Popping Contributions

As the 104th Congress stumbled to a
close in 1996, defenders of the U.S. Food and Drug Administration
breathed a collective sigh of relief. Despite intensive lobbying
by the drug and medical device industries, legislation designed
to scuttle the FDA ran aground on the shoals of partisan acrimony
and voter unease. Weary from bruising budget battles, Republicans
abandoned the measures and industry lobbyists regrouped.

Now the lobbyists are back with a new
series of proposals virtually certain to attract serious congressional
attention this year. Some of the initiatives are relatively noncontroversial,
the result of negotiations between industry and the FDA. Other
proposals—the handiwork of privatization proponents and other
antiregulation activists—would seriously impair the agency's ability
to remain a strong and independent guardian of America's health.

The outlook for the radical reforms
hinges on the competing strategies of two industry segments—pharmaceutical
and biotechnology companies on one side, medical device makers
on the other. Lobbyists for the pharmaceutical-biotech alliance
hope to avoid the tactical errors of 1996; they are concentrating
on relatively modest proposals they believe will gain bipartisan
support. The device makers are determined to resurrect some of
the radical ideas that went down last year—and they have powerful
allies in the chairmen of two key committees: Thomas J. Bliley
of the House Commerce Committee, who spearheaded last year's anti-FDA
crusade, and James Jeffords of the Senate Labor Committee.

If the two groups coalesce this summer
in support of a single package for restructuring the FDA, their
formidable lobbying presence will be tough to stop. Thanks to
the political influence of its manufacturing companies, the medical
device lobby has assembled a bipartisan coalition that includes
such liberal stalwarts as Senators Tom Harkin of Iowa, Barbara
Mikulski of Maryland, and Paul Wellstone of Minnesota. As if that
weren't enough, the FDA enters this year's battle without its
most forceful and articulate advocate—former commissioner David
Kessler, who resigned in early 1997 after years of relentless
battering by Bliley and other congressional critics.

speaking, both the drug companies and medical device producers
agree on their regulatory philosophy. While each needs a strong
FDA to maintain consumer confidence, each sees the FDA as slow
and cumbersome, overly restrictive, and a barrier to quick approval
of profitable new drugs and devices. In the industry narrative,
patients urgently need drugs and medical devices, some of which
could save their lives, yet the FDA's turgid bureaucracy prevents
those products from being placed in the hands of doctors.

While some of these complaints are
legitimate, the FDA has already taken a great deal of action to
improve its performance—accelerating the drug approval process,
for instance. In recent years, the FDA has put critical lifesaving
drugs on a fast track and taken other steps that have reduced
overall drug approval times. The key to these improvements was
the 1992 Prescription Drug User Fee Act (PDUFA), which raises
money for the FDA through levies on prescription drug companies.
Over the past five years, PDUFA has provided $327 million to the
agency, allowing it to hire 600 more staff members and cut nearly
in half the time needed in the final phase of the drug approval

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What's more, FDA defenders rightly
point out that many of the new drugs and devices that companies
are so anxious to release are either "me-too" drugs—drugs
that are basically equivalent to and no improvement on existing
ones—or devices that represent minor, incremental advances over
current devices on the market. Anyway, until the FDA can evaluate
the safety of such products, it's not clear that the products
really are better—and it's certainly not clear that contracting
out device and drug reviews, as some lobbyists have proposed,
would maintain public safety.

In the end, "modernization"
has less to do with speeding lifesaving products to patients than
with improving the industry's bottom line. Companies "claim
that there's a huge constituency of patients out there waiting
for new drugs, and that the solution is changing the FDA,"
says Scott Sanders, spokesman for the American Foundation for
AIDS Research. "But the truth is that the industry just wants
to make it easier to approve and market their products."


Although that argument carried the
day in 1996, another showdown seems inevitable this year, since
PDUFA will expire in September. Because the act provides such
a substantial chunk of the FDA's budget, the agency desperately
needs reauthorization of PDUFA for another five years.

The drug companies need PDUFA reauthorization
too. Without it, the FDA will face a drastic budget shortfall
and its mechanism for approving new drug applications will grind
to a halt. Accordingly, the Pharmaceutical Research and Manufacturing
Association (PhRMA) and the Biotechnology Industry Organization
(BIO) have limited their agenda to the politically expedient.
They would like the middle—or clinical—phase of the drug approval
process to be even faster; they would like the FDA to allow wider
promotion of drugs for unapproved purposes; and they want the
FDA's demands for preapproval drug trials to be less stringent.
But basically the drug companies are satisfied with PDUFA, and
their primary goal is to attach moderate reforms to the PDUFA
reauthorization that will not affect its passage.

Medical device makers, however, neither
pay fees to nor benefit from PDUFA. Thus they can afford to hold
PDUFA hostage to demands for more sweeping reforms. Chief among
them are controversial proposals to allow the FDA to contract
out its review of medical devices to "independent scientific
review organizations" and to allow similar subcontractors,
rather than FDA officials, to conduct on-site inspections of medical
device manufacturing facilities. Opponents of this measure, like
Ralph Nader's Public Citizen and the Patients Coalition—which
represents about 100 consumer groups and disease-related groups
for people with AIDS, cancer, and dozens of other maladies—say
that third-party reviewers paid by manufacturers would inevitably
be biased, since they would have a clear financial incentive to
approve, rather than turn down, new medical devices.

Of course, adding too many boxcars
to the PDUFA freight train could derail it. Even some of the moderate
proposals could spark determined opposition from key defenders
of the FDA in Con gress such as Representative Henry Waxman
of California and Senator Edward Kennedy of Massachusetts. Other
initiatives would probably incite a presidential veto. The drug
and biotech firms worry that if the device makers are able to
assemble a sufficiently powerful coalition of lawmakers, the agenda
will shift once again to radical reorganization of the FDA-energizing
the opposition and leaving them worse off than before.

of that possibility, the drug companies tried to preempt the device
makers by cementing an early compromise that would satisfy at
least some FDA defenders on Capitol Hill and—just maybe—the FDA

Getting the attention of Congress was
easy: Pharmaceuticals are one of the nation's most powerful lobby
groups. The top twelve drug companies, ranked by order of political
action committee contributions during 1995-96, are: Glaxo Wellcome,
Pfizer, Merck, Eli Lilly, Bristol-Myers Squibb, Abbott Labs, Schering-Plough,
SmithKline Beecham, Ciba-Geigy, Hoffman LaRoche, Pharmacia &
Upjohn, and Genentech. In all, these firms support 64 full-time
lobbyists in their Washington, D.C., offices, in addition to the
formidable staff of PhRMA itself.

Besides that, according to the 1996
Washington Representatives, the dozen firms employed an
astonishing 76 of Washington's best and brightest law firms and
lobbyists to represent them on Capitol Hill, at federal agencies,
and in public relations and grassroots campaigns. Many of these
lobbying firms have contracted with more than one drug maker,
and sometimes with as many as a half dozen or more. Not all of
this activity, of course, relates to FDA, but its enormous volume
says a lot about the power of the pharmaceutical lobby in Washington.
And many of these hired-gun lobbyists employ one or more former
senators or congressmen; for example, former Senator Dennis DeConcini of Arizona works for the firm Parry & Romani Associates,
which last year did work for Genentech, Glaxo, Hoffman LaRoche,
Pfizer, Pharmacia & Upjohn, PhRMA, and Schering-Plough. At
the Senate Labor Committee hearings in April, Senator Jeffords
interrupted the proceedings to nod and greet former Senator David
Durenberger, a lobbyist for Bristol-Myers Squibb.

In 1995-96, makers of drugs and devices
contributed $2.8 million to federal candidates, three-fourths
of that, more than $2.1 million, coming from the PACs of the big
12 pharmaceutical companies. The biggest, Glaxo Wellcome, contributed
$411,454 all by itself. And the 12 concentrated their money where
it would do the most good: More than $193,000 went to the 16 Republicans
on the health subcommittee of the House Commerce Committee, for
an average of $12,068 for each member; 13 Democrats on the subcommittee
received just $4,386 each from the companies' PACs.

Early on, the pharmaceutical companies
sought an alliance with the biotechnology industry. In addition
to meeting regularly at PhRMA, since last fall the drug makers'
Washington team has met regularly at breakfasts organized by Pete
Teeley, vice president for government and public relations at
Amgen, a large California maker of biotech products. Amgen is
a key player in several respects. In Washington, the company is
represented by a premier insider, C. Boyden Gray, a partner at
Wilmer, Cutler & Pickering, who was President Bush's White
House counsel. Gray is also chairman of Citizens for a Sound Economy,
a conservative public relations group that organizes grassroots
support for Washington initiatives—and that last year spent $2
million on a vitriolic campaign against the FDA. Amgen also helped
forge an alliance between PhRMA and BIO; the two associations
chose Amgen's chairman, Gordon Binder, to present their joint
testimony at a Senate Labor Committee hearing led by Senator Jeffords.

Concerned about the failure of the
FDA reform effort last year, PhRMA and BIO members used the Teeley
meetings and other forums to develop a revised strategy for 1997.
Quietly, the drug and biotech companies began direct negotiations
with the FDA, in effect bypassing Congress. "Last year, it
was the industry talking to the Hill, and the Hill talking to
FDA," says one lobbyist. "So we decided to talk to FDA
directly." For the FDA, the negotiations were handled by
the deputy commissioner for policy, William Schultz, a former
aide to Henry Waxman and, before that, an attorney with Public
Citizen. With the urgent need to renew PDUFA hanging over everyone's
heads, the companies initially went to the FDA with a long list
of reforms. "It was everything from big—ticket items to the
absurdly minute," says an FDA official. But this was just
the industry's opening position, a kind of wish list that quickly
melted away in the face of the drug makers' desire to win renewal

Over the course of two months, the
FDA and the drug and biotech companies hammered out the outlines
of a deal: They both would support congressional reauthorization
of PDUFA; the companies would agree to increase their user fee
payments by 21 percent a year for 5 years; and the FDA would agree
to reasonable changes in procedures that would speed up the clinical
trials phase of the drug approval process by 10 to 16 months,
an acceleration that could mean hundreds of millions of dollars
to companies able to market their products that much sooner.


But the medical device makers prevailed
on the key figure on FDA issues, Representative Bliley, to intervene
on their behalf. Before the pharmaceutical-biotech alliance had
a chance to close its deal with the FDA, Bliley demanded that
the companies halt their discussions with the FDA. "As nice
as those people are," says Mike Collins, a spokesman for
Bliley, "laws are still written by those who are elected
to write them, not by special interests talking with government
bureaucrats in Rockville, Maryland." In the Senate, Jeffords
joined Bliley in announcing his intention to link PDUFA renewal
to "FDA modernization."

Although Bliley's action may have seemed
like a virtuous attempt to rein in a special interest, it was
widely understood in industry circles that Bliley and Jeffords
were doing more than just reasserting congressional prerogative.
The medical device industry—the alliance of the Health Industry
Manufacturing Association (HIMA), the Medical Device Manufacturers
Association (MDMA), and the National Electrical Manufacturers
Association (NEMA)—was worried that FDA negotiations with the
drug and biotech companies would leave them in the dust. So their
lobbyists persuaded the two committee chairmen to stop the FDA
talks with the drug companies and link reform to PDUFA.

"We've met with Mr. Bliley several
times this year," says Jeff Kimbell, executive director of
MDMA. "We've had his support over the years. He understands
why drugs and devices are different, and need to be treated differently."
To reinforce that understanding, medical device companies organized
an April 15 fundraiser for Chairman Bliley at a restaurant in
Union Station, near Capitol Hill. Jeffords, too, has strong ties
to the device industry, and his key staffer on the issue is a
former lobbyist with HIMA.

The device companies have been engaged
in a flurry of nonstop lobbying since the beginning of the year.
In early April, the trio of device associations held a day-long
seminar for House and Senate staffers on FDA reform, and MDMA
staged the fourth in a series of "fly-ins," bringing
30 device company executives to Washington for meetings with members
of Congress. In all, says Kimbell, MDMA company executives have
held more than 900 such meetings since last year. "Device
companies are smaller than drug companies, and companies with
30 or 40 employees are not going to have a PAC," says Kimbell.
"So we rely on the grass roots."

Indeed, the 12 largest device company
PACs contributed a total of $335,000 to federal candidates in
1995-96, less than the total for Glaxo Wellcome's PAC alone. But
the combination of intensive lobbying and strategically placed
campaign money gives the device companies an effective voice on
Capitol Hill. The device makers are well aware that the drug and
biotech firms are willing to abandon all but the most limited
sort of reform in order to secure PDUFA. "The drug companies
have billions of dollars at stake on PDUFA," says Steve Kelmar,
vice president for government affairs at Medtronic, Inc., a Minnesota
medical device maker. "They don't want us to interfere with

is the likeliest candidate to broker a compromise between the
two sides. A nine-term veteran of Congress, Bliley brings to the
table a visceral dislike of government regulation and an outspoken
opposition to the FDA's way of doing things. Last year, Bliley
was behind the controversial bills that ultimately went nowhere.
This year, Bliley is once again determined to knock the FDA down
a few pegs. Standing confidently behind the podium at the American
Enterprise Institute last December, Bliley reaffirmed his intention
to rewrite the rules for the FDA. He warned that although the
FDA has improved its performance under congressional pressure
last year, such "battlefield conversions" are not sufficient.

Bliley's stance on the FDA is hardly
surprising, given his close financial connections with the industries
that the agency regulates. Last year, Bliley collected more than
$34,000 from drug, device, and biotech industry political action
committees. "Tom Bliley you give money to, because Tom Bliley
is the most important man in Congress for us. That's the way the
system works," says a drug industry lobbyist. "Don't
ask me why Bliley wants money, but he asks for it. And we give
it." They do so despite the fact that Bliley has not faced
a serious opponent in his district for a decade; last year he
raised more than $1 million against a young challenger who garnered
just $30,000. Since its decision to treat cigarettes as nicotine
delivery devices, the FDA can expect Bliley's assaults will be
redoubled. As Congress's top recipient of tobacco industry money
for a decade or more, he has earned himself the nickname "congressman
from Philip Morris."

What's more, Bliley has a longtime
relationship with a leading device maker located in his district,
A.H. Robins. Since the start of Bliley's career in 1980, the company's
patriarch, E. Claiborne Robins, Jr., has been a regular contributor
to his campaigns. Back in the 1970s, A.H. Robins gained notoriety
as the manufacturer of the Dalkon Shield, an intrauterine birth
control device whose faulty design caused infection, sterility,
and even death in tens of thousands of women. (The FDA did not
approve the Dalkon Shield, whose invention preceded the laws requiring
that the FDA approve medical devices for safety and effectiveness.)
With cold disregard for anything but the bottom line, A.H. Robins
Co. hid the truth, covered up documents, suppressed scientific
studies, and fought plaintiffs in court. At the very height of
the controversy, in 1982, Bliley penned a tribute to the company's
founder: "Claiborne Robins has put service to state and country
and, above all, to his fellow man, well ahead of material pursuits."

By the end of the decade, however,
the crush of lawsuits had bankrupted the company and, in the midst
of a multibillion-dollar settlement with women injured by the
Dalkon Shield, the shattered A.H. Robins Co. was sold to American
Home Products. Bliley, who has recently owned as much as $100,000
in American Home Products stock, and who has been a regular recipient
of money from AHP's PAC, held a quiet meeting in February 1995
with its president and CEO, J.M. Stafford. Only days later, Bliley
introduced a bill that would give drug and device companies immunity
from lawsuits filed by injured consumers if the faulty product
had previously secured FDA approval.

"In supporting both of these kinds
of legislation, Bliley is doing things that can doubly damage
the public's health," says Sidney Wolfe, director of the
health research group at Public Citizen. "On one hand, he
wants to lower the threshold for making drugs and devices safe,
and so make it more likely that dangerous and unsafe drugs will
get onto the market. And on the other hand, once they are on the
market he wants to make it very difficult, if not impossible,
to sue, on the grounds that the manufacturer is not liable once
FDA has approved their product. So, you lower the standards and
then you immunize the companies. A double whammy."

His governing philosophy notwithstanding,
Bliley also happens to be a master legislator. He realizes that
in order to advance FDAlegislation he will have to forge a bipartisan
coalition that can withstand the opposition of Waxman and his
allies. If he is to succeed, Bliley must first reconcile the conflicting
demands of the industry groups, and then come up with a politically
realistic bill that will pass Congress and be signed by the President.

As a result, this year the watchword
is bipartisanship. Bliley has been in regular contact since last
fall with Secretary of Health and Human Services Donna Shalala,
and with Representative John Dingell, the ranking Democrat on
the Commerce Committee, seeking FDA legislation that can garner
broad support. "Our goal is ultimately to get the President
on board," says Bliley's spokesman Mike Collins. Collins
is frank in admitting that the PDUFA reauthorization is the bargaining
chip that could bring broader changes at FDA, noting that while
big drug companies like Merck do not need changes in FDA approval
processes to be profitable, smaller drug firms and medical device
companies do. "Is PDUFA a kind of leverage for us to achieve
our goal of modernizing FDA?" he asks rhetorically. "Of
course it is."


In their public stance, at least, the
big drug manufacturers seem willing to take few chances. To win
the support of Kennedy, Shalala, and consumer groups, PhRMA President
Alan Holmer announced that the industry wants only "consensus
or noncontroversial FDA modernization items as amendments to PDUFA."
And with diplomatic politeness, he suggested that Bliley and Jeffords
would go along and that more hard-core conservatives like Indiana
Senator Dan Coats, who want far more significant changes at FDA,
would swallow their opposition and back the legislation.

One reason to believe Holmer is the
silence from conservative and libertarian groups such as the Cato
Institute, Washington Legal Foun dation, Citizens for a Sound
Economy, and the Progress and Freedom Foundation. Last year,
amid the frenzy of the Republican "revolution," these
groups—many of them funded by drug and device companies—were competing
with each other to promote radical FDA reforms, including the
creation of private-sector, third-party reviewers to replace FDA
scientists in the drug approval process. This year, the groups
speak, if at all, in softened tones. Talk of FDA "reform"
has given way to the gentler notion of "modernization."
Publicly, industry spokesmen pay homage to consensus and moderation.

such rhetoric belies what's going on behind the scenes, where
even the pharmaceutical-biotech representatives still contemplate
more radical restructurings. Other, more controversial bills are
being developed with the support of PhRMA, BIO, and the medical
device makers, and there is a real chance that some or all of
them could be bundled into a package deal, which could then be
attached to PDUFA reauthorization later in the year. One example:
A separate bill would allow drug companies to advertise and promote
their products for uses that are not approved by FDA—so-called
"off-label use." Currently, the FDA does not allow companies
to promote off-label uses, but drug and device companies believe
that certain products could gain access to a much wider market
if doctors would prescribe them for purposes that are not explicitly

If those in industry who want far-reaching
reforms succeed in convincing Bliley and Jeffords to stand firm
on linking such changes to PDUFA, bipartisanship could collapse
into acrimony. And the FDA could find itself facing a runaway
piece of legislation that would compromise fundamental parts of
its mission. In that event, the question is: Will the White House
be willing to go to the mat to defend the FDA, or will President
Clinton choose to compromise? At the FDA, they'd rather not find

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