WASHINGTON — With annual revenues of roughly $450 million and an army of some 160 lobbyists, PhRMA has long been described in near mythological terms by both awed opponents and reverent allies: It’s untouchable, it never loses, it can kill a bill before the ink is dry on the first draft.
Suddenly, however, the industry lobbying powerhouse looks far more vulnerable.
More than a dozen current and former staffers and lobbyists connected to the drug industry told STAT that as Democrats take control of the House in January, PhRMA is struggling to preserve its clout.
The concerns are numerous, they said: PhRMA hasn’t yet landed on a legislative strategy that can win over Democrats who’ve grown frustrated at the group’s negotiating tactics. Democratic staffers aren’t as interested in the group’s job offers anymore, a setback for the group’s efforts to recruit savvy lobbyists to their cause. And it’s hamstrung, too, in its attempts to exert influence through donations, now that some prominent Democrats have made high-profile pledges not to accept money from corporate PACs or the drug industry.
“PhRMA is generally seen more and more as being a lobby that has a lot of baggage to carry,” Andy Slavitt, who led the Centers for Medicare and Medicaid Services under President Obama, and who has long been critical of high drug prices, said.
One former Democratic aide, speaking on the condition of anonymity, put it more bluntly:
“Folks are getting tired of the antics.”
The issues with the House are so dire, some officials who work with the group said they expect that come January, PhRMA may have to shift its lobbying strategy far more toward the Senate, where Republicans still maintain the majority and where the group has long had strong relationships. One drug industry lobbyist told STAT the industry will be counting on the Senate to kill anything controversial that makes its way through the House.
“We see the House as pretty much a dead zone,” the lobbyist said.
Robert Zirkelbach, PhRMA’s head of public affairs, disputed that PhRMA is losing clout among Democrats.
“We have long-standing relationships on both sides of the political aisle. And even if we don’t agree on specific policies, we believe it’s important to work constructively with policy makers,” Zirkelbach said, adding that PhRMA has been focusing on “not just saying no to ideas that we have concerns about but that we come to table with solutions.”
Even Democrats’ frustrations with PhRMA aren’t universal, and they aren’t likely to completely undermine the group’s agenda. None of the Democratic staffers who spoke to STAT said they would shut the group out completely. And as a sign of the organization’s continued clout, multiple congressional offices declined to comment for this story. Several others requested anonymity for fear of jeopardizing future relationships with the organization.
In fact, the former Democratic staffer suggested that it might be easier to “extract the blood” from the industry, as many Democrats hope to do, by working with them, not icing them out.
Staff for Rep. Frank Pallone of New Jersey, the top Democrat on the Energy and Commerce Committee, declined an interview with STAT on this subject, and a spokesman said “we’re willing to work with anyone who will help us make [lower drug prices] a reality.”
PhRMA remains one of the top three most powerful lobbying groups in the country, according to James Thurber, who founded American University’s Center for Congressional and Presidential Studies. However, Thurber acknowledged that PhRMA is “losing ground” on drug pricing.
In some ways, PhRMA won’t suddenly be powerless — it just won’t be omnipotent anymore, as one current Democratic congressional aide put it.
“They’re not getting blackballed, but they’re being treated comparably to other industries and they’re not used to that,” the aide said.
PhRMA, which represents major brand-name drug makers like Amgen, Johnson & Johnson, and Merck, has spent at least $17 million on its federal lobbying activities each year for the past decade; that figure topped $25 million last year and is on track to break its records this year.
Like many major associations in Washington, the group strives to maintain a bipartisan reputation. Some of its internal lobbyists once worked for President Obama, others for Republicans on Capitol Hill. Sometimes, it tilts in one political direction or the other. The group angered Republicans in 2009, for example, when it helped Democrats finance the Affordable Care Act as part of a deal negotiated by former Republican lawmaker Billy Tauzin.
Since 2016, however, PhRMA has shifted that tilt back toward Republicans. Its new president, Steve Ubl, cut his teeth in Washington working for Republican Sen. Chuck Grassley of Iowa. After the departure of top Democratic lobbyist Pam Smith in 2016, the two executive vice presidents leading its advocacy and policy teams, Rodger Currie and Lori Reilly, are both Republicans, too. In every election since 2012, the group has also poured more of its campaign cash into Republican coffers than Democratic ones.
“It was really pronounced that when the rubber was really hitting the road and the policy was moving forward, they definitely focused their outreach and lobbying on the Republicans instead of coming directly to both sides,” said another former Democratic aide who worked on legislation that focused on the industry.
The group hasn’t abandoned Democrats entirely — Scott Olson, a former staffer for Sen. Max Baucus (D-Mont.), helps run the advocacy team. Smith still works on behalf of PhRMA at an outside firm. And last year PhRMA hired Bridgett Taylor, an Obama administration alum, to help bolster its Democratic outreach. It still regularly meets with key leadership and committee staff who have maintained some power to help shape legislation, even in the minority.
But now PhRMA, despite its notoriously deep pockets and lobbying firepower, may have more trouble convincing progressive freshman and even some incumbent Democrats that it’s a good-faith partner. Two lobbyists told STAT that earlier this year, the drug industry even cut a deal with a frequent opponent, the generics industry, in hopes that the smaller lobby shop could use its better relationships with Democrats to help them get a coveted policy fix across the finish line.
“It’s malpractice what they’ve done,” a different industry lobbyist said. “They’ve had no ground game, they’ve had no fundamental strategy on how to get Democrats to buy in.”
Multiple Democratic congressional aides also told STAT that PhRMA’s name has become so controversial on Capitol Hill that going to work for the drug industry has become stigmatized in some Democratic circles.
There is hope, a Democratic Ways and Means staffer told STAT, that this is the cycle where working for PhRMA as a Democrat becomes toxic to the point that Democratic offices on Capitol Hill and a Democratic White House would be hesitant to hire you back in a health policy role.
Part of the shift, however, may not be PhRMA’s fault — several aides and lobbyists suggested the tough road ahead had far more to do with the changing politics of the new Democratic majority.
“The pool of so-called moderate Democrats who are at least willing to keep an open mind on our issues has become much smaller in recent years,” the drug industry lobbyist told STAT, who added that PhRMA focusing on a smaller subsection of moderate Democrats was a smart strategy.
At least so far, the group hasn’t made any major staff shifts. Two lobbyists for PhRMA member companies told STAT that the group hasn’t yet alerted its members that it plans to raise membership dues or make other structural changes. But lobbyists both inside and outside the drug industry told STAT that K Street has been buzzing with rumors that the midterms will force the group to make staffing or other changes to appease the industry.
“The question is, ‘Are the companies going to see this as throwing money down the drain?’” the first drug industry lobbyists said.
“I would be surprised if some heads didn’t roll, even if [just] for appearance’s sake,” a generic industry lobbyist told STAT.
Zirkelbach, the head of the public affairs at PhRMA, disputed the characterizations of PhRMA as favoring one party over the other.
“Our federal team is a talented, experienced team that’s made up of Republicans and Democrats. Our head of federal is a longstanding Democrat. We have always maintained a bipartisan team and I think that’s been consistent for PhRMA’s history,” he said. He added that PhRMA is making no changes to its staffing. “We feel we have the right team in place,” he said.
On Capitol Hill, Democratic staff — far more than their Republican counterparts — are frustrated. Several current and departed Democratic aides on Capitol Hill told STAT in interviews that PhRMA and its lobbyists were hard to work with and even combative.
“They won’t come to the table, or they’ll change the position, or they’ll move goal posts,” the first former Democratic staffer explained. “You’d ask for feedback and they’d basically just delete the bill and put in their version.”
“They only have one speed and it’s 100 percent support or 100 percent opposition and that ranged from pretty major pieces of legislation, all the way to something that arguably would have negligible impact on industry,” the second former Democratic aide said.
Others have been frustrated by PhRMA’s unwillingness to acknowledge its role in rising drug prices.
“They haven’t been very good at, ‘Here’s how I contribute to the problem,’ and sometimes that’s all you want them to do,” the current Democratic staffer explained.
And even when the group’s input and technical expertise is helpful, their involvement can slow down the process.
“They could have three … lawyers in the room with you in an hour to work through an issue,” the first former Democratic staffer recalled. “That being said, they could also just also be a huge pain in the ass to try to get things done.”
Republicans STAT spoke with acknowledge PhRMA has a reputation as tough negotiators on Capitol Hill, and that their involvement could slow down a bill’s progress. But in interviews, several GOP staffers were much quicker to make excuses for the industry or to shrug off more frustrating encounters as standard operating procedure for a large bureaucratic organization.
“I could hear people say that’s their M.O … [but] it’s not like it’s … nefarious or strategic,” one former Republican staffer said in response to STAT’s questions about PhRMA’s negotiating style. “I wouldn’t give them the benefit of the doubt on stuff like that quite frankly.”
Zirkelbach told STAT it wasn’t a fair characterization to say PhRMA treated Democrats differently than Republicans.
“We are not going to let the D.C. chattering cloud dictate our lobbying strategy. Look, at the end of the day we have an obligation to come to the table with solutions that we think address the challenges, but also to push back when there are policy ideas that would impact our ability to innovate or make it harder for patients to access those treatments,” he said. “We’re not going to apologize for that.”
The environment for drug makers in Washington is clearly changing. The industry is continuing to struggle to reverse the loss that led it to team up with the generics industry — a change to what drug makers are required to pay when Medicare beneficiaries are in the so-called donut hole. That loss, first enacted in February, took the industry by surprise and has absorbed much of its lobbying focus throughout 2018.
And as PhRMA spends millions trying to turn back past decisions, bipartisan consensus is developing that something needs to be done on drug pricing.
Rep. Nancy Pelosi (D-Calif.), the likely incoming speaker of the House, Senate Majority Leader Mitch McConnell of Kentucky, and President Trump — the three most powerful figures in Washington — all pledged after the midterms to work together on bringing down drug prices. Democrats have already introduced multiple bills codifying Trump’s ideas for lower prices.
“The PhRMA lobby could have all of the influence in the world on particular Democrats but it wouldn’t make a difference in stopping the moving the train here,” Topher Spiro, vice president for health policy at the Democratic think tank Center for American Progress said, adding “it’s clear that there’s high demand for extremely aggressive comprehensive legislation” to address drug costs.
More and more Democrats are now coalescing around ideas once thought of as radical, current and former congressional aides told STAT.
“Everything they’re negotiating is on the far left because [PhRMA has] been unwilling to come to the table and give people things that are up the middle or slightly right,” the first former Democratic congressional aide told STAT.
One example: A bill from Rep. Lloyd Doggett (D-Texas) would allow Medicare to negotiate drug prices and would strip drug companies of their patents if they refuse to negotiate. The bill has 100 Democratic co-sponsors. Another, from Sen. Bernie Sanders (I-Vt.), would also allow the government to strip drugs of their patents, this time if the drug was more expensive than in other similar countries.
The long list of progressive priorities on drug pricing makes it seem like PhRMA’s Democratic lobbyists have their work cut out for them, but at least one staffer joked that the environment might actually make their jobs easier.
“It’s almost like a Democratic pharmaceutical lobbyist’s job is not to get them to be for a pharma priority, it’s to keep them as quietly against [a given bill] as possible,” the former Republican staffer told STAT. “The best job in this town is a Democrat pharmaceutical lobbyist, because the expectations are so low.”
Lev Facher contributed reporting.