2017-05-29 20:52:03
Drug Lobbyists’ Battle Cry Over Prices: Blame the Others

WASHINGTON — Hundreds of independent pharmacists swarmed the House and Senate office buildings one recent afternoon, climbing the marble staircases as they rushed from one appointment to the next, pitching lawmakers on their plan to rein in the soaring drug prices that have enraged American consumers.

As they crowded into lawmakers’ offices, describing themselves as the industry’s “white hats,” they pointed a finger at pharmacy benefit managers like Express Scripts and CVS Health, which handle the drug coverage of millions of Americans.

“Want to reduce prescription drug costs?” the pharmacists argued during their visits. “Pay attention to the middlemen.”

A civil war has broken out among the most powerful players in the pharmaceutical industry — including brand-name and generic drug makers, and even your local pharmacists — with each blaming others for the rising price of medicine.

It is an industry that was already spending nearly double what other business sectors in the United States economy allocate on lobbying, and those sums continue to rise. President Trump has only heightened anxiety by accusing the drug industry of “getting away with murder,” even though he has not weighed in with his own proposal.

For now, lawmakers are facing an almost daily assault.

“Everyone is very eager to maximize their profits and get a piece of the pie, and sorting it all out is complicated,” said Senator Susan Collins, Republican of Maine.

The question is whether a rare confluence of public outrage, political will and presidential leadership can bring about a meaningful change that will slow the drain on consumers’ pocketbooks.

“You remember that old photograph of the Three Stooges, their faces cracked sideways and they are pointing at each other?” asked Chester Davis Jr., the president of the Association for Accessible Medicines, sitting in the basement cafeteria of the Russell Senate Office Building at the start of a day in which he would make his own pitches on behalf of generic drugmakers. “Everyone is doing the finger-pointing, when in fact there is a lot of blame to go around.”

In polls, Democrats and Republicans alike have lowering drug prices near the top of their health care priorities. Public anger has risen along with the skyrocketing prices for many essential medicines — insulin for diabetes, for example, and EpiPens for severe allergic reactions. But will efforts to reduce drug costs surmount the industry’s aggressive lobbying and campaign contributions?

“It’s still a very uphill fight,” said Representative Lloyd Doggett, Democrat of Texas, who like Ms. Collins has been pushing Congress to increase competition and lower prices, “given the millions they have spent on lobbying, advertising and campaign contributions.”

With billions in profit on the line, the pharmaceutical and health products industry has already spent $78 million on lobbying in the first quarter of this year, a 14 percent jump over last year, according to the Center for Responsive Politics. The industry pays some 1,100 lobbyists — more than two for each member of Congress.

In the 2016 election cycle, the industry poured more than $58 million into the election campaigns of members of Congress and presidential candidates, as well as other political causes, the Center for Responsive Politics data shows. That was the biggest investment in the industry’s history and a 20 percent jump from the last presidential election cycle in 2012.

No single proposal has emerged as a clear winner in the bid to lower prices. Mr. Trump has sent conflicting signals: On one hand, he has accused the industry of “price fixing” and has said the government should be allowed to negotiate the price of drugs covered by Medicare. At other times, he has talked about rolling back regulations and named an industry-friendly former congressman, Tom Price, to head the Department of Health and Human Services, and a former pharmaceutical consultant, Scott Gottlieb, to lead the Food and Drug Administration.

Members of Congress have put forward a grab-bag of options, each of which would help or hurt different industry players.

Some address minor aspects, such as a bipartisan bill that would force brand-name drugmakers to hand over samples of their drugs to generic competitors. One would allow for the importing of cheaper drugs. Another would force pharmacy benefit managers to disclose more information about how they did business.

For now, it is a free-for-all.

The brand-name drug industry is the dominant player. It spends the most on campaign contributions, has the largest army of lobbyists and has the biggest pile of chits among lawmakers to try to protect its own interests.

Its trade group, the Pharmaceutical Research and Manufacturers of America, or PhRMA, was so concerned about its vulnerability this year that it increased its annual dues by 50 percent — generating an extra $100 million to flood social media, television stations, as well as newspapers and magazines with advertising that reminds consumers of the industry’s role in helping to save lives. A second set of PhRMA ads point blame for price increases elsewhere, like benefit managers and health insurers.

In doing so, PhRMA is seeking to rehabilitate a reputation that was damaged by the actions of companies like Turing Pharmaceuticals, which sharply hiked the price of a decades-old medicine. Its unapologetic former chief executive, Martin Shkreli, came to be seen as the ultimate illustration of the industry’s bad deeds.

Though Turing was never a member of the group, PhRMA recently purged nearly two dozen companies from its membership after it voted to exclude investor-driven drug companies like Turing.

Nearly every week that Congress is in session, the industry holds fund-raisers at private clubs and restaurants to help bankroll the re-election campaigns of its allies. One former lobbyist for PhRMA recently boasted that he had once organized six fund-raising events in a two-day period. (He asked that he not be named because the fund-raising efforts are supposed to be confidential.)

In late April, for example, a PhRMA Industry Breakfast was hosted for Representative John Shimkus, Republican of Illinois, at the National Republican Club of Capitol Hill, a members-only hot spot across the street from the Capitol.

The industry had reason to thank Mr. Shimkus. Last year, he helped save pharmaceutical companies billions of dollars by persuading the Obama administration to kill a project that was meant to test ways to lower the cost of the so-called Medicare Part B program, which spent $24.6 billion on prescription drugs in 2015.

Mr. Shimkus, who received nearly $300,000 in drug-industry contributions in the last election cycle, led an effort to collect signatures from 242 members of the House challenging the effort. He also co-sponsored legislation that threatened to block it, which became moot after the Obama administration backed down.

A spokesman for Mr. Shimkus said his actions were intended to protect cancer patients — pointing to a clinic in his district he said might close if the Medicare program had gone into effect — not the pharmaceutical industry.

But other participants said industry influence — as drug companies attempted to preserve their bottom line — had played a decisive role.

“When we first proposed this, people were warning me, ‘Be careful, everybody on K Street is going to be gunning for you now,’ and I did not really know what they meant,” said Andy Slavitt, a top Obama administration official who pushed the prescription drug price experiment. “Now I know. When you take on pharma, you take on this whole town.”

Stephen J. Ubl, the chief executive of PhRMA, acknowledged that his group had been “very engaged” in defending his member companies’ interests, and blamed a few bad actors — not his own members — for the public’s disapproval.

“The researchers wake up every day working for better treatments and cures,” he said, echoing his organization’s multimillion-dollar advertising campaign, “Go Boldly.”

The pharmacy benefit managers are giants themselves. Two of the biggest, Express Scripts and CVS Health, which are among the nation’s 50 largest companies, have initiated their own counteroffensive.

In February, Mark Merritt, the president of the Pharmaceutical Care Management Association, the trade group for benefit managers, outlined a strategy to “engage the new administration” and to build “a political firewall on Capitol Hill,” according to a confidential memo that was first made public by BuzzFeed.

The memo bragged about the group’s courting of senior Trump administration officials. It also said it had met with Capitol Hill staff members and lawmakers, formed a partnership with conservative advocacy groups and created an advertising campaign called “Drug Benefit Solutions.”

Last month, the group hosted several hundred government officials and other industry players at a fancy “policy forum” a few blocks from the Capitol, where it detailed just why its members were “uniquely positioned” to save consumers money.

A smaller war is playing out between pharmacy benefit managers and pharmacists, confrontations that have included covert operations.

When the independent pharmacists descended on Capitol Hill in late April, they came with a brochure depicting benefit managers as sharp-toothed dogs, grabbing bags of money.

Yet even as they walked the halls, a group calling itself Ask Your Independent Pharmacist sent a blast email to some of the same lawmakers the pharmacists had just met with. “Whose interests are they on the Hill to champion — the pharmacist’s pocketbook or the patients they claim to serve?” an email asked.

When The New York Times called a public relations firm, Kivvit, which operates out of an address listed on the email, staff members repeatedly hung up when asked who had paid for the message. After a reporter called the firm’s Chicago headquarters, Tracy Schmaler, a Justice Department aide in the Obama administration who now works at Kivvit, responded: Express Scripts had paid for the message.

Jonah Houts, the head of government affairs at Express Scripts, said the company’s role as a middleman drew fire from all sides.

“We were designed to create tension,” he said. “We’re successful at what we do, and that’s why we want to make sure the lawmakers who are considering legislation that affects us understand that.”

The generics industry has also come under attack. Though its drugs are generally cheap, some have also risen sharply in price, and prosecutors have been investigating claims of price-fixing by some of the largest players, including Mylan.

Heather Bresch, the chief executive of Mylan and a former chairwoman of the generics trade group, has been pilloried on social media for her role in hiking the price of EpiPens, even though EpiPens sold as branded drugs, not generics.

As the controversy over EpiPens unfolded, Ms. Bresch shifted criticism toward what she called the “broken system” of brokers, distributors and pharmacists who take a cut of the price, too. In January, the generics trade group shed its old name for one that reflects the changed political climate: the Association for Accessible Medicines.

Mr. Doggett, the Texas Democrat, said the industry war was in some ways a positive sign.

“We have moved from ‘There is no problem’ to ‘It’s not my fault,’ ” he said. “It begins to focus attention on what so many of my constituents already know the problem is, which is price gouging.”