SAN FRANCISCO — The pharmaceutical industry’s most powerful lobbying group is opening its war chest to try to sway a policy fight with no clear connection to medicine or health care, spending a half-million dollars here to oppose a California ballot measure that would expand rent control protections across the state.
PhRMA’s contribution is unusual not for its size — $500,000 is a relatively small sum for the trade association — but because the group typically only involves itself in policy issues likely to impact its bottom line. In this fight, it is siding with landlords, developers, and real estate investors, mainly in California but with some headquartered in other states; PhRMA is the only large donor opposing the measure without ties to the housing industry.
The group says that it’s getting involved in the ballot measure at stake, called Proposition 10, because it fears passage could make housing harder to find for the nearly 900,000 employees who work in biopharma in the state. Some economists have expressed concern that it could discourage the construction of new housing and make life harder for low-income renters in the long-term.
But some people here suspect that PhRMA is using its financial clout to settle an old political score with Michael Weinstein, a longtime HIV/AIDS activist who has repeatedly tangled with the drug industry, most recently by bankrolling a set of state-level ballot measures aimed at capping drug prices.
The AIDS Healthcare Foundation, which Weinstein leads as president, has provided the vast majority of the financial backing for Proposition 10: over $12 million, according to the latest campaign finance disclosures. The nonprofit, which runs clinics across the globe, sees housing policy as key to promoting health, saying the measure would prevent displacement and expand protections for low-income renters in a state with few affordable housing options.
And as Weinstein sees it, PhRMA’s involvement looks like payback.
“They consider us an enemy, and they have unlimited money to spend on anything they want,” he said in a phone interview with STAT. “It’s preposterous for them to say they have an interest in this issue.”
He added, with an air of disbelief: “It’s a very strange coincidence.”
Dr. Adams Dudley, director of the Center for Healthcare Value at the University of California, San Francisco, said he thinks “it’s hard to imagine that [PhRMA’s] stated reason is plausible.”
The more plausible explanation, as Dudley sees it, is that PhRMA is “sending a signal: If you get on our bad side, we’ll keep opposing whatever you do, we’ll try to make your life difficult for a very long time, even if you do something else.”
Whether or not it accounts for PhRMA’s involvement in Proposition 10, the drug industry’s distaste for Weinstein is easy to explain. He has sued GlaxoSmithKline (GSK) over its prices, Pfizer (PFE) over its marketing, and Gilead over its patents.
In the past few years, Weinstein has further angered drug makers — and even a number of patient advocates — by funding ballot measures in California, Ohio, South Dakota, and the District of Columbia that would have prevented state and local health authorities from paying more for drugs than the discounted price the Department of Veterans Affairs received. None of them has succeeded.
The most significant such push came in 2016 in California, where drug makers contributed a record-setting $109 million to oppose the measure. PhRMA itself didn’t contribute cash, but it did log an additional $650,000 in non-monetary contributions, a category that includes labor and services. In that fight, the drug industry found allies in the California Medical Association and a surprising number of patient groups, including some that have taken money from pharmaceutical companies; they called the measure flawed, saying it would have failed to bring drug prices down for most Californians.
The AIDS Healthcare Foundation brought in Sen. Bernie Sanders (I-Vt.) to stump for the measure, but voters defeated it by a 53-47 margin in the election that sent President Trump to the White House.
In 2017, Weinstein tried again in Ohio with a nearly identical ballot measure, where the drug industry — and over 79 percent of voters — opposed it. And in the lead-up to the 2018 general election, PhRMA has won legal challenges in South Dakota and D.C. that prevented similar measures from even reaching the ballot.
Despite its rich history with Weinstein, PhRMA denied the contributions had anything to do with past political entanglements.
“The research-based biopharmaceutical industry supports nearly 900,000 jobs and $2.6 billion in economic output in California,” PhRMA spokeswoman Priscilla VanderVeer said in a statement. “The industry’s investment in the state is threatened when our employees cannot find housing and Prop. 10 could make the situation much worse. That’s why we are opposing Prop. 10 and contributing to its defeat.”
The opposition to Proposition 10 in California this election season has so far raised more than $20 million. While the largest donors opposing Proposition 10 are in the housing industry, a political action committee backed by the California Business Roundtable is also pledging to defeat it. The group’s members include several real estate developers as well as the drug makers Eli Lilly and Boehringer Ingelheim.
Proposition 10 is not the first time PhRMA has waded into local housing policy — nor is it the first time it’s opposed the AIDS Healthcare Foundation in such a fight.
In 2017, Weinstein was the driving force behind Measure S, a local ballot measure in Los Angeles County that would have tightened zoning laws in an effort to prevent new market-rate construction. The AIDS Healthcare Foundation provided almost all of the $5 million funding to support it, saying the proposed law would prevent displacement.
But just like with Proposition 10, critics countered by calling the measure anti-development and saying it would freeze the city’s efforts to lower prices by expanding its housing supply. PhRMA contributed $25,000 to the opposition to Measure S. And in what has become a familiar result for Weinstein-backed initiatives, the measure failed by a 30-70 margin.
In that same March 2017 municipal election in Los Angeles County, PhRMA contributed $10,000 to support a separate referendum, called Measure H. Voters passed the measure, which levied a 0.25 percent sales tax increase to fund mental health, housing, and other services for the homeless.
PhRMA says its contributions to local efforts surrounding housing, homelessness, and urban development may not be directly related to the business of manufacturing pharmaceuticals but are important to the industry nonetheless.
Just about everyone agrees that California is in the midst of a housing crisis. As the state’s coastal economies boom, construction of new homes and apartment buildings isn’t keeping pace. The result: Residents are paying more for monthly rent, commuting longer distances to work, and packing into increasingly cramped quarters.
“That something has to be done is already pretty well established,” said Melissa Michelson, a political science professor at Menlo College in Silicon Valley. “The question is whether rent control is the answer — or whether will it make things worse.”
Proposition 10 would repeal a state law enacted in 1995 that limits the type of rent restrictions local governments can impose. Its passage would allow local governments to impose rent control more freely, giving them a tool housing advocates say could go a long way toward preventing evictions and rapid gentrification.
Expanded rent control, however, is not seen as a slam-dunk win for affordable housing advocates, and opponents argue it could discourage new construction.
The measure is dividing California’s opinion makers, in some cases along party lines. The state’s Democratic Party has endorsed the measure, while its Republican Party opposed it. The state’s major newspapers are split, too: The editorial boards of the Los Angeles Times and the Sacramento Bee have come out in favor of the measure; those of the San Francisco Chronicle and the San Jose Mercury News have opposed it.
How Proposition 10 fares in November will come to down to a few factors, Michelson said. One is how effective the opposition’s ads prove to be in sowing doubts in the minds of voters that the measure is flawed. And another is whether progressive voters come out in full force to pass the measure as part of a blue wave.
Regardless of what California voters decide, the AIDS Healthcare Foundation is expected to continue prioritizing the affordable housing issue.
The group last year created a new division called the Healthy Housing Foundation. The offshoot, designed to provide affordable housing, has acquired four hotel properties on Los Angeles’ Skid Row and in Hollywood, altogether totaling more than 600 units. It’s also planning of the construction of 680 units in Fort Lauderdale, Fla.
Said Weinstein: “We’ve jumped in whole-hog into this issue, because it’s a crisis of the kind that we confronted at the beginning of AIDS, which was a vulnerable population whose needs were being ignored.”
Lev Facher contributed reporting from Washington.