Ever wonder how drug company executives spend their share of the pharmaceutical industry’s hundreds of billions of dollars in annual sales? Well, contrary to what you might imagine, these high-salaried individuals don’t necessarily spend all their money on themselves – in fact, some of them give quite generously to members of Congress, including probably your own.
By law, companies are not allowed to donate directly to political candidates, but there are plenty of workarounds. Despite all kinds of red tape and restrictions on giving, the pharmaceutical and health products industry still managed to contribute $36,749,488 through various channels, such as PACs, parties, individual contributions and Super PACs in the 2017-18 election cycle.
“ … Like many industries, they see this as a relatively small cost of doing business compared to the potential payoff if they’re successful and the risk if they are not,” Sheila Krumholz, executive director of the Washington, DC-based Center for Responsive Politics, said.
Employees can donate directly to candidates and campaigns as well as to Political Action Committees (PACs) and Super PACs that align with their companies’ agendas. PACs have been raising and spending money to elect candidates since 1944, typically representing business, labor or ideological interests. There are limits on how much PACs can give to candidates, to other PACs and to national party committees, and to what they can receive from the same. Super PACs originated in 2010 and can receive unlimited donations from corporations, unions, associations and individuals. They operate independently and aren’t supposed to coordinate with campaigns.
The industry includes medical products such as equipment and devices as well as nutritional and dietary supplements, ranking 12th among “interest groups” and 5th among industries in contributions to members of Congress, which totaled $21,103,233 during the 2017-18 election cycle. The nutritional and dietary supplements sector represents a very small portion of overall donations, Krumholz said.
Legislators gifted with the biggest donations are typically those in overall positions of power or with specific influence over the pharmaceutical and healthcare industries. Donations to U.S. Rep. Paul Ryan increased once he became speaker of the house, and the same happened for Oregon Republican Rep. Greg Walden (the top 2018 election recipient at $211,000) when he became chair of the influential House Committee on Energy and Commerce.
Donations are also aimed at legislators representing company headquarters. Democratic Senator Cory Booker of New Jersey, home to a high number of pharmaceutical companies, received $423,790 since 2013. (Booker stopped taking donations from industry PACs and individuals last year in response to mounting pressure from Democrats.)
The industry appears pragmatic, slightly favoring whichever party is in power. In this year’s election cycle, 217 Republicans and 187 Democrats were funded, with Republicans receiving slightly more on average. In the 2010 election cycle, the reverse was true for Democrats when they were the ones controlling both houses.
“Ultimately, we can’t hold these companies accountable … but we must hold our representatives in Washington accountable. The system is organized not to protect our interests necessarily but to pay heed to those who are paying the most money,” Krumholz said.
To find out how much your representatives have received, Kaiser Health News has put together a handy online tool, “Pharma Cash to Congress.” In what basically amounts to a “hall of infamy” you can see which lawmakers stand out and which companies have the deepest pockets. Another great tool is the Center for Responsive Politics’ Open Secrets website, where you can search by year for amounts given to lawmakers as well as candidates.
According to Krumholz, pharmaceutical industry concerns include reducing the amount of government regulation, expediting drug approval, maximizing access to government research funding as well as Medicare and Medicaid reimbursements, and maintaining favored status in terms of what’s allowed into the country.
When it comes to lobbying, the pharmaceutical industry outdoes itself, spending more than any other industry. At publication, the industry had invested $216,134,421 on total lobbying expenditures so far in 2018.
“It (lobbying) greases the skids on their legislative agenda and it comes out of our pockets. If you look at their lobbying disclosures, you see a huge, wide-ranging list of issues they’re lobbying on, specific bills they’re targeting. There’s a lot of money being directed at shaping policy coming out of Congress and out of Washington,” Krumholz said.
The pharmaceutical industry as a whole employs 1,407 lobbyists, Krumholz said, and 60 percent of lobbyists come through the “revolving door,” meaning they’ve formerly worked for the government, including as elected officials themselves.
“Yes they (legislators) work for us, yes we are the boss, but we are kind of the absentee boss because most people don’t know what their representative is doing in their name in Washington,” Krumholz said.
Most constituents, Krumholz said, don’t have a relationship with their legislators.
“ … They don’t call, they don’t write, they don’t go to any town halls. That void is quickly filled by mostly corporate interests … who can afford to pay attention to this because it can mean billions of dollars in revenues or losses depending on the outcome,” she said.