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Drug Industry Lobbying Spikes Amid Focus on Drug Costs

April 21, 2016 -- The pharmaceutical industry is spending record sums in Washington, amid rising congressional and regulatory interest in high drug prices. The Zika virus, opioid abuse, and annual spending bills also are keeping the lobbying business afloat.

The Pharmaceutical Research and Manufacturers of America (PhRMA) spent more than $5.9 million on its lobbying activities between January and March of this year—the most it spent in a single quarter since 2010, at the height of the frenzy over the federal health law. The Biotechnology Innovation Organization (BIO) dropped over $2.2 million on influencing Congress and the federal government in the first quarter, about $100,000 more than its usual spend in recent years.

Most of the country's major pharmaceutical companies also spent more on K Street this quarter, including Pfizer Inc.; AbbVie Inc.; Gilead Sciences Inc.; AstraZeneca PLC; Novartis International AG; and Merck & Co. Inc. Together, those companies spent more than $14.3 million in the first quarter, up from $10.9 in the same period in 2015.

GlaxoSmithKline PLC and Amgen Inc. dropped their spending, as did a handful of smaller companies.

These sums underscore the industry's increasing concerns about regulatory oversight. Presidential candidates in both parties have railed against the costs of prescription drugs, and the Centers for Medicare and Medicaid Services issued a controversial proposal earlier this year that would dramatically change the way Medicare pays for drugs provided through outpatient care such as physicians' offices. And when companies aren't defending against regulatory changes, they are pushing for major initiatives like the 21st Century Cures package.

Representatives for PhRMA and BIO didn't immediately respond to inquiries about their spending.

The pharmaceutical industry's numbers aren't reflected elsewhere in health. America's Health Insurance Plans, the major lobbying arm of the insurance industry, spent $2.2 million, more than $600,000 less this quarter than it did in the same period last year.

Insurers such as Humana Inc.; UnitedHealth Group Inc.; Anthem Inc.; and Cigna Corp. also spent less—even as the industry worked this quarter to ensure high payment rates for Medicare Advantage, a private Medicare option that has become profitable for many insurers. The Blue Cross Blue Shield Association and Aetna both spent more in the first quarter of this year than in the first quarter of 2015.

Provider spending trends were mixed. The American Hospital Association ramped up its spending, dropping about $5.1 million this quarter, up from $4.6 million in the same timeframe in 2015. Many physician groups—including the American Academy of Family Physicians, the American College of Cardiology and the American College of Emergency Physicians—increased their spending.

Those groups are fighting hard to influence CMS as it prepares to write new physician payment rules, after Congress last year permanently replaced the much-maligned formula that routinely called for annual cuts that lawmakers often revoked.

Still, the American Medical Association actually spent less this quarter than it did during the same period last year. And many hospital organizations also reduced their spending —despite the higher spending by the AHA, the largest group.

Abortion rights groups also ramped up their K Street investment in the last three months. Planned Parenthood Federation of America and its separate action fund together spent $315,000, more than double the $142,000 they spent in the same period in 2015. The Center for Reproductive Rights also more than doubled its spending. Among abortion opponents like the Susan B. Anthony List and the National Right to Life Committee, spending stayed on par or even dropped.

One health care provider, 21st Century Oncology, more than tripled its spending, dropping $1.6 million, up from $480,000 in the first quarter last year. That company settled a federal investigation of its Medicare and Tricare billing practices in December, and is currently investigating a data breach.

Getting Down to Business

The U.S. Chamber of Commerce boosted its spending in the first quarter of this year, according to disclosures filed with Congress this week. But other prominent players, such as the Business Roundtable, Squire Patton Boggs, and Comcast Corp., are seeing business slow.

More players are expected to follow suit, with both chambers due to be in session for only about 13 weeks before the elections.

"In presidential election years, you're going to get a slowdown in the second and third quarters, which will be more enhanced this year with the conventions being moved up and Congress being done here in the next six weeks with serious legislation," said Rich Gold, who heads the lobbying practice at law firm Holland & Knight.

The U.S. Chamber, the biggest spender on K Street, reported $15.8 million in lobbying, up from $14.7 million in the fourth quarter of 2015 and $13.8 million in the first quarter of last year. The sum doesn't include chamber affiliates such as a legal reform institute that reported nearly $7 million for this year's first quarter.

The Business Roundtable, meanwhile, scaled back its lobbying efforts to $3.3 million for the first quarter from $4.8 million in the last quarter of 2015 and $4.5 million in the first quarter of last year. It disclosed lobbying on budget and tax measures as well as the aviation bill.

Interest in Zika

The American Medical Association spent $6.6 million in the first three months of this year, a boost over its $4.5 million from last year's fourth quarter but slightly less than its first quarter 2015 tab of $6.7 million. The prominent doctors' trade group reported lobbying on policy responses to Zika, a mosquito-borne virus that public health officials say could reach 30 U.S. states this year.

In total, 70 lobbying entities—such as the American Academy of Pediatrics, the March of Dimes, and the National Pest Management Association—reported work on Zika in the first quarter. It marked the first reporting period that the virus, which has been connected to birth defects, has appeared on lobbying forms.

In the tech industry, Facebook got more social on K Street.

The company reported $2.8 million on federal lobbying in January through March of this year, up from $2.1 million in the fourth quarter of last year and from the first quarter of last year, when it reported $2.4 million. The social media company is involved in cybersecurity, government surveillance, immigration, and tax matters.

Keeping Busy

Brownstein Hyatt Farber Schreck reported it was paid $6.8 million in the first quarter, a drop from last year's fourth quarter tally of $7.4 million but a boost over the first quarter of 2015, when it reported $5.9 million.

"We're well positioned to be helpful to our clients in a number of areas where there's still congressional activity," said Republican Marc Lampkin, managing partner of the firm's Washington office. "People still have an interest in the appropriations process."

Brownstein Hyatt signed clients including the Credit Union National Association, the National Restaurant Association and Safe Rx, a Colorado company that is marketing secure prescription drug containers as a way to curb illegal sales of opioids, Lampkin said.

The task forces that House Speaker Paul D. Ryan, R-Wis., established on a tax overhaul and other issues have generated client interest, he added.

"What the speaker is trying to do is not just fill the gap of the extended presidential race but keep congressional Republicans at the forefront of policy development," Lampkin said.

At Holland & Knight, executives expect a busy fourth quarter as clients prepare for the next Congress and the new president, Gold said. His shop reported a decline in federal lobbying revenue from $5 million in the last quarter of 2015 to $4.8 million in the first three months of 2016. Holland & Knight also reported $4.8 million in the first quarter of 2015.

The reportable lobbying revenue at another top lobbying firm, Squire Patton Boggs, dipped to $4.6 million from $6.7 million during the same period last year and from $5.5 million in last year's fourth quarter.

Dave Schnittger, a senior policy adviser at the firm, said much of the shop's revenue growth is taking place outside the scope of the federal disclosures, which he said "only captures a fraction of the policy work the firm does."

He noted the firm has added new lobbyists and policy wonks, especially in its health care team.

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