Pharmaceuticals,Political Money,and Public Policy: A Theoretical and Empirical Agenda

This quote is from the December 21, 2008 blog posting by Baker Dean , economist and co-founder of the Center for Economic and Policy Research, available at <http://www.prospect.org/csnc/blogs/beat_the_press> (last visited July 19, 2013).

The author calculated these percentages from the Center for Responsive Politics, available through <https://www.opensecrets.org/industries/totals.php?cycle=2012&ind=H4300> (last visited July 19, 2013).

For an overview of different PAC strategy models and an empirical test of those models, please read Jorgensen P. , “Campaigning on Fruit, Nuts, and Wine,” Political Research Quarterly 63, no. 1 (2010): 16–28.

From the Center for Responsive Politics, supra note 2.

Jorgensen P. , “Organized Interests in Congressional Elections,” Unpublished Dissertation, University of Oklahoma, May 2011.

From the Center for Responsive Politics, supra note 2.

For example, published lists have pharmaceutical manufacturers donating over $21 million to candidates, political parties, and outside spending organizations. This figure likely underestimates total money in two ways. First, transactions to state-level, party committees may not be included. This money should be included in any partisan breakdown, since the fund-raising prowess of these party committees follows a four-year, presidential cycle. Second, the method of aggregating transactions into economic industries should be more precise. With each transaction over $200, the individual donor must list an employer. Published industry codes of campaign finance records use the given employer to aggregate into industry-level analysis; however, it is common for an individual to give multiple transactions, with each employer listing having spelling errors, or worse. In 2012, just over $1.1 billion of transactions had no identifiable employer (including retired donors), which was 27 percent of the total. Unless this percentage is lowered, all counts of industry donations will underestimate the true total. After standardizing the employer for each individual donor, and including all donations to state-level party committees, I found nearly $9 million more donations from pharmaceutical manufacturers in 2012. The differences in total money and partisan split, after utilizing new data management techniques on the 2012 electoral-cycle data, brings to light many of the empirical problems facing the study of pharmaceutical politics.

These numbers do not include donations to pharmaceutical PACs who then redistribute to candidates and political parties.

Angell M. , “The Truth about Drug Companies,” New York Review of Books, July 15, 2004.

See, discussion of these issues by other authors in this issue, especially, Gagnon M.-A. , “Corruption of Pharmaceutical Markets: Addressing the Misalignment between Financial Incentives and Public Health,” Journal of Law, Medicine & Ethics 41, no. 3 (2013): 571–580; Light D. W. Lexchin J. Darrow J. , “Institutional Corruption of Pharmaceuticals and the Myth of Safe and Effective Drugs,” Journal of Law, Medicine & Ethics 41, no. 3 (2013): 590–600; Sismondo S. , “Key Opinion Leaders and the Corruption of Medical Knowledge: What the Sunshine Act Will and Won't Cast Light On,” Journal of Law, Medicine & Ethics 41, no. 3 (2013): 635–643; Cosgrove L. Wheeler E. , “Drug Firms, Codification of Diagnostic Categories, and Bias in Clinical Guidelines,” Journal of Law, Medicine & Ethics 41, no. 3 (2013): 644–653; Rodwin M. A. , “Rooting Out Institutional Corruption to Manage Inappropriate Off-Label Drug Use,” Journal of Law, Medicine & Ethics 41, no. 3 (2013): 654–664; Sah S. Fugh-Berman A. , “Physicians under the Influence: Social Psychology and Industry Marketing Strategies,” Journal of Law, Medicine & Ethics 41, no. 3 (2013): 665–672.

Baker D. , “Issues in Trade Protectionism,” Report for the Center for Economic and Policy Research (November 2009): 1–10, at 4; for the role of advertising in economic theory, see Wolff R. D. Resnick S. A. , Contending Economic Theories: Neoclassical, Keynesian, and Marxian (Cambridge, MA: MIT Press, 2012).

Id. (Baker).

Rodwin M. A. , “Independent Clinical Trials to Test Drugs: The Neglected Reform,” Saint Louis University Journal of Health Law & Policy 6, no. 1 (2012): 113–166.

Baker D. , “Stagnation in the Drug Development Process: Are Patents the Problem,” The Center for Economic and Policy Research (March 2007): 1–18.

Id., at 8, 10–11.

Murray M. J. , “The Pharmaceutical Industry: A Study in Corporate Power,” International Journal of Health Services 4, no. 4 (1974): 625–640, at 637.

Ferguson T. , Golden Rule: The Investment Theory of Party Competition and the Logic of Money-Driven Political Systems (Chicago: University of Chicago Press, 1995): At 8.

Comanor W. S. , “The Political Economy of the Pharmaceutical Industry,” Journal of Economic Literature 24, no. 3 (1986): 1178–1217.

Daemmrich A. , “U.S. Healthcare Reform and the Pharmaceutical Industry,” Harvard Business School Working Paper, 12–015, September, 14, 2011.

Id.; Gokcekus O. Adams M. Grabowski H. Tower E. , “How Did the 2003 Prescription Drug Re-Importation Bill Pass the House,” Economics & Politics 18, no. 1 (2006): 27–45.

Id. ( Gokcekus ).

Id. ( Gokcekus ). In arguing that senior citizens pressured their congressional member to allow drug re-importation, the authors measure the presence of senior citizens in the constituency in two ways: First, by measuring the amount of campaign contributions from donors listing their occupation as retired; and second, by using the percentage of the 65+ population in a congressional district. They find that retired donors did not influence the vote, while the 65+ population did increase the probability of voting to allow drug re-importation. This finding is not surprising given the argument of this paper that those donors who list themselves as retired have very little in common socio-economically with the average retiree, and many of those donors are not actually retired. There is more on this issue later in this essay.

Hall R. Van Houweling R. P. , “Campaign Contributions and Lobbying on the Medicare Modernization Act of 2003,” paper presented at the annual meeting of the American Political Science Association, Philadelphia, PA, September 3, 2006.

Id., at 15.

Ferguson T. Jorgensen P. D. Chen J. , “Poles Apart? Party Polarization and Industrial Structure in American Politics Now – A Preliminary Quantitative Assessment,” paper presented at the Institute for New Economic Thinking Annual Conference, Hong Kong, April 2013, available at <http://ineteconomics.org/sites/inet.civicactions.net/files/Ferguson%20Jorgensen%20Chen%20Poles%20Apart%20INET%20paper%20.pdf> (last visited July 19, 2013).

See author calculations from the Center for Responsive Politics, supra note 2.

See Daemmrich , supra note 19.

See Angell , supra note 9.

Id.

Rodwin M. A. , “Conflicts of Interest, Institutional Corruption, and Pharma: An Agenda for Reform,” Journal of Law, Medicine & Ethics 40, no. 3 (2012): 511–522.

Baker D. , “The Benefits and Savings from Publicly-Funded Clinical Trials of Prescription Drugs,” The Center for Economic and Policy Research (March 2008): 1–19, at 4; Rodwin M. A. Abramson J. D. , “Clinical Trial Data as a Public Good,” JAMA 308, no. 9 (2012): 871–872.

Baker D. , “The Reform of Intellectual Property,” Post-Autistic Economics Review 32 (2005): Article 1.

Madison J. , “Federalist Paper No. 10,” The Federalist (New York: Signet Classics, 2003).

On the various means by which money influences politics, please read: Mayer J. , “Covert Operations,” New Yorker 86, no. 25 (2010): 44–55; O'Connor A. , “The Privatized City,” Journal of Urban History 34, no. 2 (2008): 333–353; Hall R. L. Wayman F. W. , “Buying Time: Moneyed Interests and the Mobilization of Bias in Congressional Committees,” American Political Science Review 84, no. 3 (1990): 797–820; Greider W. , Secrets of the Temple (New York: Simon & Schuster, 1989); Ferguson , supra note 17; Overacker L. , Money in Elections (New York: MacMillan Company, 1932); Ferguson T. Johnson R. , “Too Big to Bail: The ‘Paulson Put,’ Presidential Politics and the Global Financial Meltdown, Part I: From Shadow Financial System to Shadow Bailout,” International Journal of Political Economy 38, no. 1 (2009): 3–34; Ferguson T. Johnson R. , “Too Big to Bail: The ‘Paulson Put,’ Presidential Politics, and the Global Financial Meltdown, Part II: Fatal Reversal – Single Payer and Back,” International Journal of Political Economy 38, no. 2 (2009): 5–45; Johnson S. Kwak J. , 13 Bankers: The Wall Street Takeover and the Next Financial Meltdown (New York: Pantheon Books, 2010); Hacker J. S. Pierson P. , Winner-Take-All-Politics: How Washington Made the Rich Richer – and Turned Its Back on the Middle Class (New York: Simon & Schuster, 2010); Winters J. A. Page B. I. , “Oligarchy in the United States,” Perspectives on Politics 7, no. 4 (2009): 731–751.

Schattschneider E. E. , The Semisovereign People: A Realist's View of Democracy in America (New York: Thomson Learning, 1975): At 5.

Edelman M. , The Symbolic Uses of Politics (Urbana-Champagne: University of Illinois Press, 1985).

See Schattschneider , supra note 34, at 16.

Id., at 66.

See Angell , supra note 9, at 5.

Hill L. , “Adam Smith and the Theme of Corruption,” Review of Politics 68, no. 4 (2006): 636–662; Hill L. , “Adam Ferguson as Corruption Theorist,” paper presented at the annual meeting of the American Political Science Association, Washington, D.C., September 2010.

Id. (Hill 2006), at 637.

See Overacker , supra note 34, at vii.

See Hall Wayman , supra note 34; Stratmann T. , “The Market for Congressional Votes: Is Timing of Contributions Everything,” Journal of Law & Economics 41, no. 1 (1998): 85–114; Stratmann T. , “Can Special Interests Buy Congressional Votes? Evidence from Financial Services Legislation,” Journal of Law & Economics 45, no. 2 (2002): 345–373; Cooper M. J. Gulen H. Ovtchinnikov A. , “Corporate Political Contributions and Stock Returns,” Journal of Finance 65, no. 2 (2010): 687–724; Tahoun A. , “The Role of Stock Ownership by US Members of Congress on the Market for Political Favors,” London School of Economics, Working Paper, 2011; Gilens M. , Affluence and Influence: Economic Inequality and Political Power in America (Princeton: Princeton University Press, 2011); Lessig L. , Republic, Lost: How Money Corrupts Congress – and a Plan to Stop It (New York: Twelve, 2011).

Ferguson T. Jorgensen P. Chen J. , “Who's Watching the Watchdog? The Federal Election Commission, Missing Data, and the Current State of Campaign Finance,” paper presented at the annual meeting of the Law & Society Association, May 30, 2013.

I, along with Ferguson Thomas Chen Jie , will analyze these new name- and industry-matching techniques in a forthcoming Safra Edmond J. Center Working paper.

See Gokcekus , supra note 20.

See Ferguson Jorgensen Chen , supra note 44.

See works cited in supra note 43.

On Pharma funding of CME and other professional activities, see Rodwin M. , “Five Uneasy Pieces to Pharmaceutical Policy Reform,” Journal of Law, Medicine & Ethics 41, no. 3 (2013): 581–589.

Hall R. L. Deardorff A. V. , “Lobbying as Legislative Subsidy,” American Political Science Review 100, no. 1 (2006): 69–84, at 69.

Id., at 4. The authors are interested in using the Medicare Modernization Act, specifically the pharmaceutical-related sections, to test the core hypotheses of their theory, which are lobbyists lobby their productive friends. I am arguing that scholars should use this theory to understand the pharmaceutical industry, and the dependent corruption of Congress created in part by this industry. I am pushing the agenda of their research to an area that they do not want to pursue in their conference paper, when they write, “We do not purport to explain why this bill – rather than some other bill, or no bill at all – passed the critical threshold of enactment.”

Dunn W. N. , Public Policy Analysis: An Introduction (Upper Saddle River, NJ: Prentice Hall, 2004); Patton C. V. Sawicki D. S. , Basic Methods of Policy Analysis and Planning (Englewood Cliffs, NJ: Prentice Hall, 1993).

Dryzek J. S. , “Don't Toss Coins in Garbage Cans: A Prologue to Policy Design,” Journal of Public Policy 3, no. 4 (1983): 345–367; Schneider A. Ingram H. , “Systematically Pinching Ideas: A Comparative Approach to Policy Design,” Journal of Public Policy 8, no. 1 (1988): 61–80.

James T. E. Jorgensen P. D. , “Policy Knowledge, Policy Formulation, and Change: Revisiting a Foundational Question,” Policy Studies Journal 37, no. 1 (2009): 141–162, at 143–144.

Shulock N. , “The Paradox of Policy Analysis: If It Is Not Used, Why Do We Produce So Much of It,” Journal of Policy Analysis and Management 18, no. 4 (1999): 226–244, at 240 (emphasis added).

See Daemmrich , supra note 19; Gokcekus , supra note 20.

See the other articles in this symposium, particularly the articles by Brown A. Cosgrove L. Gagnon M. Gray G. Landau A. Light D. Rodwin M. Sismondo S. Sah S. ,

Castellblanch R. , “Challenging Pharmaceutical Industry Political Power in Maine and Vermont,” Journal of Health Politics, Policy and Law, 28, no. 1 (2003): 109–132. Castell-blanch's work is a good example of clarifying policy alternatives and explaining why Maine was able to base a drug-price reduction bill in 2000, while the state legislature in Vermont was not able to pass a similar bill. The author argues that the Maine State Employees Association and the Maine Council of Senior Citizens had more resources and mobilized more people than their Vermont counterparts. In addition to mobilizing public support, sympathetic policymakers in the state included pharmacists in the decision-making process, negating the influence of pharmaceutical firms on pharmacists, and the state used its social program's purchasing power as a bargaining chip. The thesis of the article is the same as this essay: In order to reform the practices of the pharmaceutical industry, citizens must challenge the industry's political power.

Wyatt E. , “Supreme Court Lets Regulators Sue over Generic Drug Deals,” New York Times, June 17, 2013, at A1. The federal government also pursues fraud settlements. On this issue, read Thomas K. Schmidt M. S. , “Glaxo Agrees to Pay $3 Billion in Fraud Settlement,” New York Times, July 2, 2012, at A1.

Yen H. , “Black Voter Turnout Passes Whites in 2012 Election, A First in Census History,” Huffington Post, May 8, 2013, available at <http://www.huffingtonpost.com/2013/05/08/black-voter-census_n_3240403.html> (last visited July 19, 2013); Ansolabehere S. , “The Turnout Mystery,” Boston Review, January 10, 2013, available at <http://bostonreview.net/state-nation/turnout-mystery> (last visited July 19, 2013); File T. , “The Diversifying Electorate – Voting Rates by Race and Hispanic Origin in 2012 (and Other Recent Elections),” Current Population Survey, May 2013, available at <http://www.census.gov/prod/2013pubs/p20–568.pdf> (last visited July 19, 2013).

For a synopsis of state actions after the Supreme Court's decision in Shelby County v. Holder (2013), especially concerning voter identification and restriction on early voting, see Cooper M. , “After Ruling, States Rush to Enact Voting Laws,” New York Times, July 5, 2013, available at <http://www.nytimes.com/2013/07/06/us/politics/after-Supreme-Court-ruling-states-rush-to-enact-voting-laws.html?_r=0> (last visited July 19, 2013).

On the potential for decline in turnout caused by strict voter identification laws, see Barreto M. A. Nuño S. A. Sanchez G. R. , “The Disproportionate Impact of Voter-ID Requirements on the Electorate – New Evidence from Indiana,” PS: Political Science & Politics, 42, no. 1 (2009): 111–116; Hershey M. R. , “What We Know about Voter-ID Laws, Registration, and Turnout,” PS: Political Science & Politics 42, no. 1 (2009): 87–91; on the lack of evidence for in-person voting fraud and partisanship of voter identification laws, see Groth W. R. , “Litigating the Indiana Photo-ID Law: Lessons in Judicial Dissonance and Abdication,” PS: Political Science & Politics 42, no. 1 (2009): 97–101; Kinnard M. , “Report: No Widespread Fraud Found in SC Elections,” Associated Press, July 5, 2013, available at <http://hosted.ap.org/dynamic/stories/S/SC_VOTER_ID_SCOL-?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT> (last visited July 19, 2013); for an example of a court case on early voting, see Childress S. , “Court Rules Florida's Early Voting Restrictions are Discriminatory,” Frontline, August 17, 2012, available at <http://www.pbs.org/wgbh/pages/frontline/government-elections-politics/court-rules-floridas-early-voting-restrictions-are-discriminatory/> (last visited July 19, 2013).

See Ferguson Jorgensen Chen , supra note 25.

Burnham W. D. , “Democracy in Peril: The American Turnout Problem and the Path to Plutocracy,” The Roosevelt Institute, Working Paper No. 5, December 1, 2010.

See Madison , supra note 33, at 51.

See Ferguson , supra note 17, at 8.