The Lobbyist Who Made You Pay More at the Drugstore

Here's how the pharmaceutical industry keeps America's drug prices among the highest in the world.

By Wendell Potter and Nick Penniman | March 18, 2016


W.J. "Billy" Tauzin during his tenure as House Energy and Commerce Committee chairman in 2001. (Photo by Alex Wong/Newsmakers)

The following is excerpted from Wendell Potter and Nick Penniman’s new book, Nation On the Take: How Big Money Corrupts Our Democracy and What We Can Do About It. You can also listen to an interview with the authors.

Bill and Faith Wildrick have never heard of Billy Tauzin, but they’re paying dearly for Tauzin’s tireless work for the pharmaceuticbal industry. So are Faith’s employer and all of her co-workers. We all are. And in the future, so will our children and grandchildren.

Thanks in large part to Tauzin and Washington’s infamous revolving door, the Wildricks are paying so much to fill Bill’s prescriptions every month — even with their insurance — that they’re barely able to make ends meet. They and most of the rest of us, including the executives and employees of MCS Industries, the Easton, Pennsylvania, company where Faith works, also have to fork over more money to health insurance companies every payday because of the deals Tauzin cut for Big Pharma.


We can also thank Tauzin and many of his friends in Washington for increases in both our taxes and the national debt. In fact, by 2023, the US government’s debt will likely be more than a trillion dollars higher than it otherwise would be because of the way Tauzin and other lobbyists — with the blessing of President George W. Bush and Republican leaders in Congress — wrote the Medicare drug bill in 2003.

And in large part because of Tauzin’s deal making and the millions of dollars at his disposal, the Affordable Care Act — with the blessing of President Barack Obama and Democratic leaders in Congress — was written in a way that boosts drug company profits while doing little to make prescription medications more affordable for the vast majority of Americans. In fact, drug prices are going up at a faster clip than ever before.

As drug industry profits soar, millions of people — including most of our elected officials — continue to accept as gospel Big Pharma’s talking points that (1) any constraint on pharmaceutical companies’ ability to gouge us would “stifle” or “have a chilling effect” on innovation and (2) they have to charge Americans more because other countries won’t let them gouge their citizens. For the success of this propaganda we can thank the millions of dollars in dark money the industry spends every year on deceptive PR campaigns.

In just a little more than three decades, our total spending on health care exploded to $2.9 trillion.

Americans pay far more for their prescription medications than citizens of any other country. In fact, we pay almost 40 percent more than Canada, the next highest spender on drugs, and twice as much as many European countries, including France and Germany. In 2013 we spent exactly 100 percent more per capita on pharmaceuticals than the average of the 34 countries that comprise the Organization for Economic Cooperation and Development (OECD), of which the United States is a member. And the portion of our tax dollars that go to Medicare likely will continue to increase because Congress, under the influence of the pharmaceutical industry’s cash, made it impossible for Medicare to negotiate with drug companies in order to lower costs.

In 1980, spending on health care in the United States totaled $255.8 billion. Of that total, we spent 39.3 percent on hospital care, 25.3 percent on physician/professional services, and 4.7 percent on prescription drugs. In just a little more than three decades, our total spending on health care exploded to $2.9 trillion. Between 1980 and 2013, the percentage of the total that we spent on hospital care dropped to 32.1, while spending on physician/professional services increased slightly, to 26.6 percent. Spending on prescription drugs, by contrast, almost doubled, to 9.3 percent.

Partly because of that steep increase, health care spending reached 17.4 percent of the US Gross Domestic Product in 2013, nearly double the average of 9.3 percent of the OECD countries. Spending on health care per person in the United States reached $9,255 in 2013, compared to the $3,484 average spent on health care per person in the OECD as a whole.

If you’re a young, healthy person you probably can’t even remember the last time you had to get a prescription filled. You may be wondering why you should even care about the rising cost of drugs and the ability of big corporations and their lobbyists to keep the status quo firmly in place.

US Pharmaceutical Spending, Per Capita, Compared to Other OECD CountriesSource: Organization for Economic Co-operation and Development Methodology: Numbers are per capita for 2013 or nearest year: Data not available for New Zealand, Turkey and the United Kingdom.




You should care because even if you’re not a regular customer at the pharmacy counter, you’re paying for the millions of other Americans who are, through taxes and health insurance premiums that are going up every year because drug companies have so many politicians, Democrats and Republicans alike, in their corner.

According to Express Scripts’ prescription price index, a branded drug that cost $100 in 2008 had almost doubled in price six years later. This rapid increase in drug prices is one of the reasons why health insurers and employers that offer coverage to their workers are constantly raising not only the premiums we have to pay but also our out-of-pocket costs through higher deductibles and coinsurance rates.

And if you do get sick enough to need meds that aren’t yet available in generic form, your insurer will make you pay much more for them than you would have just a few years ago. Since 2000, the average copayment for such drugs has doubled, according to the Kaiser Family Foundation. And coinsurance rates for people who have to pay a percentage of their prescription drug costs instead of a fixed copayment have risen even faster. The average coinsurance rate for drugs was 14 percent in 2008. The rate had jumped to 32 percent by 2013, according to the consulting firm Towers Watson.

The Cagey Cajun

It’s worth taking a closer look at Tauzin’s life, both to understand the power a single industry wields over Capitol Hill and to witness the ways in which Washington’s revolving door works.

Born into a working-class French-speaking Cajun family in Lafourche Parish, Louisiana, Wilbert Joseph Tauzin II might have settled into the life of a construction worker — his father taught him how to wire houses and install air conditioners — had he not been bitten by the political bug even before college.

The “Cagey Cajun,” as he would later be called in Washington, was audacious enough to throw his hat in the ring for student council president of Thibodaux High School when he was just a sophomore. It was the first of many political campaigns he would win.

After graduation, he enrolled in Nicholls State University, which is just two and a half miles from his high school. Not being able to count on his family for much financial support, he worked, at various times, as an electrician’s helper, an oil rigger and a pipefitter to cover his tuition.

While in college, Tauzin realized that remaining loyal to a single political party has its drawbacks. Campus politics when he was a student was dominated by a party system. At the time, Tauzin, who later would be known as a conservative lawmaker, considered himself a Liberal. But when he sought the Liberal Party’s nomination for student body vice president, he came up a few votes short. Instead of supporting the Liberal candidate who beat him, however, the young Tauzin decided to stay in the race as an independent. He went on to victory.

He was a Democrat when the voters in Louisiana’s Third Congressional District elected him to Congress in 1980. Within a few years he had become one of his party’s assistant majority whips. He also would play a key role in bringing together a group of his conservative and moderate colleagues who came to be called Blue Dog Democrats, a name inspired by Cajun artist George Rodrigue’s famous Blue Dog paintings, one of which graced a wall of the congressman’s office.

But after the Gingrich Revolution of 1994, which put Republicans in charge of Congress, Representative Tauzin crossed the aisle and soon became the deputy majority whip for House Republicans. Thus he became the first member of Congress to have served in leadership positions of both parties. He’s “as wily as any alligator in the swamp,” former Tennessee congressman Jim Cooper, a Democrat, told The New York Times during the debate on what would ultimately become the Affordable Care Act.

For many years, Tauzin was one of the pharmaceutical industry’s most important allies in Congress, especially from 2001 to 2004, when he chaired the House Energy and Commerce Committee, which oversees the Food and Drug Administration. While he held that chairmanship, drug companies and insurance and health professionals contributed nearly $1 million to Tauzin’s congressional campaigns, according to the Center for Responsive Politics. That’s chump change, though, compared to what the pharmaceutical industry paid him as its top lobbyist when he left Congress in 2005. His salary increased more than twelvefold — from $162,100 to $2 million — the minute he signed on as president and CEO of the Pharmaceutical Research and Manufacturers of America (PhRMA), the industry’s powerful trade group.



PhRMA spent $26 million on lobbying in 2009, during the debate over the Affordable Care Act, to shape the law to its satisfaction. Individual companies within the pharmaceutical and health products industry spent millions more on top of that. In fact, at $275 million, the industry’s federal lobbying expenditures in 2009 stand as the greatest amount ever spent on lobbying by one industry in a single year, according to the Center for Responsive Politics. The total swelled to $558 million when lobbying expenditures from hospitals, medical device manufacturers and other health care companies and organizations were included. The industry also doled out millions of dollars in campaign contributions in 2008 and 2009, much of it to Democrats who ostensibly were in charge of writing the reform legislation.

PhRMA’s ability to influence elections and public policy has made it the envy of most other corporate advocacy groups in Washington. Not only is PhRMA consistently among the top spenders on lobbying activities every year, it is widely considered to be the most effective. The PR and consulting firm APCO Worldwide asked hundreds of the city’s movers and shakers in 2013 which of approximately fifty leading trade associations had the most clout. PhRMA came out on top, garnering the most wins in the most categories. It was voted the best at lobbying, the most effective at having a local and federal presence and the group whose members most frequently “mobilize to contact policymakers.” In other words, what PhRMA wants, PhRMA is very likely to get.

PhRMA, Clinton, Bush, Obama

Although Tauzin’s five-year reign at PhRMA proved extremely successful, the group has been a major force in Washington for more than twenty years. One of the industry’s most important victories came in 1994, when it teamed up with lobbyists for doctors, hospitals, medical device manufacturers and insurers to defeat President Clinton’s health care reform proposal. Clinton wanted to give Medicare the ability to negotiate with drug companies and to make it legal for medications made in the United States and exported to Canada and other countries to be imported back into the States and sold at lower prices. Both of those policy changes undoubtedly would have cut into drug company profit margins. But the Clinton reform legislation never made it to the floor of either the House or Senate for a vote. Industry lobbyists were able to kill it in committee.


Lawmakers of both parties tried to put those proposals back on the table nearly ten years later, when President George W. Bush, looking to shore up his support among older voters, pledged to work with Congress to add a voluntary prescription drug benefit — which came to be known as Part D — to the Medicare program. Not wanting to risk losing generous campaign contributions from the pharmaceutical industry, however, Bush and congressional leaders, including Tauzin, who by then chaired the House Energy and Commerce Committee, Republican House Speaker Dennis Hastert of Illinois and House Majority Leader Tom DeLay of Texas, invited drug company lobbyists to help shape what would become the Medicare Prescription Drug Improvement and Modernization Act of 2003. Also invited to the table were lobbyists for health insurers. They made certain that Medicare beneficiaries who wanted drug coverage would have to buy it from private insurers.

in full: http://billmoyers.com/story/the-man-who-made-you-pay-more-at-the-drugstore/



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