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.

Broadly 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 process.

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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.

Mindful 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 itself.

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 of PDUFA.

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 that."

Bliley 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.

But 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 FDA-approved.

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 out.

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