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PHARMACEUTICAL GIANT SWINGS HEAVY POLITICAL STICK
From: Mark Graffis <firstname.lastname@example.org>
Copyright © 1997 The (Raleigh, N.C.) News & Observer
RESEARCH TRIANGLE PARK, N.C. (July 15, 1997 01:21 a.m. EDT) -- Along
with developing drugs that treat everything from ulcers to AIDS,
Wellcome has spent the past few years perfecting a product of a
different sort: corporate politics.
The pharmaceutical giant has blossomed into one of the most
influential companies in Washington. Since the beginning of the
decade, donations to federal candidates from its employee political
action committee have risen 400 percent.
Its PAC now ranks 15th nationally. It employs five full-time
lobbyists. Last year, it contracted with 50 additional lobbyists,
including several former congressmen. During the first six months of
1996, Glaxo spent more than $2.1 million lobbying Congress on such
issues as a high-profile fight that extended a drug patent and, some
analysts believe, earned it at least an extra $1 billion in sales.
The company is kind to politicians in other ways, including letting
them use its corporate jet. The result is a political force whose
influence is felt in the drugstore, where customers face higher
for certain prescriptions; at the ballot box, where state and
politicians, backed by Glaxo money, run for office; and in Congress,
where measures of interest to Glaxo are often considered.
Glaxo officials argue that their investment in politics is simply
meant to ensure that legislation affecting their business gets a fair
hearing in Congress. They contend that it has little impact on how
politicians actually vote.
"We're really striving just to get a real full and fair and honest
open debate on issues," said Timothy Williams, an associate general
counsel who was chairman of the Glaxo Wellcome PAC's board of
directors for the past two years.
"We hope our involvement will at least lead politicians to give
a 360-degree perspective and take into account both sides of the
The company has achieved such prominence that Sen. Ted Kennedy,
D-Mass., took to the Senate floor last year to rail against it and
lobbying strength. Glaxo, he said, was an example of corporate
"They're definitely very powerful," said Nancy Watzman, project
director for the Center for Responsive Politics, a Washington-based
nonprofit that monitors campaign finance issues. "And they're doing
all the things that make you powerful in Washington."
Glaxo's parent company is based in Great Britain and has been
operating in the United States since 1977. Two years ago, it merged
with competitor Burroughs Wellcome to form the world's largest
Even before the merger, Glaxo was an active political player. As the
company was completing construction of its $450 million headquarters
in 1989, Sen. Jesse Helms, R-N.C., flew to Australia at Glaxo's
request as part of the company's efforts to change a U.S. law that
limited legal imports of Australian opium, a crop it controlled. A
year later, Helms persuaded Congress to pass a $10 million tax break
on import duties the company paid for an ingredient in one of its
Talk of a health-care revolution really got Glaxo going. When Bill
Clinton was elected president in 1992, pharmaceutical companies
worried about possible new restrictions. Glaxo mobilized its forces
and joined the fight that would eventually defeat the reform
Along with Glaxo's political donations, then-CEO Charlie Sanders
helped form an industry group that bought radio ads in 25
congressional districts to argue against the price control in
The company has built on the political lessons it learned in that
fight. Perhaps nothing better illustrates Glaxo's growing influence
than the battle it won in keeping an extension of the patent for
Zantac, Glaxo's ulcer medicine.
"Here's a situation where there's one company that stood to benefit
and spent millions and millions of dollars on a particular
said Watzman, of the Center for Responsive Politics.
"And despite a pretty organized opposition, they managed to win
through the force of their lobbying. I think that definitely caught
Glaxo's successes are a case study in the science of corporate
politics. It has succeeded by spending a lot of money and taking the
role politics plays in the health of its company very seriously.
This past election its PAC donations were the largest of any U.S.
pharmaceutical company. Glaxo encourages employees to be politically
active and has organized its own political network for workers.
"The important thing is that employees here are American citizens,"
said Nancy Pekarek, a Glaxo Wellcome spokeswoman.
More than 1,500 employees contribute to the company PAC. They elect a
board that decides which candidates will receive donations.
Republicans have been the major beneficiaries, by almost five to one.
During 1995-96, Glaxo doled out $495,000 in soft money to the two
major parties, with 90 percent going to the Republicans.
Glaxo spent more than $2 million lobbying from January to June 1996.
Sanders said lobbying is something every major company does, and that
Glaxo simply wants to get a fair hearing on its issues.
"Lobbying has a bad name because people think you are getting some
undue influence," Sanders said. "But the fact is, you want to talk to
your representative and tell them if something is affecting you and
present your side. But that's democracy. That's what it's all about."
Congressmen can expect to receive phone calls or letters from Glaxo
employees asking them to support the company. The "Civic Action
Network" consists of 1,800 employees from across the country.
"Any true grass-roots movement has breadth as well as depth," said
Dick Domann, director of the network. "And since we have folks from
Alaska to Florida, that carries a little more weight."
Glaxo's links to politicians extend to the skies, as well.
can borrow or rent the company's 10-seat corporate jet, if it's
nearby. Helms used it three times during the fall campaign and paid
Glaxo $3,479, according to his records.
"It's not uncommon for members of Congress to make requests for our
jet," Pekarek said. "It's a common practice, I believe, among
companies who own jets."
When all these various lobbying methods are working in sync, the
results can be powerful. Consider the fight over the ulcer medicine.
When Congress passed the General Agreement on Tariffs and Trade in
1994, it unexpectedly -- and, Glaxo critics say, inadvertently --
extended two dozen drug patents, including the one for Zantac.
Consumers would have to wait another 19 months for a cheaper generic
version while Glaxo earned at least an extra $1 billion. It also
a Canadian company building a plant to make a generic version would
not go into operation until Glaxo's patent rights run out.
Sen. David Pryor, an Arkansas Democrat who left office last year,
wrote a bill to close what he called a "loophole" and eliminate that
19-month patent extension.
In fighting Pryor's bill, Glaxo found itself pitted against other
pharmaceutical companies, the Clinton administration and a host of
Sen. Orrin Hatch, R-Utah, would eventually broker a compromise bill
that allowed Glaxo to keep its 19-month patent extension.
That was good news for Glaxo, which had donated more than $20,000 to
Hatch and his PAC since 1990. The company also gave $5 million to the
University of Utah's Huntsman Cancer Institute, which had been
by a major Republican donor and Hatch supporter. Glaxp also flew
here to give a speech to employees.
Eleven senators, including Helms and Lauch Faircloth, R-N.C.,
circulated a "dear colleague" letter urging senators to support
Glaxo's position. Faircloth is a Glaxo stockholder and has received
$15,000 in contributions from the company's PAC since 1990.
Sen. Carol Moseley-Braun, D-Ill., also signed the letter. She
$9,999 in contributions and was paid twice to speak at Glaxo
Glaxo added some firepower, including Dennis DeConcini, the former
Arizona senator who once served as chairman of the committee
considering the bill, and former Sen. William Brock, a Tennessee
Republican turned lobbyist who was once trade representative for
The 53 senators who voted in favor of Glaxo received an average
contribution of $5,470, according to the Center for Responsive
Politics. Those who voted against received an average of $1,447.
Ciba-Geigy, which wants to introduce a generic version, donated an
average of $578 to the 45 who voted against it.
The battle left bitter feelings among Glaxo's opponents.
"What has happened since discovery of the loophole is a lesson in
greed," said Kennedy during the final debate. "Glaxo and the other
brand-name manufacturers began an intense lobbying campaign to
this inadvertent mistake from being corrected. Corporate profits, not
research and development, will be the prime beneficiary."
Glaxo is focusing on the future -- speeding up approval of new drugs,
legislation that would allow the export of drugs not approved for
in the United States, and a tax credit for research and development.
Critics say Glaxo's aggressive attitude toward politics will become
even more common as companies seek to secure their profits in the
"They're a model for the future of what a corporation is becoming
...," said Bob Hall of Democracy South. "They're very active in
manipulating politics to their benefit and doing it at every level
that they need to do it."
By CHRIS O'BRIEN, Raleigh News & Observer
James Love | Center for Study of Responsive Law
P.O. Box 19367 | Washington, DC 20036 | 202.387.8030
http://www.cptech.org | email@example.com