K Street Gore

One important way to judge what a presidential candidate might do if elected is to look at his record while in office—his publicly announced positions and his skill in commanding loyalty, wielding authority, and winning public support. But it is also important to look at the networks of campaign contributors, lobbyists, political organizations, and policy groups that have surrounded him over the years and that might have some claim on his loyalty. Does anyone imagine, for instance, that if Texas Governor George W. Bush were elected president, he would ignore Ken Duberstein and the Duberstein Group, Frank Carlucci, James Baker, and Richard Darman of the Carlyle Group, Dick Cheney of Haliburton Oil, retired General Colin Powell, and the other former Bush administration officials turned lobbyists, CEOs, and investment bankers?

What about Vice President Al Gore, the Democratic front-runner for 2000? Gore has many of the same connections that Bill Clinton did—to the Democratic Leadership Council, Goldman Sachs and Democratic Wall Street, trial lawyers, and Hollywood—but he has also established close ties on his own to high-tech industry, particularly telecommunications, computer equipment, pharmaceuticals, and biotech firms. These ties, of course, reflect Gore's own concerns, but they could also shape his priorities as president and determine how he would approach conflicts that arise between these firms and the general public over prices, access, trade policy, and antitrust enforcement.

There has also been at least one instance during Gore's vice presidency when he seems to have been unduly swayed by his ties to high-tech industry. It's a fairly obscure case that involved trade policy toward the export of AIDS drugs to South Africa and raised pressing questions about how to weigh narrow economic priorities against broader humanitarian concerns. Gore himself was at the center of administration policy on this issue. Together with his extensive fundraising and lobbying connections, it provides a warning signal of the unwarranted influence that these kinds of firms might have over his presidency.

Gore is closely linked to high-tech industry through his aides and former aides. The most important group includes Gregory Simon, his chief domestic policy advisor from 1993 to 1997, Jack Quinn, his chief of staff and counsel from 1993 to 1996, Peter Knight, his administrative assistant from 1977 to 1986, and Roy Neel, a top aide from 1977 to 1992 and his chief of staff in 1993. All are expected to work on his campaign, and all are lobbyists for telecommunications and computer firms. Simon is now the head of Simon Strategies, which represents Cisco Systems, the Cellular Telecommunications Industry Association, and other telecommunications firms. (Former Gore aides Chris Ulrich and Jennifer Rainville also work at the firm.) Quinn, a partner at Arnold & Porter, lobbies for Bell Atlantic. Knight, a partner at Wunder, Knight, Levin, Thelen & Forscey, also lobbies for Bell Atlantic. Neel is president and CEO of the United States Telephone Assoc iation. Currently, Gore's two main domestic policy advisors in the Office of the Vice President come from the same high-tech network. David Beier was the chief Washington lobbyist for Gene tech, which was also a major contributor to Gore's PAC, and Morley Winograd was a vice president of AT&T.

Gore was heavily involved in raising money among high-tech industries for the Clinton-Gore re-election effort in 1996, and many of the same firms have begun contributing to his presidential drive. After the 1996 election, Gore established a political action committee, Leadership '98, that he used to curry favor among Democratic congressional candidates in the 1998 election. For the presidential candidate, contributions to his leadership PAC are the true mark of devotion. Looking at Federal Election Commission records provided by the Center for Responsive Politics, I counted $482,050 in contributions from non-Hollywood communications and electronics firms and from biotech and pharmaceutical companies. I estimated an additional $250,000 in contributions, because many of the law firms, lobbying organizations, and investment banks that gave money were closely tied to high-tech firms. That's 18.5 percent of Gore's total contributions—it dwarfs contributions from every other category except securities firms. By contrast, for instance, Gore received only $18,500 from officials of energy and natural resource firms, $5,000 from defense contractors, $5,500 from labor unions, and $5,000 from environmental organizations.

Has this interlocking directorate of Gore aides, high-tech lobbyists, and firms already influenced Gore's judgment as vice president? Gore has certainly taken their side in policy battles. He was the chief administration backer of the 1996 Tele communications Act, which like many deregulatory measures has encouraged consolidation rather than competition, and is now contributing to sharply higher prices in cable and some phone service. Gore has championed White House aide Ira Magaziner's efforts to deny government a formal role in protecting consumer privacy on the Internet. (Gore's aide Beier has now replaced Magaziner as the administration's internet policy chief and is pursuing the same laissez-faire approach.) But Gore's stand on these policy issues may have reflected his own sincerely held opinions.



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That might not have been the case, however, in Gore's intervention on behalf of American drug companies exporting to South Africa. South Africa is suffering from the fastest-growing epidemic of AIDS in the world. According to a 1997 survey by the South African Depart ment of Health, 16 percent of all women who attend prenatal clinics are infected with HIV. There are now 50,000 new cases of HIV infection a month, and a total of 3.2 million are estimated to be infected, in a country of 40 million. Many of the victims are poor blacks who cannot afford extraordinarily expensive AIDS drugs such as AZT, ddl, ddC, and Taxol. In response, the South African government passed a law in 1997, the Medicines and Related Substances Act, allowing compulsory licensing and parallel importing of vital drugs like these.

Compulsory licensing would permit the South African government to arrange for the production of vitally needed drugs that its citizens cannot currently obtain at affordable prices. The government would sell these generic drugs within South Africa and would pay the patent owner a fixed royalty on each sale. Compulsory licensing can cut the cost of these drugs by 75 to 90 percent. Parallel importing consists of purchasing the brand-name drugs from a third party in another country rather than directly from the manufacturer—taking advantage of the fact that drug companies sometimes charge significantly lower prices in one country than in another. For instance, in Britain, where parallel importing is common, the list price for Glaxo's Retrovir is £125, but consumers can purchase the same brand-name drug imported from other European countries for as low as £54.

The South Africans have not yet engaged in compulsory licensing or parallel importing, but Amer ican pharmaceutical companies have tried to cut them off at the pass. The key industry lobby is the Pharmaceutical Research and Manufacturers of America (PhRMA). PhRMA has charged that South Africa is violating the WTO rules on intellectual property and has called for the U.S. government to enact trade sanctions against South Africa until it repeals its law. One PhRMA spokesman accused the South African Ministry of Health of attempting to "steal" drug company patents.

In fact, PhRMA and other drug company lobbyists have grossly misrepresented what is permitted under the WTO's rules. The WTO's trade agreement on intellectual property, known as TRIPS, specifically allows countries to engage in compulsory licensing. Article 31 states that compulsory licensing is:

permitted if, prior to such use, the proposed user has made efforts to obtain authorization from the right holder on reasonable commercial terms and conditions and that such efforts have not been successful within a reasonable period of time. This requirement may be waived by a Member in case of national emergency or other circumstances of extreme urgency or in cases of public non-commercial use.

The U.S. itself has invoked compulsory licensing on antipollution devices used to comply with the Clean Air Act. South Africa's AIDS epidemic would certainly qualify as a public health emergency, but South Africa has not attempted to waive negotiations. PhRMA is objecting to the very idea that South Africa would permit compulsory licensing. In short, South Africa has done nothing illegal under WTO.

Moreover, parallel importing, which would be the more likely course for the South African Ministry of Health to follow initially, is not covered at all under the WTO, as a State Department report acknowledged last February. It's completely legal under the WTO and is, in fact, perfectly consistent with principles of free trade that the drug company lobbyists claim to uphold. What the companies really want is to partition the world market into exclusive national markets so that they can wring the highest price out of each, irrespective of the other. The U.S. has often taken other countries like Japan to task for exactly this practice.

PhRMA, of course, is acting like a lobby—pressing the interests of its clients even when their case is weak and morally repugnant—but what is astonishing is that the Clinton administration has thrown its full weight behind their complaint. Last year, citing the 1997 law permitting compulsory licensing and parallel importing, the U.S. Trade Repre sent ative's Office put South Africa on its "watch" list as a free-trade violator and whacked tariffs on some South African imports. The administration has brought continual pressure to bear on South Africa through the American Embassy, the State Department, the U.S. Trade Represent ative's Office, the Department of Commerce, and, perhaps most important of all, the Office of the Vice President.

Gore is the administration's point man in U.S.–South Africa trade. He is co-chairman with South African Deputy President Thabo Mbeki of the U.S.–South African Binational Commission, which oversees economic diplomacy between the two countries. Gore is also closely linked to PhRMA and its lobbyists. Member companies contributed significantly to Gore's PAC. One of PhRMA's key lobbyists is Anthony Podesta, the brother of Clinton Chief of Staff John Podesta, a friend and advisor of Gore. Anthony Podesta also worked for Gore's David Beier when Beier was Genetech's lobbyist, and is the landlord of Simon Strategies, which shares office space and some projects with Podesta's firm. And Gore has fully backed PhRMA's complaint against South Africa.

Even while publicly acknowledging South Africa's AIDS crisis, the Vice President has badgered Mbeki repeatedly about his country's alleged offenses against American drug companies. A State Department report last February described Gore's effort as part of an "assiduous, concerted campaign to persuade the Govern ment of South Africa." It added that Gore "made the issue of intellectual property rights protection, and pharmaceutical patents in particular, a central focus of his discussions with Deputy President Mbeki."

There has been very little protest of the administration's role because very few people know about it. In Washington, James Love, the director of Ralph Nader's Consumer Project on Technology, has taken up the issue along with two international groups, Health Action Inter national and Medecin Sans Frontieres, but Gore has not responded to several letters that Love and Nader have sent. When I asked Gore's office for a response to these letters, a press representative faxed me a statement that Gore was "working to help AIDS patients by making sure drug companies maintain profit levels to develop new AIDS medications." Perhaps Gore was helping some AIDS patients, but clearly not those in South Africa.

Gore's response certainly reflects the administration's general approach to trade issues. The Clinton administration has regularly put the export and investment concerns of American businesses above human rights and even security considerations. But in most of these cases, it could claim that it was acting in the national interest. In rejecting trade sanctions against China for its human rights or security violations, for instance, the administration has credibly argued that to deny most-favored-nation trading status to China would not only imperil American businesses, but also threaten the stability of Asia. But Gore and the administration would be hard put to advance similar justifications for denying AIDS drugs to South Africa. Allowing South Africa to negotiate compulsory licensing or to undertake parallel importing would pose very little threat to American companies and none at all to world capitalism. South Africa is a miniscule part of the world market—according to Health Action International, the entire developing world consumes 14 percent of the world's drug supply.

Nader and Love believe that Gore's willingness to go along with PhRMA suggests that on specific industry issues Gore will not be willing to offend K Street. Says Love, "To me, Gore has never in his life bucked corporate interest. He hasn't shown any character by bucking big money. It makes you worried he never will." This judgment may be a little extreme, given Gore's outspoken support for energy taxes and for the Global Warming Treaty. But Gore's willingness to do PhRMA's bidding in this case may indicate that on the issues that impinge upon his high-tech network of supporters, he is willing to do the wrong thing to keep them happy—and keep them in his corner. It's not necessarily a reason to oppose Gore's presidential candidacy—he has much to recommend him—but it is a reason to be wary of him and his equally well-connected opponents as we proceed into the first presidential election of the new century.



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