[Ip-health] New York Times: Medicare Law Prompts a Rush for Lobbyists

[Thiru Balasubramaniam]

August 23, 2005


  Medicare Law Prompts a Rush for Lobbyists

By ROBERT PEAR
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WASHINGTON, Aug. 19 - The new Medicare law has touched off explosive
growth in lobbying by the health care industry, whose spending on
advocacy here far exceeds that of consumer groups and other industries
like defense and banking.

Almost every week the federal government issues new rules or guidelines
to carry out the 2003 law, which provides a drug benefit starting in
January. To keep track of the new rules and to decipher their meaning is
a full-time job for hundreds of lawyers and lobbyists, who regularly
seek changes advantageous to their clients.

With hundreds of billions of dollars at stake, health care providers,
insurers, drug makers and pharmacies are continually trying to influence
rules for the drug benefit and other initiatives authorized by the law.

"You see a real surge in health care lobbying because that's where the
money is," said Frederick H. Graefe, a lobbyist for hospitals and makers
of medical equipment. "Twenty years ago the defense industry was
dominant and had the most lobbyists, the big players. Now it's health
care."

Last year alone, the health care industry spent $325 million - more than
any other sector - in its efforts to influence Congress and federal
agencies, according to Political Money Line, a nonpartisan group that
studies reports filed with Congress by lobbyists and their clients.

Drug companies led the way. They reported spending $86.9 million on
lobbying last year, followed by hospitals with $55 million and doctors
with $35.4 million.

Lobbying Congress nowadays often means persuading lawmakers to make
telephone calls to Bush administration officials on behalf of clients
concerned about specific issues, like the Medicare payment for a drug or
a medical device.

The pinpoint focus of much lobbying is illustrated by the case of
Lexapro, an antidepressant made by Forest Laboratories. The Bush
administration has said that Medicare drug plans must cover
"substantially all" antidepressants, but not necessarily Lexapro, a drug
widely prescribed for depression and anxiety among older adults. Claudia
Schlosberg, a lawyer with Blank Rome who represents Forest Laboratories,
has been pressing Medicare officials to reverse that decision and has
obtained letters from several members of Congress supporting the
company's position in favor of covering Lexapro.

"Every health care interest has a voice on Capitol Hill," said Elizabeth
J. Fowler, a lawyer who recently left the Democratic staff of the Senate
Finance Committee to join a consulting firm. "What you lose in the
process is consumer and beneficiary voices. We heard a lot more from
industry interests than from beneficiaries."

Chris Jennings, who became a lobbyist after serving as health policy
coordinator for President Bill Clinton, said: "The proliferation of
health care lobbyists produces specialization. The broader good is often
lost as people focus on next year's Medicare reimbursement rate for a
specific group of health care providers, or a regulation to be issued
next month."

The health care industry is subject to pervasive federal regulation, and
the government sets prices for many goods and services provided to the
elderly under Medicare. But the Bush administration and the Republican
majority in Congress are receptive to advice from the industry,
including private insurers who will deliver the drug benefit.

"The success of the new Medicare law depends on a robust partnership
between government and the private sector," said Stacey Hughes, a
partner in the lobbying firm established by former Senator Don Nickles,
Republican of Oklahoma.

Health policy experts and officials said the growth of health care
lobbying reflected several trends:

=B6Congress earmarks more and more money each year for specific hospitals,
medical schools and health care projects. Health care providers and
local officials have a better chance to obtain such largess if they
retain lobbyists to plump for their projects on Capitol Hill.

=B6Lobbying has become more substantive. To buttress their arguments,
lobbyists need data, cost estimates and economic analyses of health
policy proposals. They retain expert consultants to prepare such reports.

=B6Lobbyists have adopted many techniques of political campaigns. They
hire pollsters and buy advertising to sway public opinion and pressure
Congress.

=B6Many lobbyists have carved a niche for themselves by focusing on one
party, one house of Congress, one Congressional committee or a handful
of influential lawmakers.

Carol A. McDaid, a health care lobbyist at Capitol Decisions, a
subsidiary of the Van Scoyoc Companies, said, "It's become so
sophisticated that, in preparation for a critical vote, a big health
care or pharmaceutical company will hire a different firm to lobby each
key member of an important committee, like the Ways and Means Committee."

The Pharmaceutical Research and Manufacturers of America reported
spending $15.5 million on lobbying last year, while two of its members,
Pfizer and Bristol-Myers Squibb, spent $5.6 million apiece and Johnson &
Johnson spent $4.5 million.

Other heavyweight lobbies included the American Medical Association,
which spent $18.5 million last year, and America's Health Insurance
Plans, which spent $5.6 million, about the same amount as the Blue Cross
and Blue Shield Association.

By contrast, AARP, the lobby for older Americans, spent $8 million. The
American Cancer Society spent $2.6 million, the American Heart
Association spent $1 million and Families USA, the liberal group that
calls itself a voice for health care consumers, reported spending $40,000.

Alan B. Mertz, president of the American Clinical Laboratory
Association, said the advocacy budget for his group had more than
tripled, to $2.5 million this year from $750,000 in 2002. "We had to
beef up our advocacy to deal with threats to our Medicare
reimbursement," Mr. Mertz said, noting that Medicare payments for
laboratory tests had been frozen through 2008.

Lobbyists said it made sense for their clients to pour money into
lobbying because so much money was at stake. Health care accounts for
more than 15 percent of the nation's economy, and private insurers often
look to Medicare as a guide in deciding what services to cover and how
much to pay.

Moreover, the federal role is growing. Medicare and Medicaid will
account for 37 percent of all spending on prescription drugs next year,
up from 20 percent this year, said Stephen Heffler, an economist at the
federal Centers for Medicare and Medicaid Services.

The Bush administration and the Congressional Budget Office say Medicare
will spend more than $1 trillion on prescription drugs in the next 10
years, with outlays topping $100 billion a year after 2009.

Two linguistic changes show how health care lobbyists have emerged as a
potent force. Lobbyists and trade associations, once seen as special
interests, are now called "stakeholders," with a legitimate claim to be
heard in the policy-making process.

"Expanding coverage" used to mean providing health insurance to people
who had none. But lobbyists now use the term in a different sense. When
they speak of "coverage expansions," they mean that Medicare should
cover, or pay for, new technology like PET scans, implantable
defibrillators and drug-coated stents to treat clogged arteries.

Political campaign contributions are frequently coordinated with
lobbying campaigns. Lobbyists often hold fund-raisers at the request of
members of Congress, as allowed by campaign finance laws. They are
expected to contribute money from their own pockets and to raise money
from clients.

"You increase your influence and access by doing fund-raisers," said
James C. Pyles, a lawyer and lobbyist for psychoanalysts and home care
agencies. "If you're not on the donor list, you don't have much access."

Ms. McDaid, who lobbies for hospitals and ambulance companies, said: "In
the old days, the requests for political giving went mainly to your
clients' political action committees. Now health care lobbyists have to
tithe personally. The bigger your client base, the more pressure there
is to give. It's not unusual for a lobbyist at a big firm to give
$25,000 to $50,000 in personal contributions to Congressional candidates
in a two-year election cycle."

The growing prominence of health care issues on the national agenda has
created an unquenchable demand for lobbyists. New issues include
bioterrorism, stem cells, health information technology, the privacy of
medical records, television advertising of prescription drugs and the
importing of drugs from Canada.

Republicans are in demand at lobbying firms and trade associations, but
so are knowledgeable Democrats.

John E. McManus, who formed his own lobbying firm after working for
Republican members of the House Ways and Means Committee, received a
total of $620,000 last year from the American Medical Association, the
Advanced Medical Technology Association, the Pharmaceutical Research and
Manufacturers of America and several drug companies, including Merck and
Genentech. Mr. McManus can help them navigate the new Medicare law
because, as a Congressional aide, he helped write it.

On the other side of the political spectrum, David H. Nexon, a health
policy adviser to Senator Edward M. Kennedy for more than two decades,
stepped down in February to become senior executive vice president of
the Advanced Medical Technology Association, the lobby for makers of
medical devices like Medtronic and Guidant.

Charles M. Brain, director of legislative affairs for President Clinton,
reported that he got $240,000 last year for representing the
Pharmaceutical Research and Manufacturers of America. Stephen J.
Ricchetti, deputy chief of staff in the Clinton White House, lobbies for
Eli Lilly & Company, Novartis and Pfizer.

Richard J. Pollack, executive vice president of the American Hospital
Association, said health lobbying had become more partisan.

"We hire Republicans to lobby Republican members of Congress and
Democrats to work Democratic offices," Mr. Pollack said.

The Generic Pharmaceutical Association has retained Mr. Jennings and
Mark W. Isakowitz to lobby for legislation to increase the use of
generic drugs. As a White House aide, Mr. Jennings helped devise the
Clinton plan for universal health insurance. As a lobbyist at the
National Federation of Independent Business, Mr. Isakowitz, a
Republican, helped defeat the Clinton plan.

As the costs of Medicare and Medicaid soar, federal prosecutors and
members of Congress are investigating fraud and abuse with new zeal.
Many health care companies find they need more lawyers and lobbyists to
cope.

In a recent advertisement recruiting lawyers for its Washington office,
Sidley Austin Brown & Wood, one of the nation's largest law firms, said
its health care practice had "experienced tremendous growth."