Millions Spent to Keep States From Cutting Drug Costs
    By Maureen Groppe
    Gannett News Service

    Thursday 06 April 2006

Lawmakers received gifts, report says.

    Washington - The pharmaceutical industry is spending tens of millions of dollars on lobbying, campaign donations and gifts to try to persuade state officials not to pass laws that would cut into drug profits, according to a report to be made public today by the nonpartisan Center for Public Integrity.

    The industry spent more than $44 million lobbying state governments in 2003 and 2004, according to the center, which reviewed state disclosure reports filed by drug companies and trade associations. In Michigan, spending totaled $741,000.

    The industry also contributed more than $8 million to state political candidates and groups and picked up the tab for meals, golf tournaments and baseball games for some public officials.

    The reason for all the attention, according to the center, is state initiatives that would reduce the cost of drugs and cost the industry perhaps billions of dollars in profits. A spokesman for the industry's largest trade association said drug companies are educating state officials on the unintended consequences of ill-advised proposals.

    "State legislatures have considered punitive measures that could have damaged physician-patient relationships and jeopardized the future development of potentially life-saving and life-enhancing medicines," said Ken Johnson, a senior vice president for the Pharmaceutical Research and Manufacturers of America, or PhRMA.

    Johnson also noted that the industry donated $5.1 billion in free prescription drugs last year to needy patients.

    Winners and Losers

    States buy about 16% of prescription drugs sold in the United States through Medicaid and other programs for poor people. That doesn't include what states pay for drugs for their current and retired employees and for prison inmates.

    Two-thirds of states have passed laws to cut drug costs since 2003, according to the National Conference of State Legislatures. Those changes include buying medicine in bulk, promoting generic drugs over more expensive brand names and creating lists of preferred drugs covered by state plans.

    PhRMA, in its 2003-04 annual report, touted successful efforts to defeat preferred-drug-list proposals and other Medicaid changes in Kansas, Maryland, New Jersey, New York, North Carolina, South Carolina and Washington.

    States could save an estimated $2 billion to $4 billion on drugs by 2008 if they used their full purchasing power to win price cuts, according to a 2003 study by management consulting group A.T. Kearney.

    "At the same time that the pharmaceutical industry has been splurging millions of dollars to influence state legislature and drug prices, they're celebrating enormous profits," said Roberta Baskin, the center's executive director.

    "The losers, of course, are American consumers who continue to pay some of the highest prices for prescription drugs anywhere in the world."

    Following the Money

    Comparable state lobbying figures for other industries aren't available. But on the federal level, health care interests spent the most on lobbying of any industry sector during the first 6 months of 2005, according to http://politicalmoneyline.com, a nonpartisan Web site that tracks federal lobbying and campaign spending.

    Within the health care field, drug makers were the top lobbyists, spending $44.6 million at the federal level in the first 6 months of 2005.

    Each state has its own lobbying disclosure requirements and procedures, making spending hard to track and compare. But the center found that the most drug industry lobbying occurred in states with the most prescription drug dollars at stake or where the industry had a significant presence, such as New Jersey and Indiana.

    The most lobbying activity - about 20% of all expenditures - was in California, which has the largest prescription drug budget of any state.

    In Massachusetts, Democratic state Sen. Mark Montigny blames the drug industry for blocking - for six years - legislation he has proposed to allow bulk purchasing and other measures.

    "There's no close second in terms of their effectiveness," Montigny said.

    He helped found the National Legislative Association of Prescription Drug Prices about five years ago to respond to a perceived failure at the federal level to deal with drug prices. But after the states got active, he said, the industry's presence at the state level "just grew and grew."