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Biotechs' Lobbying Begins to Pay
Off
Victories Pile Up as Spending On Political Causes
Soars
By Michael Barbaro
Washington Post Staff Writer
Tuesday, July 22, 2003; Page E01
In August 1999, when the Biotechnology Industry Organization decided to lobby the White House for stronger Medicare drug coverage, the trade group took to the airwaves with an aggressive tactic: a 60-second radio spot, broadcast seven times a day for seven days. Featuring a retired schoolteacher pleading for broader benefits, the radio blitz had all the trappings of a pricey lobbying campaign.
But it wasn't.
The ad cost just $7,000 and ran on one radio station, WMVY-FM, in one town, Martha's Vineyard, Mass., where then president Bill Clinton was vacationing. "I have no idea whether the president heard it," said the trade group's president, Carl Feldbaum. "But that's all we could afford."
Fast-forward almost four years to June, when the industry trade group did not have to seek out small-market radio stations to reach the president. It simply delivered its agenda to President Bush when he spoke at the group's annual convention.
Today, the industry's spending power in Washington is considerably stronger and the relatively young business of biotechnology, just two decades old, is beginning to score significant legislative victories, from reform at the Food and Drug Administration to the proposed expansion of outpatient Medicare coverage.
Between 1998 and 2002, annual spending on lobbying by biotechnology companies, their parent firms and their industry trade group jumped 50 percent, to $33 million, according to an analysis by the Washington-based Center for Responsive Politics. Top companies have established Washington offices to raise their profile among regulators and lawmakers. And dozens of mid-size companies have hired lobbyists here to press their agendas.
During the same four-year period, the biotech industry more than doubled its campaign contributions to federal candidates, from $3.2 million in 1998 to $7.7 million in 2002, the Center for Responsive Politics found. The organization counted individual, political action committee and soft money donations from a wide range of businesses, including chemical companies with in-house biotechnology units, such as Dow Chemical Co. and BASF Corp.
Biotechnology executives say higher spending on political causes reflects the sector's shift away from early-stage drug development, conducted without much federal oversight at company laboratories, toward the highly regulated universe of clinical testing and product manufacturing, when patients come into the picture.
"This is an industry coming into its own," said Vaughn Kailian, vice chairman at Millennium Pharmaceuticals Inc., a Cambridge, Mass., biotechnology company. "The thing that will kill you in the start-up stage is money, not regulatory issues. But the closer companies come to product approval, the more access they need in Washington."
Despite its gains, biotechnology is hardly a political power broker. The vast majority of biotechs, still struggling to become profitable, cannot afford to hire more scientists, let alone find the salary for a lobbyist. And the industry's campaign donations remain relatively lean. In the 2002 election cycle, for example, the industry gave $7.7 million to federal candidates; its bigger and older brother, the pharmaceutical industry, gave $20.7 million. The biotech industry is still small potatoes compared with the biggest campaign-contributors, lawyers and law firms, who gave $94.8 million in the 2002 election cycle.
Analysts say the industry is simply growing up. For much of the past decade, few biotechnology companies actually delivered drugs to the public. A small club of firms -- Amgen Inc., Genentech Inc., Gilead Sciences Inc. and MedImmune Inc., all profitable and flush with cash -- largely dominated the industry. But the number of companies with more than one drug on the market has grown steadily in recent years, forcing a new generation of executives to navigate thorny issues such as competition from generic drugmakers and liability protection for drugs used after a bioterror attack.
Take Millennium Pharmaceuticals. After its first drug was approved, the 10-year-old company opened a one-man government relations office in Washington to press for broader reimbursement coverage for expensive biotech drugs and to educate lawmakers about gene-based medicine. To pull it off, the company boosted its lobbying expenditures from next to nothing to $1.1 million the same year.
The timing proved fortuitous: Millennium's second commercial drug was approved earlier this year, and the company has built a strong profile among lawmakers, company officials say. But few biotechs can afford that kind of access. Fewer than a dozen of them have offices in Washington.
Most companies rely on the Biotechnology Industry Organization to do their bidding in Washington. The 10-year-old trade group, which has about 1,000 members, has largely succeeded in its goal of raising biotechnology's standing on Capitol Hill. In the past four years, its lobbying expenses have nearly doubled, to $3.5 million, and its campaign contributions have vaulted from $4,500 to more than $166,000.
Regulations -- and the agencies and congressional committees that shape them -- are the major focus of the industry's lobbying efforts, documents filed with Congress show.
"If you are a tech company with an idea, you build it, get a patent on it and you sell it. But if you are a biotechnology company, you are regulated almost every step of the way," said Walter Moore, vice president of government affairs at Genentech, which spent $1.5 million on lobbying last year.
Genentech pressed for the appointment of a new FDA commissioner after the agency had been headless for nearly two years. Celgene Corp. pushed for stronger Medicare reimbursements for cancer drugs, its main business. And Applera Corp., whose subsidiaries decode genetic information and develop drugs based on the data, supported certain forms of gene patenting.
Executives say their efforts have produced important victories for the industry. When Congress reauthorized the Prescription Drug User Fee Act last year, biotechnology companies, led by the Biotechnology Industry Organization, secured a major increase in the amount they would pay for the agency to review drug applications in return for a bigger FDA workforce and a quicker approval process.
This year, the industry is taking partial credit for the proposed expansion of outpatient drug payments in the House and Senate Medicare bills now pending in Congress. The reform would offer biotechs greater incentives to develop the kind of expensive but potentially life-saving therapies Medicare has often failed to cover.
Because biotechnology is rooted in complex laboratory science, much of the lobbying is educational. Monsanto Co. of St. Louis., a developer of genetically modified seeds, spends tens of thousands of dollars each year arranging to bring congressional staff members to its farms. "There's only so much education you can do without seeing some of agriculture and biotechnology firsthand by walking through the fields," said company spokesman Brian Hurley.
Monsanto's federal filings reveal another reality about biotechnology's spending in Washington: It strongly favors lobbying over campaign contributions. The company spent $2.2 million on lobbying in 2002, but only $226,000 on campaign contributions, a gap mirrored across much of the industry.
Only 12 companies contributed more than $100,000 during the 2002 election cycle, according to the Center for Responsive Politics. The vast majority gave $1,000 or less, with Republicans receiving more of the total than Democrats.
Despite its shallow pockets, biotech executives have their favorite candidates, who tend to sit on congressional committees that either regulate the industry or fund the agencies that do, according to the Center for Responsive Politics.
In 2002, Nancy L. Johnson (R-Conn.), a member of the House Ways and Means Committee and chairman of the subcommittee regulating health care, received $88,992 from the industry; Charles E. Grassley (R-Iowa), chairman of the Senate Finance Committee, which regulates Medicare, received $61,799; and Mary Landrieu, (D-La.), a member of the Senate Appropriations Committee and the subcommittee regulating the FDA, received $47,000.
© 2003 The Washington Post Company
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