Lobbying in the USA and «Big Pharma»

Lobbying in the USA and «Big Pharma»

How American companies provide themselves with windfall profits

Among the users of the services of lobbying companies, businesses related to the healthcare system occupy the 1st place in the United States. In recent years, companies producing medicines and medical equipment, the so-called "big pharma", have been leading in this group by a large margin.

Thus, according to data for 2021, the amounts spent on lobbying at the federal level in the United States were distributed as follows: pharmaceuticals and medical equipment («Big Pharma») — $356,597,531, hospitals and maternity hospitals — $118,642,782, health services — $117,410,312, medical personnel — $88,049,165. Other issues related to with healthcare (Miscellaneous Health) — $8,767,008.

In the first half of the current 2022, «Big Pharma» continued to increase its spending on lobbyists. This allows American analysts to predict that by the end of two years (2021 and 2022) they will reach or even exceed $ 700 million.

The absolute leader in terms of spending on lobbyists at the federal and state levels is the association of more than 30 pharmaceutical manufacturers in the world and the United States Pharmaceutical Research & Manufacturers of America (PhRMA), which is an intermediate link between direct stakeholders and their lobbyists.

According to the results of 2021, the total expenses (federal government and states) of the leading clients of lobbying companies look like this: PhRMA spent $35,615,151 in 2021, Biotechnology Innovation Organization (BIO) — $13,964,988, Pfizer, Inc — $12,147,508, Roche Holdings — $11,567,933, Amgen, Inc — $9,976,444, Horizon Therapeutics — $9,976,271, Gilead Sciences — $8,961,845, Eli Lilly & Co — $ 8.940.897, Pharmaceutical Care Management Association — $8,917,201, Merck & Co — $8,608,702, Bristol-Myers Squibb — $6,612,611, GlaxoSmithKline — $6,461,213, Emergent BioSolutions — $3,872,333, etc.

Major pharmaceutical companies promote their interests with the help of lobbyists at both the federal and state levels. They use different firms for this purpose. This is due to the fact that local lobbyists have strong ties with administrations and state legislators, and are also experts in the field of local legislation. This increases their effectiveness in promoting the interests of their clients.

The leading lobbying firms promoting the interests of «Big Pharma» at the federal level include: Tarplin, Downs & Young, which earned $7,590,000 last year, Forbes Tate Partners — $6,110,000, BGR Group — $5,800,000, Tiber Creek Group — $4,430,000, Akin, Gump et al — $4,320,000, Todd Strategy Group — $4.280.000, Thorn Run Partners — $4.050.000, Capitol Counsel — $3.500.000, W Strategies — $3.380.000, Jeffrey J Kimbell & Assoc — $3.360.000.

As for the lobbying firms that received the largest fees in 2021 and work exclusively in the states, the top ten include: Bay State Strategies Group with annual earnings of $608,500 (Massachusetts), Capitol Advocacy, LLP — $569,000 (California), Tress Capitol Advisors — $506,000 (New York), Noteware Government Relations — $457.038 (California), Metz Husband & Daughter — $390.000 (Florida), Valencia Government Relations — $355.000 (California), BCB Government Relations — $331.992 (Massachusetts), Finneran Global Strategies — $305.000 (Massachusetts), McDermott Quilty & Miller — $1299.100 (Massachusetts), and Dickinson & Avella — $298.008 (New York).

The fact that the list of the most highly paid lobbying firms is dominated by three states (Massachusetts, New York and California) is explained by American analysts by the fact that either the headquarters of customer firms or their main production facilities and laboratories are located there.

When selecting lobbyists, it is important that the selected company, whether for work at the federal level or in individual states, is well aware of the process of developing and making political decisions, as well as persons in government who can influence this process. In addition, it is considered important that firms hired to make a specific decision in different jurisdictions (federal and individual states) work for the same result without distorting the employer's task.

Referring to the personnel of leading lobbying companies that largely specialize in promoting the interests of «Big Pharma», American sources note that up to half of the specialists previously worked for the Federal Department of Health and Human Services, which manages the work of the Food and Drug Administration. And this federal agency, in turn, is the only and main source of funding for major federal programs related to medicines issued by doctors (by prescription), such as Medicare and Medicaid.

As an example of the activities of lobbyists from «Big Pharma», consider the H.R. 3 law introduced to the US Congress in April 2021 concerning the prices of medicines prescribed by doctors. Now it’s stuck in Congress. It should be noted that the prices for this category of drugs are more than 200% higher than in other countries with developed economies.

The bill provides for the establishment of a kind of price ceiling only for the most expensive drugs and control over the implementation of this provision by the state. The ceiling should not exceed 125% of the average price for it or its equivalent in countries such as Australia, Canada, France, Germany, Japan and the United Kingdom. This form of price determination is called "international price comparison" (international price comparison).

The prospects of losing part of the windfall profits for manufacturers of expensive medicines led to the fact that at least 183 pharmaceutical companies involved lobbying firms as agents of their interests in Congress. Moreover, 16 of the largest corporations and associations, including PhRMA and BIO, aimed their lobbyists to work only on the point that concerned "international price comparison».

The problems for «Big Pharma» were complicated by the fact that the idea of bringing the prices of particularly expensive medicines at least in some compliance with those adopted by the closest American partners, was spread and supported at the level of governments and state legislators. In particular, in the poor states of Maine and North Dakota. Both states took as a basis the prices of expensive prescription drugs in Canada, neighboring the United States.

It should be noted that, despite all the efforts of lobbyists and pressure from «Big Pharma», a bill was passed in Maine in April 2022 requiring manufacturers and suppliers of medicines to adjust their prices as necessary. In North Dakota, at the time of preparation of the material, the bill has not yet passed.

It is noted that in both states, lobbyists working for PhRMA, on the eve of hearings in local legislative assemblies, presented extensive and detailed reports justifying the harmfulness of the price adjustment initiative for the national health system, since it is "discriminatory, threatens the process of developing new medicines, and is also questionable from the point of view of law."

It is also noteworthy that both in Maine and in Dakota, the same document was presented to legislators, which included some points related to local peculiarities.

In order to fight the bill at the federal and local levels, PhRMA, through its associated media and lobbying structures, organized an entire campaign that cost $5 million by the end of 2021.