages at pharmaceutical companies are to blame for soaring drug prices, not the costs associated with the research and development of new drugs.

The Public Citizen report also accuses the pharmaceutical industry of exaggerating the amount it spends on research and development for prescription drugs in order to justify high drug prices. Based on a review of government and industry data, and a report obtained through the Freedom of Information Act from the National Institutes of Health (NIH), the consumer group says the actual after-tax cash outlay for each new prescription drug is approximately $110 million vs. the $500 million figure commonly used by the pharmaceutical industry. The drugmakers base their figures on a study conducted by Tufts University economist Joseph A. DiMasi.

According to Christopher Molineaux, vice president of public affairs for the Pharmaceutical Research and Manufacturers of America (PhRMA), DiMasi's figures are actually "quite conservative" and that "Lehman Healthcare estimates that drugs beginning development in 1995 will have average development costs of $675 million."

Peddling influence

Public Citizen's report (The Other Drug War: Big Pharma's 625 Washington Lobbyists) also focuses on Citizens for Better Medicare (CBM), a group that spent an estimated $65 million on "issue" ads during the election. According to the report, these "thinly disguised" issue ads supported Republican candidates while attacking Democratic candidates. Public Citizen says what few consumers realize is that CBM was created, funded, and staffed by the pharmaceutical industry. It also cites a study by the Annenberg Public Policy Center at the University of Pennsylvania that found: "Citizens for Better Medicare is not a grass-roots-generated group of citizens but an arm of the PhRMA."

"The drug industry is stealing from us twice."

CBM was very prominent during the 2000 election. According to Public Citizen, in the eight months leading up to election day, CBM ran 27 percent of all issue ads broadcast in the country by non-party groups, the most of any independent non-party group. The AFL-CIO was second with 15 percent of all issue ads.

Among the report's other key findings:

  • The drug industry hired 625 lobbyists last year, more than one lobbyist for every member of Congress. The one-year bill for the lobbyists was $92 million, a $7.2 million increase over what the industry spent for lobbyists in 1999.
  • Of the 625 lobbyists employed in 2000, more than half were either former members of Congress (21), or worked in Congress or other federal agencies (296).
  • The top recipients of drug industry "hard money" in the last election were Republicans: Sen. Orrin Hatch of Utah ($278,024), who was the chairman of the Judiciary Committee, which oversees drug patent laws; President George W. Bush ($267,633); and Rep. Bill Thomas of California ($109,000), chairman of the House Ways and Means Committee, which has jurisdiction over the Medicare program.
  • The pharmaceutical industry gave $625,000 to the Bush-Cheney inaugural committee.
  • U.S. taxpayer-funded scientists conducted at least 55 percent of the research projects that led to the discovery and development of the five top-selling drugs in 1995.
  • 22 percent of the new drugs brought to market in the past two decades were innovative drugs that represented important therapeutic advances, while the rest were "copycat" drugs that "have little or no therapeutic gain over existing drugs."

"The drug industry is stealing from us twice," says Clemente of his group's findings. "First it claims that it needs huge profits to develop new drugs, even while drug companies get hefty taxpayer subsidies. Second, the companies gouge taxpayers while spending millions from their profits to buy access to lawmakers."

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