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Health Brand-name and generic drug makers are squaring off for a costly political battle -- and consumers may pick up the tab.
by Michael Scherer March 5, 2001

Illustration: Health
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The Wall Street Journal called it the largest corporate political campaign in the nation's history. Last year the pharmaceutical industry spent more than $80 million on public relations, issue advertising, campaign contributions, and lobbying -- all to keep the Democrats from retaking Congress. They were rewarded with GOP control of the House, Senate, and White House, all staunchly opposed to imposing price controls on the $110 billion industry.

Now, with the election over, the industry is gearing up for a new campaign -- but this one pits brand-name drug companies against their generic rivals. It is being fought in the halls of Congress, at private fundraising events, and in the op-ed section of the nation's newspapers. At stake are the rules that govern drug patents -- and with them, the right to reap millions of dollars from the ill and infirm.

This year, the recently-formed Generic Pharmaceutical Association (GPhA) has promised a full-scale lobbying assault to convince lawmakers that the fastest way to lower drug prices is to end patent extensions that keep drug prices high. It won't be an easy sell. Brand-name companies argue that they need the costly patents to fund the next generation of life-saving drugs -- and they have deep pockets to make their case on Capitol Hill, often making campaign contributions through corporate accounts, usually to Republicans.

Outspent by brand-name companies, executives at generic companies tend to give as individuals -- and three of them contributed enough during the last election to make the Mother Jones 400. Like most generic drugmakers, they supported the Democrats, hoping to offset the superior firepower of brand-name firms with a political version of hand-to-hand combat. "The most effective way to compete is to have good solid relationships with the representatives themselves," explains William Nixon, president of GPhA. "We get by on our good looks and personality."

Agnes Varis (No. 111, $318,650), president of Agvar Chemicals and a vice chair of the GPhA board, is helping to lead the personality-driven push on Washington. A major Democratic fundraiser, Varis was on a first-name basis with Bill Clinton and supported Hillary Clinton's Senate bid. The only Republican she gave to was Senator John McCain (R-Ariz.), who plans to reintroduce a bill to speed up the approval of generic drugs and eliminate loopholes that extend patents.

But despite her business concerns, those who know Varis say her political giving goes beyond her financial interests. "She is one of the most outspoken feminist liberals you will ever meet," says Nixon, a former aide to Senator William Roth (R-Del.). "Her giving has very little to do with the industry."

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Phillip Frost (No. 53, $485,000), the CEO of Ivax, a manufacturer of generics, would have a harder time making the same claim. Several of the donations he made with his wife, Patricia, went to Democratic members of the House Subcommittee on Health and Environment, which oversees the pharmaceutical industry. Frost gave $2,000, the maximum allowed, to Rep. Peter Deutsch (D-Fla.), a subcommittee member who co-sponsored the "Prescription Drug Competition Act of 2000" to ensure the "timely availability of generic drugs through the enhancement of drug approval and antitrust laws."

Patricia Frost, who lists her occupation as homemaker, gave $5,000 to the political action committee for the 29th Congressional District of California. Henry Waxman, the district's Democratic representative, sponsored the so-called Hatch-Waxman Act in 1984 that governs competition between brand-name and generic drug companies. He also holds a seat on the influential health subcommittee.

Harold Snyder (No. 60, $449,500), a board member of Teva Pharmaceuticals, also gave to Democrats. His company, an Israeli maker of generics, has recently expanded into Brazil, which has relatively lax laws governing patent protection. Snyder gave $2,000 to Rep. Nita Lowley (D-N.Y.), a member of the House Appropriations Committee, a leading proponent of health care reform and a chief advocate of U.S. aid to Israel. Investors in Teva, which trades in Tel Aviv, have watched their stock spike downward as violence in Israel has increased.

Like other generic drug makers, Snyder would benefit from his industry's political campaign. Topping the agenda is faster approval of generic antibiotics, and an end to a regulatory loophole that permits brand-name firms to extend their patents simply by agreeing to spend modest sums on pediatric research. But despite their large individual contributions, generic executives remain politically outgunned by the brand-name giants. As a result, they are not be entirely opposed to reforming campaign finance -- a move that would improve their odds of being heard in the halls of Congress.

"There is no question," Nixon says, "that if money was taken out of politics, we would have a much more even playing field."

 

 
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THE HEALTH INDUSTRY
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The top contributors in this industry include:
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1. S. Daniel Abraham
diet-drink fat cat
53.Phillip Frost
generic giver
66.Alan Solomont
"ward bosses of the 21st century"
111. Agnes Varis
on the Rx board

All contributors in this industry

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