Fearing Democratic Tidal Wave, the Drug Industry Is Pouring Money Into GOP Coffers

By Dylan Scott, STAT

04 November 16

 

ith a fight over drug prices expected next year, drug companies have been funneling significant political contributions toward Republican candidates, fearful of what a full Democratic takeover of Washington might mean for the industry, according to a STAT analysis.

Drug makers have been bracing for a renewed push in Washington to bring down prices, particularly with polls consistently showing Hillary Clinton leading Donald Trump in the presidential race. In the battle for Congress, Democrats have long had a chance to win the Senate, but a takeover of the House as well — now seen as a possibility, however remote — would present the pharmaceutical industry with a worst-case scenario.

Through their political action committees, drug makers appear to be trying to blunt that outcome by investing in a divided government.

Industry PACs have given at least $4.4 million to Republicans and $2.6 million to Democrats in House races across the primary and general elections, according to figures compiled for STAT by Political Moneyline, which tracks campaign contributions and spending.

In the most competitive House contests — those rated as toss-ups or only leaning toward either party by the Cook Political Report — pharmaceutical PACs have given more than $435,000 to Republicans, a separate STAT analysis found. By comparison, the committees have given less than $70,000 to Democrats in those races.

“I think that most companies believe the system works best for us when there’s a forced engagement of bipartisanship,” one industry official told STAT, “as opposed to a runaway trifecta of the administration, the House, the Senate being in anybody's hands.”

The drug industry has traditionally leaned Republican, and this year more Republican members are at risk than sitting Democrats. Even so, 2016 appears notably lopsided. Drug makers this election cycle have supported Republicans in those closest campaigns by a 6-to-1 margin, while giving the vast majority of their dollars in competitive open seats with no incumbents to Republican candidates.

In 2010, 2012, and 2014, drug company PACs gave as much as $54,000 to Democratic candidates in close races without incumbents, and, in 2014, they actually gave more money to Democrats than Republicans in those contests.

Several high-profile GOP incumbents in tight races this year have received last-minute boosts from drug industry PACs: California Representative Darrell Issa received $5,000 from Eli Lilly, $1,500 from Endo Pharmaceuticals and another $1,000 from Amgen in October. Barbara Comstock, in the Virginia 10th district, received $2,000 from Amgen in the campaign's final month.

The dangers that a Democratic wave would pose to the drug industry are no secret. Biotech stocks are already stagnating over fears of such a sweep; one stock analyst called it the “worst-case scenario” in a note to investors last week.

Among other proposals, Clinton has raised the possibility of setting up a government panel to penalize companies for egregious price hikes. She wants Medicare to directly negotiate the drug prices it pays, a now-standard stump line for Democrats, and to limit tax breaks for drug makers.

Republican lawmakers have also criticized companies behind controversial pricing strategies — including Mylan, Valeant, and Turing — but they are generally more sympathetic to the industry’s arguments that many of the policies proposed by Clinton and other Democrats could hurt their business model and, by extension, their ability to develop new breakthrough treatments.

GOP lawmakers might also be reluctant to help Clinton fulfill her campaign goal of lowering drug costs.

“I’m sure pharma would prefer a divided Congress,” Ira Loss, who follows drug stocks for the research firm Washington Analysis, said in an email. He was one of the few willing to comment on the record about the powerful industry’s political preferences.

Others in Washington who work with drug companies and who spoke on condition of anonymity in order to speak candidly were even more frank.

The drug lobby “is pretty scared of what a Clinton [presidency] could do to the industry,” one source said, “and relies heavily on lobbying power with Republicans to block damaging legislation.”

The STAT analysis shows that, even in competitive House races with no incumbent, if the industry has donated any money, almost all of the dollars have gone to Republican candidates.

Republican candidate John Faso, a former state lawmaker in New York running for a congressional seat, got $2,000 from Eli Lilly’s committee, $1,000 from Genentech's, and a last-minute $2,000 contribution from Pfizer’s committee in October. Brian Fitzpatrick, a former FBI agent vying for a seat in the Pennsylvania 8th district, received $2,500 from Pfizer’s committee, $3,000 from Celgene’s, and $1,000 from the committee for BIO, biotech’s D.C. trade group.

Pfizer’s committee chipped in $5,000 for Jack Bergman’s campaign in the Michigan 1st district; $5,000 to Michael Gallagher in the Wisconsin 8th district; and $2,500 to the Republican in the Pennsylvania 16th district, Lloyd Smucker, who also received $1,000 from AbbVie’s committee and $1,000 from CSL Behring.

Danny Tarkanian, the GOP’s candidate in the open Nevada 3rd district race, got a $1,000 donation from Pfizer’s committee in October, the first pharma dollars spent in that race.

There are some notable exceptions in the drive to support GOP candidates. Ami Bera, an incumbent California Democrat in a close House race, received nearly $45,000 from drug company committees, while his Republican opponent received none. Angie Craig, a former health care executive who is running as a Democrat for the open Minnesota 2nd seat, received $4,000 from Abbott Laboratories. Drug companies have always relied on support from some Democrats to maintain their influence on Capitol Hill.

Drug industry PACs are among the biggest campaign spenders in health care, along with physician groups. Their contributions represent a major play in the election of a Congress that will be under public pressure to do something about drug prices.

Several drug makers declined to comment on this story. Others said they are transparent about supporting candidates who support their missions.

In a statement, Genentech said it “strives for political balance in our PAC giving and we have supported both Republicans and Democrats.”

“Our overall giving is generally reflective of the make up of Congress and in the current Congress, Republicans control the majority in both the House and the Senate,” the company said.

Clinton has already proposed her drug-price plan that the industry opposes. Top Democratic lawmakers have spent the last 18 months railing against drug companies, and polls have consistently shown drug affordability to be one of the public’s top health care concerns.

Then last week, the Center for American Progress — the most influential liberal think tank here, with leaders close to Clinton — urged Congress to delay a drug-approval reform bill until next Congress, with the explicit goal of adding price controls.

If Republicans keep a minimum control of the House, drug makers will have a better chance to thwart legislation damaging to their interests. Nothing moves quickly when the federal government is divided.

“If Democrats control both the House and the Senate and the presidency, from the perspective of the pharmaceutical interests, that would be the least attractive scenario,” one lobbyist with pharmaceutical clients said.

Some lobbyists insist a Democratic takeover isn’t necessarily a doomsday scenario for drug companies either. There are too many unknowns. First, Democrats almost certainly won’t win enough seats to have a 60-seat supermajority in the Senate that could move legislation at will.

“A dedicated minority can really slow things down if not prevent them altogether,” the lobbyist said.

Clinton and Hill Democrats could also be preoccupied with fixing the Affordable Care Act, which might make them wary of starting a fight with drug makers.

The Pharmaceutical Research and Manufacturers of America, the industry’s top trade association, is raising an additional $100 million in preparation for a showdown over drug pricing next year. After Election Day, the industry will surely recalibrate to whatever the new balance of power is. It’s going to be an active player no matter what.

The consensus, reflected in the industry’s campaign donations, is clear, though: The more Democrats in office, the greater the risk for drug makers. If one or both chambers flip, that not only means legislation could start moving, but Democrats will be deciding which hearings to hold and which investigations to conduct.

As another drug lobbyist put it: “It’s more of a problem if they run the table.”