- WASHINGTON -- In a New York
City ballroom days before Christmas, a powerful Bush administration lawyer
made an unprecedented offer to drug companies, one likely to protect their
profits and potentially hurt consumers.
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- Daniel E. Troy, lead counsel for the U.S. Food and Drug
Administration, extended the government's help in torpedoing certain lawsuits.
Among Troy's targets: claims that medications caused devastating and unexpected
side effects.
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- Pitch us lawsuits that we might get involved in, Troy
told several hundred pharmaceutical attorneys, some of them old friends
and acquaintances from his previous role representing major U.S. pharmaceutical
firms.
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- The offer by the FDA's top attorney, made Dec. 15 at
the Plaza Hotel, took the agency responsible for food and drug safety into
new territory.
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- "The FDA is now in the business of helping lawsuit
defendants, specifically the pharmaceutical companies," said James
O'Reilly, University of Cincinnati law professor and author of a book on
the history of the FDA. "It's a dramatic change in what the FDA has
done in the past."
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- Troy's switch from industry advocate to industry regulator
overseeing his former clients is a hallmark of President Bush's administration.
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- Troy is one of more than 100 high-level officials under
Bush who helped govern industries they once represented as lobbyists, lawyers
or company advocates, a Denver Post analysis shows.
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- In at least 20 cases, those former industry advocates
have helped their agencies write, shape or push for policy shifts that
benefit their former industries. They knew which changes to make because
they had pushed for them as industry advocates.
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- The president's political appointees are making or overseeing
profound changes affecting drug laws, food policies, land use, clean-air
regulations and other key issues.
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- Government watchdogs call it a disturbing trend, not
adequately restrained by existing ethics laws.
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- Among the advocates-turned-regulators are a former meat-
industry lobbyist who helps decide how meat is labeled; a former drug-company
lobbyist who influences prescription-drug policies; a former energy lobbyist
who, while still accepting payments for bringing clients into his old lobbying
firm, helps determine how much of the West those former clients can use
for oil and gas drilling.
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- "When you go to work in lobbying, it is clearly
understood and accepted that your job is to advocate for the interests
of those who hired you," said Terry L. Cooper, a University of Southern
California ethics and government professor. "When you go to work in
government, you are supposed to be responsible for upholding and maintaining
whatever you can identify as the public interest."
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- The Bush administration says the regulators were chosen
for their abilities.
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- "The president appoints highly qualified individuals
who make their decisions based on the best interests of the American people,"
said White House spokesman Jim Morrell. "Any individual serving in
the administration must abide by strict legal and ethical guidelines, including
full disclosure of past lobbying activities."
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- Six of the former industry advocates have faced ethics
investigations or resigned amid conflict-of-interest charges. Those and
at least 14 others have been lambasted by public- interest groups.
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- Government ethics standards are part of the problem because
they don't fully address the kind of issues that now permeate Washington,
Cooper and some inside government say. The rules focus mainly on direct
financial conflicts. Other, more nuanced conflicts aren't addressed
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- "There are so many ways around, over and under these
(ethics) bans ... they almost never work," said Paul Light, who for
decades has studied the appointment process for the Brookings Institution,
a think tank in Washington. "There're more screen doors than steel
doors."
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- A March 16 report from the Interior Department's inspector
general, for example, concluded that department's "byzantine"
conflict-of-interest rules were "wholly incapable" of addressing
ethical questions involving a former energy lobbyist, J. Steven Griles,
as the department's No. 2 official.
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- The report called the department's ethics system "a
train wreck waiting to happen."
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- Bringing bias to a federal job isn't new. Presidents
of all political persuasions have appointed people who shared their party's
values.
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- As president, Bill Clinton peppered the federal bureaucracy
with Democratic state officials, lawyers and advocates from various environmental
or public-interest groups.
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- Only a handful of registered lobbyists worked for Clinton,
however.
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- Bush's embrace of lobbyists marks a key difference because
it allows "those who are affected by the regulations to determine
what the ground rules should be," said David Cohen, co-director of
the Advocacy Institute, which helps teach nonprofits how to lobby in Washington.
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- While previous Republican presidents hired lobbyists,
"the Bush administration has made it rise in geometric proportions,"
Cohen said, meaning Bush is "capturing the instruments of government
and using them for the ends" that favor Bush's political supporters.
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- "In the Bush administration," said U.S. Sen.
Joe Lieberman, D-Conn., "the foxes are guarding the foxes, and the
middle- class hens are getting plucked."
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- Republicans and their lobbying allies reject the idea
that industry is embedded in the administration.
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- "Foxes? No," Vice President Dick Cheney told
The Denver Post. "I think we have a good track record."
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- The clout of industry is balanced by the power of labor
unions, trial lawyers and public-interest groups, said Jerry Jasinowski,
chairman of the National Association of Manufacturers.
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- "The notion that somehow business gets everything
and we've gotten a free ride is absurd," he said.
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- Still, the lobbyists-turned-policymakers control or influence
health care, food safety, land use, the environment and other issues touched
by government.
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- HEALTH CARE
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- Ann-Marie Lynch
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- The drug-industry lobbyist who fought price controls
joined the Health and Human Services Department and has helped drug companies
avoid the limits.
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- Top aides in the Department of Health and Human Services
provide analysis and advice to the president on key consumer issues, including
prescription-drug policies. In doing so, they consider the needs of pharmaceutical
companies seeking revenue for future research, and consumers struggling
to afford increasingly costly medications.
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- In June 2001 Bush installed Ann- Marie Lynch, a lobbyist
for the drug- company trade group Pharmaceutical Research and Manufacturers
of America, to help set those policies.
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- As a lobbyist, Lynch fought congressional attempts to
cap prices for drugs. Price controls, she argued, would hamper medical
innovation.
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- Thirteen months after Lynch became deputy assistant secretary
in the office of policy, her division issued a report that praised brand-
name drugs. It warned that "government- controlled restrictions on
the coverage of new drugs could put the future of medical innovation at
risk and may retard advances in treatment."
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- Consumer advocates say that's nonsense. Other countries
innovate despite price controls, said Gail Shearer, director of health
policy analysis for Consumers Union, nonprofit publisher of Consumer Reports.
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- "They haven't taken as seriously their job of making
medicines affordable to all Americans," Shearer said. "When you
talk about the need for (drug) innovation, you have to put it in the context
of, will people get the wonder drugs?"
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- Critics say the report influenced congressional debate
over a Medicare drug policy that, among other things, banned government
from using Medicare's buying power to cut drug prices. The legislation
will mean an extra $139 billion in profit over eight years to drug companies,
Boston University researchers said.
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- Republicans in Congress used arguments that came "directly
out of Ann-Marie Lynch's mouth" and from the trade group she previously
worked for, said Rep. Sherrod Brown of Ohio, lead Democrat on the Energy
and Commerce Committee's health subcommittee.
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- Lynch declined to talk to a reporter. HHS spokesman Bill
Pierce said the report was not intended to sway Congress. Provisions banning
Medicare from negotiating drug prices date to 2000, he said.
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- Lynch also blocked the release of about a dozen completed
research reports that challenge drug-company claims, three former employees
said. Pierce said Lynch decides research topics and which reports are released.
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- One 2001 report, for example, criticizes Medicare plus
Choice (now known as Medicare Advantage). Its findings suggested that running
the Medicare prescription-drug benefit through private health companies
- the method the administration ultimately chose - would be more expensive
and would not serve rural areas well.
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- "Very few of (the private companies) manage to bring
in the benefit cost effectively," said Mark Merlis, the private health
policy consultant who wrote the report.
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- Thomas A. Scully
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- The former hospital lobbyist presided over an agency
that helped a chain he once represented win a favorable settlement in a
Medicare fraud case.
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- Thomas A. Scully represented the nation's for-profit
hospitals as a lobbyist before being hired by the Bush administration in
June 2001 to head the federal Centers for Medicare & Medicaid Services.
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- Eight months after Scully arrived at the Medicare and
Medicaid agency, it moved to settle final claims involving HCA Inc., a
hospital chain that was the biggest member of Scully's former employer,
the Federation of American Hospitals. HCA Inc. faced allegations it fraudulently
overbilled the government for Medicare cases.
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- Under the terms agreed to in June 2002 by Scully's agency,
HCA would have settled for $250 million. Medicare fraud cases typically
are ironed out with Justice Department participation, but Scully agreed
to those terms on his own, said John R. Phillips, an attorney who represented
whistle- blowers in the case.
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- "The $250 million was a total sellout by Scully,
who totally negotiated it behind Justice's back," Phillips said.
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- It also was handled in a way that protected the company
from a full review of its cost reports and the triple- damage civil fines
that can be imposed in fraud cases, he said.
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- Sen. Charles Grassley, R-Iowa, asked Justice in October
2002 if that deal was "too lenient."
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- Justice delayed the settlement until June 2003.
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- HCA, the nation's biggest for-profit hospital company,
eventually paid that $250 million, plus $631 million in civil penalties
and damages and $17.5 million to states.
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- Scully's ethics agreement did not require him to officially
avoid cases involving HCA. But Scully said he steered clear.
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- "I recused myself from everything involving HCA-specific
issues or policy and was not involved in any way, shape or form,"
Scully said. "Every time anything came up (regarding) HCA, I left
it to my deputies."
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- But Grassley in a June 25, 2002, letter to a Justice
Department lawyer said comments by Scully "have given me great concern
that there is an active, ongoing effort underway to change or modify enforcement
(on Medicare fraud) policy that in my view could significantly undermine
the (law)."
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- Scully has since left the administration for consulting
jobs with a lobbying firm and an investment company that represent Medicare
providers.
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- Daniel E. Troy
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- The lawyer who represented major drug companies still
fights for causes that benefit them as chief counsel at the Food and Drug
Administration.
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- Daniel E. Troy was well-known at the FDA before he arrived
in summer 2001 to work as chief counsel, the top legal position in the
department.
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- As a lawyer in private practice, Troy repeatedly sued
the FDA, arguing that it had only limited ability to regulate drug companies.
He filed those suits through the Washington Legal Foundation, a group funded
by businesses, including drug companies. Donors include charitable foundations
run by Pfizer Inc., Procter & Gamble Co. and Eli Lilly & Co.
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- Troy also represented Pfizer through his firm, Wiley,
Rein & Fielding. Troy said in an e-mail to a reporter that his Pfizer
work was mainly communications and insurance law, and averaged only 80
hours a year.
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- At the FDA, Troy still is fighting for causes that benefit
drug companies.
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- It's unclear whether any of pharmaceutical firms responded
to his December request for lawsuits the FDA might get involved in.
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- By the time Troy made that offer, he had already intervened
in three drug-company cases as FDA chief counsel. One involved Pfizer.
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- In court briefs, the FDA argued that it determines which
warnings a drug company must give consumers. Lawsuits filed in state courts
arguing that drug-company warnings are inadequate therefore were invalid,
the FDA says. One of the cases Troy challenged involves thousands of consumers
who say they were harmed by painful withdrawal from an antidepressant.
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- Lawsuits accusing drug companies of telling consumers
too little about side effects constitute the largest category of cases
against drug companies, law professor O'Reilly said.
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- If Troy's legal position prevails, O'Reilly said, it
would be catastrophic for consumers hurt by drugs. He said it would bar
cases like the one filed against the makers of fen-phen, the combination
of diet medications tied to heart problems. The makers of those drugs are
settling with consumers for $14 billion. That case predates Troy's policy.
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- Troy, who declined to be interviewed, said in a written
statement that the FDA is intervening in the lawsuits to protect "the
safety, effectiveness and availability of important medical products."
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- He said that would be "adversely affected if judges
and juries acting under state law had the power to substitute their judgment
for the expert determinations made by FDA scientists."
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- Clinton's Justice Department, he added, took the same
legal position, arguing that federal law pre-empts state law.
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- But prior to Troy, professor O'Reilly and one FDA official
said, the government got involved only when a judge asked. Troy, in contrast,
is seeking cases in which to intervene.
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- And the FDA now is staking a new legal claim, experts
say: that its authority to determine drug labeling always trumps any claims
made in state court.
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- The FDA is "taking sides in private litigation,"
said Thomas McGarity, a University of Texas Law School professor and president
of the Center for Progressive Regulation, which supports government regulation
on health and safety issues.
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- The FDA asks drug-company attorneys to alert the agency
to cases because otherwise "our rules might be undermined by contrary
state findings" the agency is unaware of, said Peter Pitts, an FDA
spokesman.
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- He added: "For people to infer that (FDA) decisions
are made with anything but the public health as our focus is untrue, unfair
and very ill-considered."
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- FDA officials also say they want to discourage frivolous
lawsuits, which drive up costs.
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- A former FDA chief counsel in the Nixon administration,
Peter Barton Hutt, said he supported the FDA's legal position but added,
"I probably wouldn't be out there encouraging" lawsuits.
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- Troy oversees other FDA changes that provoked accusations
that he is siding with drug companies.
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- In October 2001, the Health and Human Services Department
gave Troy's office final approval over warnings telling companies they
could be in violation of FDA rules. Those had previously been sent out
by the FDA's drug-marketing division and district offices.
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- After that change, the number of warnings of questionable
claims by pharmaceutical companies quickly dropped from an average of seven
a month to two.
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- FDA spokesman Pitts said fewer letters were sent because
the process was centralized.
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- "If you torture statistics long enough," Pitts
said, "they confess to anything."
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- Others see this as dangerous to the public.
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- "This ... may be a welcome development for the drug
industry, but it poses serious dangers to public health," Rep. Henry
Waxman of California, the top Democrat on the House Committee on Government
Reform, said in an Oct. 1, 2002, letter to HHS Secretary Tommy Thompson.
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- Waxman said the bad policy decision was "exacerbated
by the appointment of Daniel Troy."
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- The investigative arm of Congress, the General Accounting
Office, in October 2002 also found that, under the new system, warning
notices "have taken so long that misleading advertisements may have
completed their broadcast life cycle before FDA issued the letters."
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- Waxman described the delays as "a development that
benefits the powerful pharmaceutical industry at the expense of consumers."
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- FOOD SAFETY
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- Charles Lambert
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- As a USDA official, the former lobbyist for the meat
industry who opposed labeling told a hearing that mad cow disease was not
a threat.
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- Mad cow disease had yet to surface in the United States
last June when a U.S. Department of Agriculture official - a meat- industry
lobbyist only eight months earlier - bet his job on the promise that the
ailment couldn't sneak into the country through imports.
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- Congress had just passed a law requiring meat labels
to state which country a cow lived in before slaughter. Food safety groups
say those labels could, among other things, help consumers avoid buying
beef from countries with mad cow disease.
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- The USDA opposed such labeling. The person making the
agency's case, Deputy Undersecretary Charles Lambert, knew the arguments
against such labels. He'd made them as a lobbyist for the National Cattlemen's
Beef Association.
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- Lambert spent 15 years at the Cattlemen's Association
working in Denver before coming to Washington, D.C., where he worked as
lobbyist and chief economist. He left in December 2002 to join the USDA
as undersecretary for marketing and regulatory programs.
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- When asked about mad cow and the labels, Lambert said
mad cow disease wasn't a threat.
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- "Is there a possibility that it could get through?"
Rep. Joe Baca, a California Democrat, asked Lambert at a hearing last June.
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- Lambert answered, "No, sir."
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- "None at all?" Baca asked.
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- "No," Lambert replied.
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- "You would bet your life on it - your job on it,
right?"
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- Lambert answered, "Yes, sir."
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- The disease was discovered in the U.S. six months later
- apparently brought here by a cow from Canada.
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- Lambert now says, "I overstated my case."
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- More than a dozen other high-ranking USDA officials appointed
under Bush also have ties to the meat industry.
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- "Whether it's intentional or not, USDA gives the
impression of being a wholly owned subsidiary of America's cattlemen,"
said Carol Tucker Foreman, director of the Consumer Federation of America's
Food Policy Institute. She served as a USDA assistant secretary in the
Carter White House. "Their interests rather than the public interests
predominate in USDA policy."
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- When he came to the USDA, Lambert signed an agreement
stating that in his first year he would "not participate personally
and substantially in any particular matter involving specific parties in
which (Cattlemen's) is a party or represents a party, unless I am authorized
to participate."
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- During that period he met at least 12 times with current
or former members of Cattlemen's and its affiliates, an office calendar
obtained by The Denver Post shows.
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- Lambert said that at any meeting where policy was discussed,
he acted only as a facilitator and that another USDA person was present.
The calendar shows meetings where other USDA people were present, although
it is not always clear what was discussed.
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- The rest of those meetings were at social settings, he
said.
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- "You're not required to sever all personal and past
relationships ... when you come to federal employment," Lambert said
in an interview.
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- ENVIRONMENT
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- Jeffrey Holmstead
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- The EPA official, a lawyer, formerly worked for a firm
that represents utility companies, which are among the biggest air polluters.
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- When the Environmental Protection Agency issued proposed
changes to air pollution rules Jan. 30, the wording troubled Martha Keating,
a scientist with environmental advocacy group Clear the Air.
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- "It struck me that I had seen this before,"
Keating said.
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- At least 12 paragraphs were identical to or closely resembled
a Sept. 4, 2003, proposal given to the Bush administration by Latham &
Watkins, a law firm that represents utility companies.
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- The EPA official overseeing the proposed changes is Jeffrey
Holmstead, who until he joined the EPA in October 2001 had worked as a
lawyer at Latham & Watkins. His clients included a chemical company
and a trade group for utility companies. Power plants are among the biggest
air polluters.
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- Holmstead oversees the EPA division that governs air
pollution.
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