May 4, 2012
Pfizer Inc. (PFE) and Merck & Co. (MRK) are being pulled into an
expanding congressional investigation about
the agreement drugmakers reached
the Obama administration to
support the Democrats’ overhaul of the U.S. health-care system,
according to three people familiar with the talks.
The probe began last year, with Republicans on the House Energy and
Commerce Committee seeking documents from an industry trade group,
said the people, who aren’t authorized to speak publicly.
When that group didn’t cooperate, the
panel decided to target Pfizer, the world’s biggest drugmaker, along
...said one of the people.
A man walks past
Pfizer Inc. headquarters in New York.
The Republicans last month began
negotiating directly with the companies in e-mails, calls and
meetings demanding documents and information outlining what the
industry agreed to with President Barack Obama in 2009 and 2010,
when the law was being worked on in Congress.
Michael Burgess, a Representative
from Texas, said he’s been frustrated by a lack of cooperation.
“This has been like pulling teeth,
trying to get information,” said Burgess, a Republican working
on the panel’s investigation, in a telephone interview.
A White House spokesman declined to
comment about the investigation.
Peter O’Toole, a spokesman for
New York-based Pfizer, said the company is cooperating, as did
Tony Jewell, an AstraZeneca spokesman. Kelly Davenport, a
spokeswoman for Thousand Oaks, California-based Amgen, said the
drugmaker is aware of the probe.
The investigation is part of a tenuous relationship that has
developed between the industry and politicians since passage of a
law that expanded health insurance to more than 30 million
Americans, said Alec Vachon, a health-care consultant who is
president of Hamilton PPB in Washington.
The pharmaceutical industry has loosened
its ties to Republicans, who were united in voting against the law.
About 54 percent of the industry’s political donations in the first
quarter of 2012 went to Republicans, down from a 74 percent share in
“It’s an inconstant love,” Vachon
said by telephone. Past investigations by Republicans have
mostly been focused on patient safety or Medicare. This is more
political, he said.
The almost $1 trillion, 10-year plan for overhauling the health-care
system passed through Congress without a single Republican vote in
either the House or Senate.
The insurance expansion is funded partly
by more than $100 billion in taxes and discounts on products the
drug industry offered to the White House. In return, the newly
insured will be able to buy the drugmakers’ pills using their new
The committee’s demands so far have been limited to e-mails and
meetings with company lobbyists and lawyers, without subpoenas or
formal letters that can be used to push uncooperative targets into
compliance, a person familiar said.
“We have been cooperating with the
committee on an ongoing basis since the investigation began,”
said Matt Bennett, a spokesman for the Washington-based
Pharmaceutical Research and Manufacturers of America, or PhRMA.
Adelle Infante, an Abbott
spokeswoman, and Ron Rogers, a spokesman for Merck, didn’t
immediately reply to e-mails seeking comment.
Drug company executives have said they are worried that providing
the committee with a bundle of documents will create more problems
than it solves, according to two people familiar with the
“Any time you disclose documents,
you have no idea what rocks you’re going to turn over,” Vachon
said. “There’s no upside here.”
Parts of the health law expanding
insurance coverage have been challenged as unconstitutional by 26
states, which may make this year treacherous for the industry.
PhRMA says that in addition to the $100 billion companies are giving
up over a decade to help fund the law, the industry is concerned
that its profits will be used by the government to fund future
health legislation that could flow out of a Supreme Court ruling
against the law.
The trade group cited a potential overhaul of Medicare’s payments to
doctors, or new health insurance rules.
A Supreme Court ruling that invalidates parts of the law could
restart the debate on what to do about health care, said Eli Lilly &
Co. (LLY) Chief Executive Officer John Lechleiter.
No Going Back
“There’s going to have to be a
‘what’s next?’”, Lechleiter said in an interview from PhRMA’s
annual meeting in Boston last month. “There’s no status quo that
any of us could return to.”
The court plans to rule on the law’s
constitutionality in June.
The industry has found little sympathy from Democrats, who say
drugmakers still get too good a deal from government health- care
programs. A proposal in the Obama administration’s fiscal 2013
budget would cut $156 billion over a decade from Medicare and
Medicaid spending on the industry’s drugs.
Taking more money from drug companies would result in lost jobs and
fewer future cures, said John Castellani, CEO of PhRMA.
“I see our critics and their
one-dimensional focus on costs, and I say, ‘How dare they?’” he
said in a speech at the annual meeting last month.
PhRMA and the rest of the drug and health products lobby,
Washington’s largest, spent $240 million in 2011 and registered over
1,500 lobbyists, according to the Center for Responsive Politics.
Along with drugmakers, the committee has asked questions of about 10
other groups, including doctors and hospitals.
They also demanded
that the White House turn over information on negotiations between
the health industry and Democrats, and have so far been foiled.
“This is not a beef with anyone in
the industry. I’m perfectly OK that they went to the White House
and advocated on behalf of the industry, that’s part of the way
things are done,” Burgess, the Republican from Texas, said.
“What I’ve got a problem with is the
door being closed to the rest of us.”