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The Sunlight Foundation uses cutting-edge technology and ideas to make government transparent and accountable. Underlying all of our efforts is a fundamental belief that increased transparency will improve the public's confidence in government
The Sunlight Foundation Blog
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Pfizer CEO Gets Raise for Behind Scenes Deals With White House
The Lord giveth and the Lord taketh away.
Billy Tauzin was bounced from his perch as President and CEO of the Pharmaceutical Research and Manufacturers of America (PhRMA) after the deals he helped strike with the White House and Sen. Max Baucus were stalled with the health care bill.
Jeff Kindler, the CEO of Pfizer, the nation’s largest drug company, got a 12.5% raise after he helped block drug reimportation and other cost cutting measures by striking a deal with the White House and Sen. Max Baucus. From the Pfizer statement:
During 2009, Mr. Kindler was actively involved, through both Pfizer and external organizations, in developing and advancing U.S. and global public policies that serve the overall interests of our Company and our shareholders, as well as doctors and patients. These efforts included constructive participation in the U.S. legislative process to advance Pfizer’s goals of achieving a more rational operating environment; improving Americans’ access to quality, affordable health care; preserving the doctor/patient relationship; and enhancing policies that promote innovation. Also, through both Pfizer and external organizations, he has sought to ensure the availability of safe medicines by opposing legislation that would allow for importation of prescription drugs that could jeopardize the integrity of the drug supply chain in the U.S.
For the full story on the deal struck between the pharmaceutical companies and the White House see this article.
(hat tip to Timothy Carney at the Washington Examiner.)
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White House-PhRMA Update
Last we left off in the story of the White House-PhRMA deal the White House had made new cost cutting proposals that would affect the pharmaceutical industry. PhRMA has since put out a press release that doesn’t really answer many questions about where they stand. This was before last week’s health care summit:“We remain committed to health care reform done in a fair and smart way. We continue to believe that all Americans should have access to high-quality, affordable health care coverage and services.
“Throughout the health reform debate, America’s pharmaceutical research and biotechnology companies have supported proposals aimed at encouraging critically important medical research and innovation to improve the lives of patients and foster a successful life sciences sector, which supports millions of American jobs.
“We will be carefully reviewing the proposal and look forward to hearing the discussions at Thursday’s White House summit on health care reform.”
The Washington Post reports that their lobbyists are working to block the additional $10 billion in cost cutting proposed by the administration, while still remaining supportive of the Senate bill:
The Pharmaceutical Research and Manufacturers of America (PhRMA), the powerful drugmaker lobbying group, is holding back on ads for now but will continue to work closely with lawmakers and the White House on specific issues, one senior industry official said. PhRMA, which agreed to $80 billion in cuts in exchange for protection from other steps, has concerns about Obama’s proposal to add another $10 billion to that amount, the official said.
Of course, the major key is the cessation of advertising by the group. PhRMA just isn’t willing to put any more money on the line with so much ambiguity regarding the outcome.
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White House Health Proposal May Blow Up PhRMA Deal
This morning the White House released a new health care proposal that may be used as a blueprint for a compromise between House and Senate versions of reform. This new proposal will likely not find a receptive audience at the Pharmaceutical Research and Manufacturers of America (PhRMA)–the chief lobbying arm of the pharmaceutical industry.Throughout 2009, PhRMA and major pharmaceutical companies crafted a deal with the White House to limit cost cutting by the industry in exchange for the industry’s support, through over $100 million in television advertising, for health care reform. (The entire story behind the crafting of the deal can be read here.) The White House’s new proposal contains deeper cost cuts than previously agreed to and contains regulations on the relationship between brand-name and generic drug companies that the industry opposes.
The deeper cost cuts come from an attempt to further close the “donut hole” in the Medicare Part D prescription drug program. The “donut hole” refers to the gap in coverage that occurs within Medicare Part D. For those purchasing prescription drugs through the program coverage cuts off at $2,700 spent and does not pick back up again until $6,154 is spent by the participant. The current language that was struck in the deal between the White House and the pharmaceutical industry maintains that drug companies would cover 50 percent of the cost for brand-name drugs for participants falling in the “donut hole.” This change would be implemented within the year. The White House’s new proposal would eliminate the “donut hole” by 2020 by making participants pay only 25 percent coinsurance with Medicare covering the other 75 percent. The White House also takes a page from the House health reform bill by providing a $250 rebate to Part D participants who fall into the “donut hole.” (The House bill provides for a $500 reduction in costs for participants who fall into the “donut hole.”) (Continue reading…)
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Researching and Writing the White House-PhRMA Deal
At the end of last year, the White House dropped a new pile of visitor log records into the public, online record. Upon returning in January from a near month long vacation I decided to take a look at these new records. One story that I wanted some more information on was the oft-reported on deal between the White House and the pharmaceutical companies. I started looking up meetings for pharmaceutical executives, PhRMA lobbyist Billy Tauzin and so on. After a bit of searching and reading some articles from last summer two things dawned on me: 1) There was no singular resource that brought together all of the reporting and all of the data in one place and 2) No one reporting on this deal seemed to know that Sen. Max Baucus posts his schedule online.
The second point is what really crystallized the need to write this piece for me. Last summer, I dug into Baucus’ publicly available schedule (which wouldn’t be available if it weren’t for Sunlight’s efforts) examining his meetings with leaders in the health care industry. When I was looking at the White House Visitor Logs, a lot of the dates looked familiar. That’s because they matched up precisely with dates in Baucus’ schedule with the same actors meeting at the White House and with Baucus. Data that was available online all this time showed how closely the White House and pharmaceutical companies were coordinating with Baucus’ office in crafting a health care reform bill. (Continue reading…)
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The Legacy of Billy Tauzin: The White House-PhRMA Deal
More than a million spectators gathered before the Capitol on a frosty January afternoon to witness the inauguration of Barack Obama, who promised in his campaign to change Washington’s mercenary culture of lobbyists, special interest influence and backroom deals. But within a few months of being sworn in, the President and his top aides were sitting down with leaders from the pharmaceutical industry to hash out a deal that they thought would make health care reform possible.
Over the following months, pharmaceutical industry lobbyists and executives met with top White House aides dozens of times to hammer out a deal that would secure industry support for the administration’s health care reform agenda in exchange for the White House abandoning key elements of the president’s promises to reform the pharmaceutical industry. They flooded Congress with campaign contributions, and hired dozens of former Capitol Hill insiders to push their case. How they did it—pieced together from news accounts, disclosure forms including lobbying reports and Federal Election Commission records, White House visitor logs and the schedule Sen. Max Baucus releases voluntarily—is a testament to how ingrained the grip of special interests remains in Washington.
In the 2008 campaign, Obama declared his intention to include all stakeholders as he sought to reform the nation’s health care system, but also supported key Democratic health reform policies. Among these were several that targeted the pharmaceutical industry: Allowing re-importation of drugs from first world countries with lower drug prices and providing Medicare with negotiating authority over prescription drug prices in the recently enacted Part D program. These weren’t just promises, Obama had already voted for both of them as a senator in 2007. (Roll Call Vote 132 and Roll Call Vote 150.)
Set to carry out this agenda were two Capitol Hill veterans, schooled in the monied Washington culture, chief of staff Rahm Emanuel and deputy chief of staff Jim Messina. Emanuel was a former fundraiser, Clinton administration official, investment banker and member of the Democratic leadership in Congress. Messina was the former campaign manager and chief of staff to the powerful Senate Finance Committee chairman Max Baucus. Both were known for their unparalleled legislative abilities.
Because of Obama’s decision to develop a plan operating through the legislative process, members of Congress also played key roles. Early on, the pharmaceutical companies were told to deal directly with Senate Finance Committee chairman Max Baucus. Baucus would be the vehicle for the deal worked out behind the scenes by the White House and PhRMA. (Continue reading…)
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Health Care Industry Operates Shadow Congress of Lobbyists
The Washington Post reports today that the health care industry, in its attempt to influence the debate over health care reform, has hired at least 350 former government staffers and former members of Congress to lobby on the issue. With the many connections these former government workers have, particularly former members of Congress or congressional chiefs of staff, they will have near saturation coverage of the 535 current members of Congress. They also are operating with seemingly bottomless funding. The industry is currently spending $1.4 million a week on lobbying. Perhaps, the most unparrelled lobbying campaign ever.
Now the Post story has a few caveats that indicate that this lobbying campaign is probably larger than their reporting shows. For one:
The analysis identified more than 350 former government aides, each representing an average of four firms or trade groups. That tally does not include lobbyists who did not report their earlier government experience, such as PhRMA President W.J. “Billy” Tauzin, a former Republican congressman from Louisiana. Federal law does not require providing such detail.
Lobbying disclosure reports contain a field for listing prior government work, but this field is often left empty by lobbyists with government experience. If someone like Billy Tauzin, who is the poster boy for everything wrong with the revolving door, does not list his previous work as a leading lawmaker, what hope do we have for the many lesser former government workers to list their previous government work. I’d assume that the number of former government employees working in this campaign far exceeds 350.
One other aspect of the story highlights something which we’ve discussed here, lobbying contacts. The real problem with the revolving door is the unusual amount of access that former government officials, particularly members of Congress, have to current government officials. And that includes the ability to meet, call, or email with staffers or lawmakers to push their client’s agenda. Of course, Congress does not require any disclosure of lobbying contacts, thus obscuring the role that these 350+ lobbyists are having in the process of crafting a health care reform bill that will affect everyone in the country.
If you want to see other reporting on the network of former government staffers turned health care lobbyists, we’ve been looking at the Senate Finance Committee — “the central broker in the [health care] debate,” according to the Post — and the connections each lawmaker has with health care lobbyists. You can see our visualization of Senate Finance Committee Chair Max Baucus’ connections or our visualization of all Senate Finance Committee Democrats and their connections. I’ll be posting about the Senate Finance Committee Republicans this week.
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The Lobbying Power of the Groups at the Presidential Health Care Pow-Wow
Today, President Obama held a public event with a number of leading health industry trade associations that have previously been reticent towards efforts to reform health care. The organizations included the Pharmaceutical Researchers and Manufacturers Association (PhRMA), America’s Health Insurance Plans (AHIP), the American Medical Association (AMA), the Advanced Medical Technology Association (AdvaMed) and the American Hospital Association (AHA). The public event included a promise by these industry groups, among others, to reduce health care costs by $2 trillion. It also served as a symbolic event, potentially showing the shrinking rift in between the two sides in the health reform debate. President Obama wants these organizations to temper their fire when the health reform debate begins in full, as they wield a mighty hand in the Washington lobbying game.1st Quarter Lobbying PhRMA $6,910,000 American Medical Assn $4,355,000 American Hospital Assn $4,237,176 America’s Health Insurance Plans $2,030,000 Advanced Medical Technology Assn $364,638 In their first quarter reporting for 2009, these five trade associations have reported nearly $18 million in lobbying expenditures. Their expertise in reaching out to Congress is also nearly unparalleled. The five trade groups employ in their inside lobby shops at least 20 former government employees, many of whom are former congressional staffers. The head of PhRMA’s lobby shop is former congressman Billy Tauzin, notorious for negotiating his current job as he was writing Medicare prescription drug benefit while in Congress. (This does not take into account the outside lobbying firms hired by these groups.)
The health care sector, on the whole, is leading the pack in lobbying expenditures this year. After three months of 2009, the sector has reported $127 million in lobbying expenditures. That is on pace to break the record $487 million spent by the sector on lobbying in 2008 and the congressional debate has yet to be fully engaged. The sector is the only other private sector that competes with the financial sector in lobbying spending. From 1997-2008, the health care sector has spent $3.4 billion on lobbying officials in Washington — only slightly less than the financial sector ($3.6 billion).
(Continue reading…)
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Countering the Reward Method of Corruption
David Sirota posted on OpenLeft yesterday on what he called “the reward method of corruption.” Sirota writes, “As opposed to the Payoff Method whereby a campaign contribution is made and then a favor is legislated, the Reward Method gives a politician a goodie after a favor is done, sorta like a dog being given a treat for rolling over.” This is one of two major issues raised by the revolving door between government and lobbying. (The other issue being the use of access built up over the years.)
While I don’t think there is a direct answer, which Sirota was seeking, to how to stop the flow of lawmakers and staffers from government to the lobbying profession–short of greatly increasing their pay–there are some things to mitigate the effects.
First, let’s look at the problem. This goes from the somewhat benign, lawmaker goes to work for a nonprofit cause not connected to private enterprise, to the wholly corrupt, the various staffers who did deals for Jack Abramoff and then were hired by his lobbying firm. But for the most part, these things fall in between, a staffer or lawmaker has a particular expertise and flips to make more money doing, essentially, the same thing they were doing in Congress.
Now perhaps the biggest fear is that, in preparation for a future career on K Street, a staffer or lawmaker will do favors, directly or indirectly, having been asked or on their own volition, to protect future hiring opportunities. The biggest example of this is Billy Tauzin, who was in talks to head the pharmaceutical industry’s top lobbying shop, PhRMA, while he was writing the Medicare Prescription Drug, Improvement, and Modernization Act, the largest health care overhaul since the 1960s. Tauzin’s tale included many instances of opaque situations: closed conference committees with lobbyists at the table, secret discussions for future employment, unreported meetings with lobbyists. The revelation of all of these things would have aided in providing the public with a view into Tauzin’s world preemptively.
What I’m saying is that the preemptive, or real time, disclosure of a variety of items would allow the public to prevent a lawmaker from doing favors for a potential future employer. The following would be most useful:
- Real time lobbying disclosure with increased reporting requirements — We’ve covered this here, here and here recently. Require lobbyists to disclosure all meetings with covered officials within 24 hours. Require lobbyists to report with whom they meet and the office of the lawmaker when they are meeting with staffers. Also require specific information on positions taken on bills, appropriations, or other topics of discussion.
- Open all conference committees and require time to read conference reports — Require all conference committees to be open to the public (didn’t the Democrats promise this back in 2006?) and require all conference reports to be available for 72 hours prior to consideration. (Of course, beyond this, all committees should be open and all bills should be available for 72 hours prior to consideration.)
- Increase reporting requirement for job negotiations — Currently, members of the House and some staffers must report job negotiations to the Clerk of the House, but the information is not publicly available.
As I said earlier, I don’t think there is a direct way to limit government officials from leaving for a more lucrative profession outside of increasing their pay. There could be a longer “cooling off” period in the House, where it is only one year, and perhaps an extension to staff making less money than currently meets the threshold for the post-employment lobbying restriction. But that hasn’t stopped lawmakers from taking positions as “consultants” and later becoming lobbyists (see: Hastert, Dennis or Daschle, Tom).
Greater transparency and disclosure would, however, be the best solution at present to provide less incentive for lawmakers and staff to act favorably for future employment. With more eyes on their actions there will be fewer Billy Tauzin’s, Kevin Ring’s, Michael Scanlon’s, and Tony Rudy’s.
