Deep pockets contribute to success

Industry spends millions on state campaign donations, Calif. fight

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The pharmaceutical industry, which mounted a huge lobbying campaign to thwart attempts by states to reduce drug prices, also has spent tens of millions of dollars on campaign contributions and fights over ballot initiatives, a Center for Public Integrity analysis of state campaign funds has found.

Drug company executives, employees and political action committees donated more than a combined $18 million to state political groups and candidates from 2001 to 2004, according to the Center's analysis of data provided by the Montana-based Institute on Money in State Politics. And the industry spent more than four times that much last year for a lobbying campaign on competing California ballot initiatives.

The Center found that Republican groups and candidates received more than $11 million in campaign contributions — greater than 60 percent of the donations identified; Democrats received about $7 million.

Top group recipients of pharmaceutical industry money included the California Republican Party, which received more than $620,000; the Florida Republican Party (more than $610,000); the Senate Republican Campaign Committee of New York (more than $430,000); the New Jersey Republican Party (more than $350,000); the Democratic Assembly Campaign Committee of New York (more than $335,000); the New Jersey Democratic Party (more than $320,000) and the New York State Republican Party (more than $320,000).

Gubernatorial candidates were among the largest individual recipients of campaign money from the industry. Democrat Gray Davis, California's former governor, was the top individual recipient identified with at least $570,000. More than $100,000 apiece also was given to his successor Arnold Schwarzenegger and fellow Republicans Gov. Rick Perry of Texas and Mark Earley, the party's 2001 candidate in Virginia.

Pharmaceutical companies also spent significant amounts themselves on campaign donations to state candidates who took favored positions on issues important to the industry. Pfizer contributed more than $3 million to candidates for state office over the period; Eli Lilly and GlaxoSmithKline each gave more than $2.2 million.

Those amounts, while substantial, pale in comparison to the $83 million marshaled by the pharmaceutical industry to lobby on the California health care and drug discount referendum issue in 2005.

Several labor unions and consumer groups backed Proposition 79, a measure that would have required companies to give huge drug discounts to uninsured residents under a proposed program in order to also be allowed to contract with Medi-Cal, the state's Medicaid program. Refusing would mean losing out on a share of Medi-Cal’s $4 billion annual prescription drug budget.

The industry vigorously opposed that measure and supported Proposition 78, which called for voluntary discounts from drug companies. Prop. 78 also was endorsed by the governor, Schwarzenegger.

Disclosure records filed with the California Secretary of State revealed that the ballot measure committee "California Initiative Fund — Yes on Proposition 78 and No on Proposition 79" run by trade group Pharmaceutical Research and Manufacturers of America collected $80 million in 2005. About $52 million of it was spent on television ads.

Pfizer, Johnson and Johnson, Merck, and GlaxoSmithKline each contributed $9.84 million to the fund. Eight other firms — Abbott Laboratories, Amgen, AstraZeneca, Aventis, Bristol-Myers Squibb, Eli Lilly, Novartis and Wyeth — chipped in $4.55 million apiece.

The $83-million California effort eclipsed the drug industry's usual federal campaign spending. As the Center stated in its July 2005 report "Drug Lobby Second to None," industry contributions to federal candidates from 1997 through 2004 totaled only about a combined $87 million.

The industry's big spending dwarfed that of the opposition. The "Yes on 79" ballot-measure committee reported receiving and spending slightly more than $800,000 in 2005. Including the expense of the campaign to get the initiative on the ballot, the pro-Prop. 79 coalition spent a grand total of almost $2 million, according to spokesman Michael McCauley of Consumers Union, which was part of the group.

In the end, both initiatives were voted down at the polls — an outcome the industry had considered its best-case scenario. The passage of Prop. 79 would have had serious long-term consequences for pharmaceutical companies because of the money forfeited through discounts and, more importantly, because of the precedent-setting implications.

"California is often a bellwether state," said McCauley. "It likely would have encouraged other states to enact similar programs."

McCauley blamed the industry-backed measure for the defeat of the initiative his group supported.

"[Proposition 78] was part of the strategy to confuse the voters. [The drug interests] recognized that they had to offer an alternative. But it also helped foster confusion among voters."

Victoria Kreha contributed to this story.