Lobbying Expenditures, Campaign Contributions, and Health Care—Follow the Money

All the President’s Men, the 1976 film about the Watergate scandal, popularized the phrase “follow the money” as a way to connect the dots between expenditures and outcomes in politics and government. Although the money trail is often informative, it may not provide convincing evidence about the influence of cash on specific election, legislative, and policy outcomes. Nonetheless, it is impossible to understand the influence of industry and interest groups on US health policy without considering the breathtaking sums these organizations spend for lobbying and contributions to political campaigns. The goals are to influence both who gets elected and what they do when they are in office. Not only are the sums large, but they also dwarf the spending of groups representing the interests of patients and consumers. Moreover, industry funding of patient groups is common in the US and other high-income countries, although the corporate support may not be transparent.¹

In this issue of JAMA Internal Medicine, Wouters² reports on lobbying expenditures and campaign contributions by the pharmaceutical and health product industry in the US from 1999 to 2018. The pharmaceutical and health product industry is part of the health sector of the economy, which also includes health care professionals, hospitals, nursing homes, and other patient care organizations. Health insurance companies are classified in the insurance industry.

Among all industries, the study found that the pharmaceutical and health product industry ranked first for federal-level lobbying expenditures—accounting for $4.7 billion of $64.3 billion (7.3%) of all spending over the 20-year period, with no other industry accounting for more than 5%.² Other notable findings were the average of $233 million per year in lobbying expenditures, the $414 million in contributions over 20 years to candidates and other groups for presidential and congressional elections, and the average of $44 million per year in contributions to state candidates and committees, often related to ballot measures about the costs of prescription drugs.²

Within the industry, the trade group Pharmaceutical Research and Manufacturers of America (PhRMA) and large drug companies were the highest spending organizations, accounting for 17 of the top 20 organizations for lobbying expenditures and 16 of the top 20 for federal campaign contributions. PhRMA ranked first for lobbying spending, with annual expenditures averaging $21.1 million, and 14th for campaign contributions; 5 pharmaceutical companies were among the top 10 spenders in both categories. The medical device trade group Advanced Medical Technology Association ranked 15th for lobbying expenditures, and the medical device company Medtronic ranked 17th. Across all industries over 20 years, PhRMA’s lobbying expenditures ranked sixth, with the American Medical Association (AMA) and the American Hospital Association (AHA) ranked third and fourth, respectively.²

The study by Wouters² follows articles I wrote on campaign contributions, lobbying, and the US health sector in the 2000s.^3-5 Little has changed, with industries and organizations in the health sector continuing to spend substantial sums to influence the outcomes of elections, legislation, and regulations.

One reason why PhRMA and large pharmaceutical companies have both the money and the motivation to spend on lobbying and campaign contributions is the extraordinary profitability of the drug industry in the US. In JAMA, Ledley and colleagues⁶ report that between 2000 and 2018, the profitability of large pharmaceutical companies was significantly greater than the profitability of other large, public companies, although the differences were less pronounced when factors such as company size, year, and research and development expenses were taken into account. From a business perspective, the lobbying expenditures in the pharmaceutical and health product industry appear to be money well spent.

A decade ago, the focus of federal lobbying and campaign contributions for the US health sector was health care reform. In 2010, President Obama signed the Patient Protection and Affordable Care Act into law. Although Wouters² found that the pharmaceutical and health product industry donated more money overall to Republican candidates and national party committees than to Democratic candidates and committees ($216 million vs $151 million; 58.9% vs 41.1%), the Democrats received more money in the 2008 election cycle (2007-2008), when President Obama was elected, and the 2010 election cycle (2009-2010), during which the Democrats held majorities in both the House of Representatives and the Senate.² Both parties are major beneficiaries of this industry largesse.

Also in 2010, the Supreme Court ruling in Citizens United v Federal Election Commission⁷ legalized campaign contributions to outside spending groups, including those by corporations and nonprofit organizations. Subsequently, there has been little traction for either substantive federal campaign finance or lobbying reforms. For example, Wouters² found that the 2016 election cycle (2015-2016), which included the presidential election contest between Hillary Clinton and Donald Trump, had the highest spending on campaign contributions by the pharmaceutical and health product industry. And in 2019, the $3.4 billion overall amount spent on federal lobbying was the most since 2010.⁸

In 2019 and again in 2020, the affordability of insulin and other prescription drugs and surprise medical bills are 2 of the most contentious health policy issues in the US.^9,10 Bringing a new drug to market is expensive, although it is difficult to assess the research and development costs because of the limited data in the public domain. In JAMA, a study by Wouters and colleagues¹¹ estimated the median and mean capitalized research and development investments for new therapeutic agents between 2009 and 2018 at $985 million and $1336 million, respectively. In another study in JAMA, Hernandez and colleagues¹² report that between 2007 and 2018, the mean list and net prices of branded drugs in the US increased substantially, although discounts partially offset the list price increases. Studies have repeatedly shown how the federal government could decrease Medicare spending for prescription drugs through means such as using the US Department of Veterans Affairs medication prices,¹³ generic substitution and therapeutic interchange,¹⁴ or negotiated prices and a defined formulary.^9,15 Such reforms, which should decrease costs to both the federal government and patients, have not occurred.

In 2019, in response to the calls for drug pricing reform, PhRMA spent a record $28.9 million lobbying Congress and federal agencies, surpassing its previous record of $27.5 million set in 2018 and considerably more than either the AHA ($22.2 million) or the AMA ($20.0 million) spent on federal lobbying, although the AHA and the AMA also increased their spending.⁸ Together, PhRMA and the major pharmaceutical companies that belong to the trade group spent more than $120 million lobbying Congress in 2019.¹⁶ On the surprise medical bills issue, hospitals and physicians have lobbied Congress to protect their reimbursements. Notably, 4 physician organizations that have taken the lead in lobbying Congress on surprise medical bills have ties to companies backed by private equity.¹⁷ As of February 2020, none of the major bills to lower drug prices or to reign in surprise medical bills have been enacted into law, bipartisan support for both reforms notwithstanding. In contrast, Congress in 2019 repealed taxes that were central to the Affordable Care Act, including taxes on expensive health care plans, health insurance companies, and medical device manufacturers.¹⁸

Lobbying expenditures and campaign contributions are only 2 of the links between government and the pharmaceutical and health product industry. A third example is industry user fees. In fiscal year 2019, the budget of the US Food and Drug Administration (FDA) is $5.7 billion; federal budget authorization provides about $3.1 billion (55%), and industry user fees pay for the remaining $2.6 billion (45%).¹⁹ Industry user fees pay for 65% of regulatory activities for human drugs and pay entirely for the Tobacco Control Act Program.¹⁹ The profitability of the pharmaceutical industry facilitates payments of user fees as well as the large settlements between the US Department of Justice and certain drug companies in civil and criminal cases.²⁰ The quid pro quo for these fees is that industry demands faster and faster approval of new drugs, even before they are fully shown to be safe and effective. With user fees providing nearly half of the FDA’s budget, the agency can be perceived as serving the interests of the industry it regulates, not the general interests of the public.

A fourth example is the “revolving door” of personnel, common among Democrats and Republicans, between roles as legislators and regulators and roles in the industries affected by the legislation and regulation. At present, the secretary of the Department of Health and Human Services is a former pharmaceutical lobbyist and drug company executive, and the director of the White House Domestic Policy Council is a former pharmaceutical lobbyist. The first FDA commissioner in the Trump administration has worked with many pharmaceutical companies, including as a venture capitalist and a member of the board of directors of companies, before and after his government tenure.

On November 3, 2020, the US will elect a president, all 435 members of the House of Representatives, and 35 members of the Senate. Voters will consider many issues in addition to health care and the affordability of prescription drugs. The study by Wouters² informs voters and candidates about lobbying expenditures and campaign contributions by the pharmaceutical and health product industry and adds to factual discussions about whether the current level of industry influence on US health policy is desirable or if now is the time for change.

Corresponding Author: Robert Steinbrook, MD, JAMA Internal Medicine, Editorial Office, University of California, San Francisco, 505 Parnassus Ave, Ste M1180, PO Box 0124, San Francisco, CA 94143-0124 (robertsteinbrook@gmail.com).

Published Online: March 3, 2020. doi:10.1001/jamainternmed.2020.0145

Conflict of Interest Disclosures: None reported.