Emily Kopp

Pharmaceutical companies gave at least $116 million to patient advocacy groups in a single year, reveals a new database logging 12,000 donations from large publicly traded drugmakers to such organizations.

Even as these patient groups grow in number and political influence, their funding and their relationships to drugmakers are little understood. Unlike payments to doctors and lobbying expenses, companies do not have to report payments to the groups.

The database, called “Pre$cription for Power,” shows that donations to patient advocacy groups tallied for 2015 – the most recent full year in which documents required by the Internal Revenue Service were available – dwarfed the total amount the companies spent on federal lobbying. The 14 companies that contributed $116 million to patient advocacy groups reported only about $63 million in lobbying activities that same year.

Though their primary missions are to focus attention on the needs of patients with a particular disease – such as arthritis, heart disease or various cancers – some groups effectively supplement the work lobbyists perform, providing patients to testify on Capitol Hill and organizing letter-writing and social media campaigns that are beneficial to pharmaceutical companies.

Six drugmakers, the data show, contributed a million dollars or more to individual groups that represent patients who rely on their drugs. The database identifies more than 1,200 patient groups. Of those, 594 accepted money from the drugmakers in the database.

The financial ties are troubling if they cause even one patient group to act in a way that’s “not fully representing the interest of its constituents,” said Matthew McCoy, a medical ethics professor at the University of Pennsylvania, Philadelphia, who coauthored a 2017 study about patient advocacy groups’ influence and transparency.

Notably, such groups have been silent or slow to complain about high or escalating prices, a prime concern of patients.

“When so many patient organizations are being influenced in this way, it can shift our whole approach to health policy, taking away from the interests of patients and towards the interests of industry,” Mr. McCoy said. “That’s not just a problem for the patients and caregivers that particular patient organizations serve; that’s a problem for everyone.”

Bristol-Myers Squibb provides a stark example of how patient groups are valued. In 2015, it spent more than $20.5 million on patient groups, compared with $2.9 million on federal lobbying and less than $1 million on major trade associations, according to public records and company disclosures. The company said its decisions regarding lobbying and contributions to patient groups are “unrelated.”

“Bristol-Myers Squibb is focused on supporting a health care environment that rewards innovation and ensures access to medicines for patients,” said spokeswoman Laura Hortas. “The company supports patient organizations with this shared objective.”

The first-of-its-kind database, compiled by Kaiser Health News, tallies the money from Big Pharma to patient groups. KHN examined the 20 pharmaceutical firms included in the S&P 500, 14 of which were transparent – in varying degrees – about giving money to patient groups. Pre$cription for Power is based on information contained in charitable giving reports from company websites and federal 990 regulatory filings.

It spotlights donations pharma companies made to patient groups large and small. The recipients include well-known disease groups, like the American Diabetes Association, with revenues of hundreds of millions of dollars; high-profile foundations like Susan G. Komen, a patient group focused on breast cancer; and smaller, lesser-known groups, like the Caring Ambassadors Program, which focuses on lung cancer and hepatitis C.

The data show that 15 patient groups – with annual revenues as large as $3.6 million – relied on the pharmaceutical companies for at least 20% of their revenue, and some relied on them for more than half of their revenue. The database explores only a slice of the pharmaceutical industry’s giving overall and will be expanded with more companies and groups over time.

“It’s clear that more transparency in this space is vitally important,” said Sen. Claire McCaskill (D-Mo.), who has been investigating the links between patient advocates and opioid manufacturers and is considering legislation to track funding. “This database is one step forward in that effort, but we also need Congress to act.”

What drives the money flow

The financial ties between drugmakers and the organizations that represent those who use or prescribe their blockbuster medicines have been of growing concern as drug prices escalate. The Senate investigated conflicts of interest in the run-up to the passage of the 2010 Physician Payments Sunshine Act – a law that required payments to physicians from makers of drugs and devices to be registered on a public website – but patient groups were not addressed in the bill.

Some of the patient groups with ties to trade groups echo industry talking points in media campaigns and letters to federal agencies, and do little else. And patients, supported by pharma, are dispatched to state capitals and Washington to support research funding. Some groups send patients updates on the newest drugs and industry products.

“It’s through groups like this that patients often learn about illnesses and treatments,” said Rick Claypool, a research director for Public Citizen, a consumer advocacy group that says it does not accept pharmaceutical funding.

For the patient group Caring Ambassadors Program, industry funds are needed to make up for a lack of public funding, said the group’s executive director, Lorren Sandt. According to IRS filings and published company reports, in 2015, the group received $413,000, the bulk of which came from one company, AbbVie, which makes a hepatitis C treatment and has been testing a new lung cancer drug, Rova-T, not yet approved. She said the money had no influence on the Caring Ambassadors Program’s priorities.

“There aren’t a lot of large pockets of funding outside of the pharmaceutical money,” Sandt said. “We take it where we can find it.”

Other patient groups such as the National Women’s Health Network, based in Washington, make sacrifices to avoid pharmaceutical funding. That includes operating with a small staff in a “modest” office building with few windows and outdated computers, according to executive director Cindy Pearson. “You can see the effect of our approach to funding as soon as you walk [in] the door.”

Pearson said it’s hard for patient groups not to be influenced by the funder, even if they proclaim independence. Patient groups “build relationships with their funders and feel in sync and have sympathy” for them. “It’s human nature. It’s not evil or weak, but it’s wrong.”

Charity as marketing

Patients newly diagnosed with a disease often turn to patient advocacy groups for advice, but the money flow to such groups may distort patients’ knowledge and public debate over treatment options, said Dr. Adriane Fugh-Berman, the director of PharmedOut, a Georgetown University Medical Center program in Washington that is critical of some pharmaceutical marketing practices.

“[The money flow limits] their advocacy agenda to competing branded products when the best therapy might be generics, over-the-counter drugs or diet and exercise,” she said.

AbbVie – whose specialty drug Humira made up 65% of the company’s net revenue in 2017 and is used to treat patients with autoimmune diseases, including Crohn’s disease and certain kinds of arthritis – gave $2.7 million to the Crohn’s & Colitis Foundation and $1.6 million to the Arthritis Foundation, according to the company’s public disclosures included in the database. The list price for a month’s supply of Humira, a biologic drug, is $4,872, according to Express Scripts, a pharmacy benefits manager.

Even though Humira will face competition from near-copycat drugs called biosimilars, it is expected to remain the highest-grossing drug in the United States through 2022, according to drug industry analysts at EvaluatePharma.

The Arthritis and Crohn’s foundations have been largely silent on the cost of Humira and vocal on safety concerns about biosimilars. The Arthritis Foundation has championed state laws that could add extra steps for consumers to receive biosimilars at the pharmacy counter, potentially keeping more patients on the brand-name drug. Experts say those laws could help protect Humira’s market share from generic competitors.

A coalition of patient groups, Patients for Biologics Safety & Access, opposes the automatic substitution of a cheaper biosimilar when doctors prescribe a biologic. In 2015, members of that coalition, including the Crohn’s & Colitis Foundation, the Arthritis Foundation and the Lupus Foundation of America, accepted about $9.1 million from pharmaceutical companies in the database, according to public disclosures. They include AbbVie and Johnson & Johnson, makers of blockbuster biologics.

The Arthritis Foundation did not deny receiving the money but said the foundation represents patients, not sponsors. It is “optimistic” about biosimilars’ ability to help patients and save them money, said Anna Hyde, vice president of advocacy and access. “The Foundation supports the Food and Drug Administration’s scientific standards in evaluating the safety and efficacy of biosimilars, and we support policies that encourage innovation and foster a competitive marketplace.”

The Crohn’s & Colitis Foundation maintains “more than an arm’s-length distance” from its donors in the pharmaceutical industry, who have no say over the foundation’s strategic objectives, said president and CEO Michael Osso.

He added that the foundation’s position on biosimilars is “evolving.”

Lupus Foundation CEO Sandra Raymond said she could not explain how her group, also based in Washington, was involved in the coalition. She confirmed the Lupus Foundation received $444,000 from Pfizer in 2015 but said the money was not linked to any relationship with Patients for Biologics Safety & Access.

“I never went to a meeting,” Raymond said. “A former employee signed us up for a whole host of coalitions. I think we put our name on something or someone did.”

She said the Lupus Foundation was no longer a member of the coalition. Days after Kaiser Health News reached out to the coalition, its website was updated, excluding the Lupus Foundation.

For its part, AbbVie – which overall donated $24.7 million to patient groups in 2015, according to the new database – stipulates that its grants to nonprofits are “non-promotional” and provide no direct benefit to its business, according to a company statement. The company gives to patient groups because they serve as an “important, unbiased and independent resource for patients and caregivers.”

Insulin and influence

The American Diabetes Association said in an email to KHN that it received $18.3 million in pharmaceutical funding in 2017, accounting for 12.3% of its revenue; that was down from $26.7 million in 2015. The money flowed in as insulin makers continued to hike prices in those years – up to four times per product – leading to hardships for patients.

The only “Big Three” insulin maker in the database, Eli Lilly, gave $2.9 million to the American Diabetes Association in 2015, according to disclosures from the company and its foundation. Sanofi and Novo Nordisk are the other two major insulin makers, but neither was in the S&P 500 and therefore not included in the database. Over the past 20 years, Eli Lilly has repeatedly raised prices on its best-selling insulins, Humalog and Humulin, even though the medicines have been around for decades. The drugmaker faced protests – by people demanding to know the cost of manufacturing a vial of insulin – at its Indianapolis headquarters last fall.

The ADA launched a campaign decrying “skyrocketing” insulin in late 2016 but did not call out any drugmaker in its literature. When legislators in Nevada passed a bill last year requiring insulin makers to disclose their profits to the public, the ADA did not take a public stance.

The American Diabetes Association said it doesn’t confront individual companies because it is seeking action from “all entities in the supply chain” – manufacturers, wholesalers, pharmacy benefit managers and insurers.

“As a public health organization, the ADA’s commitment and focus is on the needs of the more than 30 million people with diabetes,” said Dr. William Cefalu, its chief scientific and medical officer. “The ADA requires support from a diverse set of partners to achieve this objective.”

Eli Lilly said it contributes money to the American Diabetes Association because the two share a “common goal” of helping diabetes patients.

“We provide funding for a wide variety of educational programs and opportunities at ADA, and they design and implement those programs in ways that are aligned with their goals,” Eli Lilly said in a statement. “We’re proud to support the ADA on important work that helps millions of people living with diabetes.”

Most patient groups say that funders have little or no influence in shaping their programs and policies, but their agreements are private.

They weren’t always backed by Pharma

Into the ’80s and early ’90s, patient lobbying was generally limited and self-funded with only one or two affluent patients from an organization traveling to Washington on a given day, said Diana Zuckerman, PhD, president of the nonprofit National Center for Health Research.

But the power of patient-lobbyists became apparent after a successful campaign by AIDS patients led to government action and a national push to find drugs to treat the then-terminal disease. Dr. Zuckerman said she will never forget when two women visited her office and asked how breast cancer patients could be as effective as the AIDS patients.

“At the time, there were no breast cancer patients advocating for money or anything else. It’s hard to believe,” she said. “I still remember that conversation, because it was really a turning point.”

Soon after, breast cancer patients started visiting the Hill more frequently. Patients with other diseases followed. Over time, patients’ voices became a potent force, often with industry support.

Even some wealthy, high-profile organizations take industry money: For example, $459,000 of Susan G. Komen’s $118 million in 2015 revenue came from drugmakers in the database, according to public disclosures. Asked about the pharma money, the foundation said it has institutional processes in place to ensure that “no corporate partner – pharma or otherwise – decides our mission priorities,” including a scientific advisory board – free of sponsor influence – that reviews its research program.

Today, patient advocacy groups flush with more industry dollars fly patients in for testimony and training about how to lobby for their drugs.

Some years ago, as the groups increased in number, Dr. Zuckerman said, she started getting email invitations from advocacy groups to attend so-called lobbying days explicitly sponsored by the pharmaceutical industry. The hosts often promised training and usually some kind of keynote speaker at a luncheon in Washington – plus a potential scholarship to cover travel. Now, lobbying days involving dozens of patients from a single group are part of the landscape.

Dan Boston, president of lobbying firm Health Policy Source, said, “It would be naive to think these people on a Tuesday afternoon just happen to turn up in XYZ places,” adding that the money isn’t necessarily a bad thing. Money tends to flow toward citizen groups that already have the same priorities as their funders, he said.

Marching into the future

Patient groups have been successful at campaigning for drug approvals, at times sparking controversy.

When scientists within the FDA advised against the approval of Exondys 51, a drug to treat Duchenne muscular dystrophy, parents of children with the rare genetic disorder and patients rallied to lobby for it in Washington. They were seen as pivotal to the FDA’s 2016 decision to grant approval for the drug, made by Sarepta Therapeutics. The decision was controversial in part because the FDA noted that clinical benefits of the drug – aimed at a subset of people with Duchenne muscular dystrophy – were not yet established.

Sarepta Therapeutics, which is not featured in the database, has taken measures to support its patient base. In March, it announced an annual scholarship program – 10 grants of up to $10,000 each for students with Duchenne muscular dystrophy to attend university or trade schools. Sarepta is also among the funders of Parent Project Muscular Dystrophy, a patient advocacy group at the forefront of the push for Exondys 51’s approval.

The Pre$cription for Power database will grow to include new disclosures. Not all drugmakers are willing to disclose their company giving. Eleven of the 20 companies examined – Allergan, Baxter International, Biogen, Celgene, Endo International, Gilead Sciences, Mallinckrodt, Mylan, Perrigo Co., Regeneron Pharmaceuticals, and Vertex Pharmaceuticals – declined to disclose their company giving or did not respond to repeated calls.

Paul Thacker, a former investigator for Sen. Chuck Grassley (R-Iowa) who helped draft the Physician Payments Sunshine Act in 2010, said there is reason to question the flow of money to patient advocacy groups. The pharmaceutical industry has fostered relationships in every link of the drug supply chain, including payments to researchers, doctors and professional societies.

“There’s so much money out there, and they’ve created all of these allies, so nobody is clamoring for change,” Mr. Thacker said.

Since the Physician Payments Sunshine Act began requiring the industry to report its payments to physicians, the industry is more reluctant to co-opt them, so “pharma has to find other megaphones,” PharmedOut’s Dr. Fugh-Berman said.

And, in times of public outrage over high drug prices and soaring insurance costs, patients are particularly sympathetic messengers, she said.

“Sick consumers make for good press,” Dr. Fugh-Berman said. “They make for good testimony before Congress. They can be very powerful spokespeople for pharmaceutical companies.”

KHN’s coverage of prescription drug development, costs and pricing is supported by the Laura and John Arnold Foundation. Kaiser Health News is a nonprofit news service covering health issues. It is an editorially independent program of the Kaiser Family Foundation that is not affiliated with Kaiser Permanente.

Pharmaceutical companies gave at least $116 million to patient advocacy groups in a single year, reveals a new database logging 12,000 donations from large publicly traded drugmakers to such organizations.

Even as these patient groups grow in number and political influence, their funding and their relationships to drugmakers are little understood. Unlike payments to doctors and lobbying expenses, companies do not have to report payments to the groups.

The database, called “Pre$cription for Power,” shows that donations to patient advocacy groups tallied for 2015 – the most recent full year in which documents required by the Internal Revenue Service were available – dwarfed the total amount the companies spent on federal lobbying. The 14 companies that contributed $116 million to patient advocacy groups reported only about $63 million in lobbying activities that same year.

Though their primary missions are to focus attention on the needs of patients with a particular disease – such as arthritis, heart disease or various cancers – some groups effectively supplement the work lobbyists perform, providing patients to testify on Capitol Hill and organizing letter-writing and social media campaigns that are beneficial to pharmaceutical companies.

Six drugmakers, the data show, contributed a million dollars or more to individual groups that represent patients who rely on their drugs. The database identifies more than 1,200 patient groups. Of those, 594 accepted money from the drugmakers in the database.

The financial ties are troubling if they cause even one patient group to act in a way that’s “not fully representing the interest of its constituents,” said Matthew McCoy, a medical ethics professor at the University of Pennsylvania, Philadelphia, who coauthored a 2017 study about patient advocacy groups’ influence and transparency.

Notably, such groups have been silent or slow to complain about high or escalating prices, a prime concern of patients.

“When so many patient organizations are being influenced in this way, it can shift our whole approach to health policy, taking away from the interests of patients and towards the interests of industry,” Mr. McCoy said. “That’s not just a problem for the patients and caregivers that particular patient organizations serve; that’s a problem for everyone.”

Bristol-Myers Squibb provides a stark example of how patient groups are valued. In 2015, it spent more than $20.5 million on patient groups, compared with $2.9 million on federal lobbying and less than $1 million on major trade associations, according to public records and company disclosures. The company said its decisions regarding lobbying and contributions to patient groups are “unrelated.”

“Bristol-Myers Squibb is focused on supporting a health care environment that rewards innovation and ensures access to medicines for patients,” said spokeswoman Laura Hortas. “The company supports patient organizations with this shared objective.”

The first-of-its-kind database, compiled by Kaiser Health News, tallies the money from Big Pharma to patient groups. KHN examined the 20 pharmaceutical firms included in the S&P 500, 14 of which were transparent – in varying degrees – about giving money to patient groups. Pre$cription for Power is based on information contained in charitable giving reports from company websites and federal 990 regulatory filings.

It spotlights donations pharma companies made to patient groups large and small. The recipients include well-known disease groups, like the American Diabetes Association, with revenues of hundreds of millions of dollars; high-profile foundations like Susan G. Komen, a patient group focused on breast cancer; and smaller, lesser-known groups, like the Caring Ambassadors Program, which focuses on lung cancer and hepatitis C.

The data show that 15 patient groups – with annual revenues as large as $3.6 million – relied on the pharmaceutical companies for at least 20% of their revenue, and some relied on them for more than half of their revenue. The database explores only a slice of the pharmaceutical industry’s giving overall and will be expanded with more companies and groups over time.

“It’s clear that more transparency in this space is vitally important,” said Sen. Claire McCaskill (D-Mo.), who has been investigating the links between patient advocates and opioid manufacturers and is considering legislation to track funding. “This database is one step forward in that effort, but we also need Congress to act.”

What drives the money flow

The financial ties between drugmakers and the organizations that represent those who use or prescribe their blockbuster medicines have been of growing concern as drug prices escalate. The Senate investigated conflicts of interest in the run-up to the passage of the 2010 Physician Payments Sunshine Act – a law that required payments to physicians from makers of drugs and devices to be registered on a public website – but patient groups were not addressed in the bill.

Some of the patient groups with ties to trade groups echo industry talking points in media campaigns and letters to federal agencies, and do little else. And patients, supported by pharma, are dispatched to state capitals and Washington to support research funding. Some groups send patients updates on the newest drugs and industry products.

“It’s through groups like this that patients often learn about illnesses and treatments,” said Rick Claypool, a research director for Public Citizen, a consumer advocacy group that says it does not accept pharmaceutical funding.

For the patient group Caring Ambassadors Program, industry funds are needed to make up for a lack of public funding, said the group’s executive director, Lorren Sandt. According to IRS filings and published company reports, in 2015, the group received $413,000, the bulk of which came from one company, AbbVie, which makes a hepatitis C treatment and has been testing a new lung cancer drug, Rova-T, not yet approved. She said the money had no influence on the Caring Ambassadors Program’s priorities.

“There aren’t a lot of large pockets of funding outside of the pharmaceutical money,” Sandt said. “We take it where we can find it.”

Other patient groups such as the National Women’s Health Network, based in Washington, make sacrifices to avoid pharmaceutical funding. That includes operating with a small staff in a “modest” office building with few windows and outdated computers, according to executive director Cindy Pearson. “You can see the effect of our approach to funding as soon as you walk [in] the door.”

Pearson said it’s hard for patient groups not to be influenced by the funder, even if they proclaim independence. Patient groups “build relationships with their funders and feel in sync and have sympathy” for them. “It’s human nature. It’s not evil or weak, but it’s wrong.”

Charity as marketing

Patients newly diagnosed with a disease often turn to patient advocacy groups for advice, but the money flow to such groups may distort patients’ knowledge and public debate over treatment options, said Dr. Adriane Fugh-Berman, the director of PharmedOut, a Georgetown University Medical Center program in Washington that is critical of some pharmaceutical marketing practices.

“[The money flow limits] their advocacy agenda to competing branded products when the best therapy might be generics, over-the-counter drugs or diet and exercise,” she said.

AbbVie – whose specialty drug Humira made up 65% of the company’s net revenue in 2017 and is used to treat patients with autoimmune diseases, including Crohn’s disease and certain kinds of arthritis – gave $2.7 million to the Crohn’s & Colitis Foundation and $1.6 million to the Arthritis Foundation, according to the company’s public disclosures included in the database. The list price for a month’s supply of Humira, a biologic drug, is $4,872, according to Express Scripts, a pharmacy benefits manager.

Even though Humira will face competition from near-copycat drugs called biosimilars, it is expected to remain the highest-grossing drug in the United States through 2022, according to drug industry analysts at EvaluatePharma.

The Arthritis and Crohn’s foundations have been largely silent on the cost of Humira and vocal on safety concerns about biosimilars. The Arthritis Foundation has championed state laws that could add extra steps for consumers to receive biosimilars at the pharmacy counter, potentially keeping more patients on the brand-name drug. Experts say those laws could help protect Humira’s market share from generic competitors.

A coalition of patient groups, Patients for Biologics Safety & Access, opposes the automatic substitution of a cheaper biosimilar when doctors prescribe a biologic. In 2015, members of that coalition, including the Crohn’s & Colitis Foundation, the Arthritis Foundation and the Lupus Foundation of America, accepted about $9.1 million from pharmaceutical companies in the database, according to public disclosures. They include AbbVie and Johnson & Johnson, makers of blockbuster biologics.

The Arthritis Foundation did not deny receiving the money but said the foundation represents patients, not sponsors. It is “optimistic” about biosimilars’ ability to help patients and save them money, said Anna Hyde, vice president of advocacy and access. “The Foundation supports the Food and Drug Administration’s scientific standards in evaluating the safety and efficacy of biosimilars, and we support policies that encourage innovation and foster a competitive marketplace.”

The Crohn’s & Colitis Foundation maintains “more than an arm’s-length distance” from its donors in the pharmaceutical industry, who have no say over the foundation’s strategic objectives, said president and CEO Michael Osso.

He added that the foundation’s position on biosimilars is “evolving.”

Lupus Foundation CEO Sandra Raymond said she could not explain how her group, also based in Washington, was involved in the coalition. She confirmed the Lupus Foundation received $444,000 from Pfizer in 2015 but said the money was not linked to any relationship with Patients for Biologics Safety & Access.

“I never went to a meeting,” Raymond said. “A former employee signed us up for a whole host of coalitions. I think we put our name on something or someone did.”

She said the Lupus Foundation was no longer a member of the coalition. Days after Kaiser Health News reached out to the coalition, its website was updated, excluding the Lupus Foundation.

For its part, AbbVie – which overall donated $24.7 million to patient groups in 2015, according to the new database – stipulates that its grants to nonprofits are “non-promotional” and provide no direct benefit to its business, according to a company statement. The company gives to patient groups because they serve as an “important, unbiased and independent resource for patients and caregivers.”

Insulin and influence

The American Diabetes Association said in an email to KHN that it received $18.3 million in pharmaceutical funding in 2017, accounting for 12.3% of its revenue; that was down from $26.7 million in 2015. The money flowed in as insulin makers continued to hike prices in those years – up to four times per product – leading to hardships for patients.

The only “Big Three” insulin maker in the database, Eli Lilly, gave $2.9 million to the American Diabetes Association in 2015, according to disclosures from the company and its foundation. Sanofi and Novo Nordisk are the other two major insulin makers, but neither was in the S&P 500 and therefore not included in the database. Over the past 20 years, Eli Lilly has repeatedly raised prices on its best-selling insulins, Humalog and Humulin, even though the medicines have been around for decades. The drugmaker faced protests – by people demanding to know the cost of manufacturing a vial of insulin – at its Indianapolis headquarters last fall.

The ADA launched a campaign decrying “skyrocketing” insulin in late 2016 but did not call out any drugmaker in its literature. When legislators in Nevada passed a bill last year requiring insulin makers to disclose their profits to the public, the ADA did not take a public stance.

The American Diabetes Association said it doesn’t confront individual companies because it is seeking action from “all entities in the supply chain” – manufacturers, wholesalers, pharmacy benefit managers and insurers.

“As a public health organization, the ADA’s commitment and focus is on the needs of the more than 30 million people with diabetes,” said Dr. William Cefalu, its chief scientific and medical officer. “The ADA requires support from a diverse set of partners to achieve this objective.”

Eli Lilly said it contributes money to the American Diabetes Association because the two share a “common goal” of helping diabetes patients.

“We provide funding for a wide variety of educational programs and opportunities at ADA, and they design and implement those programs in ways that are aligned with their goals,” Eli Lilly said in a statement. “We’re proud to support the ADA on important work that helps millions of people living with diabetes.”

Most patient groups say that funders have little or no influence in shaping their programs and policies, but their agreements are private.

They weren’t always backed by Pharma

Into the ’80s and early ’90s, patient lobbying was generally limited and self-funded with only one or two affluent patients from an organization traveling to Washington on a given day, said Diana Zuckerman, PhD, president of the nonprofit National Center for Health Research.

But the power of patient-lobbyists became apparent after a successful campaign by AIDS patients led to government action and a national push to find drugs to treat the then-terminal disease. Dr. Zuckerman said she will never forget when two women visited her office and asked how breast cancer patients could be as effective as the AIDS patients.

“At the time, there were no breast cancer patients advocating for money or anything else. It’s hard to believe,” she said. “I still remember that conversation, because it was really a turning point.”

Soon after, breast cancer patients started visiting the Hill more frequently. Patients with other diseases followed. Over time, patients’ voices became a potent force, often with industry support.

Even some wealthy, high-profile organizations take industry money: For example, $459,000 of Susan G. Komen’s $118 million in 2015 revenue came from drugmakers in the database, according to public disclosures. Asked about the pharma money, the foundation said it has institutional processes in place to ensure that “no corporate partner – pharma or otherwise – decides our mission priorities,” including a scientific advisory board – free of sponsor influence – that reviews its research program.

Today, patient advocacy groups flush with more industry dollars fly patients in for testimony and training about how to lobby for their drugs.

Some years ago, as the groups increased in number, Dr. Zuckerman said, she started getting email invitations from advocacy groups to attend so-called lobbying days explicitly sponsored by the pharmaceutical industry. The hosts often promised training and usually some kind of keynote speaker at a luncheon in Washington – plus a potential scholarship to cover travel. Now, lobbying days involving dozens of patients from a single group are part of the landscape.

Dan Boston, president of lobbying firm Health Policy Source, said, “It would be naive to think these people on a Tuesday afternoon just happen to turn up in XYZ places,” adding that the money isn’t necessarily a bad thing. Money tends to flow toward citizen groups that already have the same priorities as their funders, he said.

Marching into the future

Patient groups have been successful at campaigning for drug approvals, at times sparking controversy.

When scientists within the FDA advised against the approval of Exondys 51, a drug to treat Duchenne muscular dystrophy, parents of children with the rare genetic disorder and patients rallied to lobby for it in Washington. They were seen as pivotal to the FDA’s 2016 decision to grant approval for the drug, made by Sarepta Therapeutics. The decision was controversial in part because the FDA noted that clinical benefits of the drug – aimed at a subset of people with Duchenne muscular dystrophy – were not yet established.

Sarepta Therapeutics, which is not featured in the database, has taken measures to support its patient base. In March, it announced an annual scholarship program – 10 grants of up to $10,000 each for students with Duchenne muscular dystrophy to attend university or trade schools. Sarepta is also among the funders of Parent Project Muscular Dystrophy, a patient advocacy group at the forefront of the push for Exondys 51’s approval.

The Pre$cription for Power database will grow to include new disclosures. Not all drugmakers are willing to disclose their company giving. Eleven of the 20 companies examined – Allergan, Baxter International, Biogen, Celgene, Endo International, Gilead Sciences, Mallinckrodt, Mylan, Perrigo Co., Regeneron Pharmaceuticals, and Vertex Pharmaceuticals – declined to disclose their company giving or did not respond to repeated calls.

Paul Thacker, a former investigator for Sen. Chuck Grassley (R-Iowa) who helped draft the Physician Payments Sunshine Act in 2010, said there is reason to question the flow of money to patient advocacy groups. The pharmaceutical industry has fostered relationships in every link of the drug supply chain, including payments to researchers, doctors and professional societies.

“There’s so much money out there, and they’ve created all of these allies, so nobody is clamoring for change,” Mr. Thacker said.

Since the Physician Payments Sunshine Act began requiring the industry to report its payments to physicians, the industry is more reluctant to co-opt them, so “pharma has to find other megaphones,” PharmedOut’s Dr. Fugh-Berman said.

And, in times of public outrage over high drug prices and soaring insurance costs, patients are particularly sympathetic messengers, she said.

“Sick consumers make for good press,” Dr. Fugh-Berman said. “They make for good testimony before Congress. They can be very powerful spokespeople for pharmaceutical companies.”

KHN’s coverage of prescription drug development, costs and pricing is supported by the Laura and John Arnold Foundation. Kaiser Health News is a nonprofit news service covering health issues. It is an editorially independent program of the Kaiser Family Foundation that is not affiliated with Kaiser Permanente.

Pharmaceutical companies gave at least $116 million to patient advocacy groups in a single year, reveals a new database logging 12,000 donations from large publicly traded drugmakers to such organizations.

Even as these patient groups grow in number and political influence, their funding and their relationships to drugmakers are little understood. Unlike payments to doctors and lobbying expenses, companies do not have to report payments to the groups.

The database, called “Pre$cription for Power,” shows that donations to patient advocacy groups tallied for 2015 – the most recent full year in which documents required by the Internal Revenue Service were available – dwarfed the total amount the companies spent on federal lobbying. The 14 companies that contributed $116 million to patient advocacy groups reported only about $63 million in lobbying activities that same year.

Though their primary missions are to focus attention on the needs of patients with a particular disease – such as arthritis, heart disease or various cancers – some groups effectively supplement the work lobbyists perform, providing patients to testify on Capitol Hill and organizing letter-writing and social media campaigns that are beneficial to pharmaceutical companies.

Six drugmakers, the data show, contributed a million dollars or more to individual groups that represent patients who rely on their drugs. The database identifies more than 1,200 patient groups. Of those, 594 accepted money from the drugmakers in the database.

The financial ties are troubling if they cause even one patient group to act in a way that’s “not fully representing the interest of its constituents,” said Matthew McCoy, a medical ethics professor at the University of Pennsylvania, Philadelphia, who coauthored a 2017 study about patient advocacy groups’ influence and transparency.

Notably, such groups have been silent or slow to complain about high or escalating prices, a prime concern of patients.

“When so many patient organizations are being influenced in this way, it can shift our whole approach to health policy, taking away from the interests of patients and towards the interests of industry,” Mr. McCoy said. “That’s not just a problem for the patients and caregivers that particular patient organizations serve; that’s a problem for everyone.”

Bristol-Myers Squibb provides a stark example of how patient groups are valued. In 2015, it spent more than $20.5 million on patient groups, compared with $2.9 million on federal lobbying and less than $1 million on major trade associations, according to public records and company disclosures. The company said its decisions regarding lobbying and contributions to patient groups are “unrelated.”

“Bristol-Myers Squibb is focused on supporting a health care environment that rewards innovation and ensures access to medicines for patients,” said spokeswoman Laura Hortas. “The company supports patient organizations with this shared objective.”

The first-of-its-kind database, compiled by Kaiser Health News, tallies the money from Big Pharma to patient groups. KHN examined the 20 pharmaceutical firms included in the S&P 500, 14 of which were transparent – in varying degrees – about giving money to patient groups. Pre$cription for Power is based on information contained in charitable giving reports from company websites and federal 990 regulatory filings.

It spotlights donations pharma companies made to patient groups large and small. The recipients include well-known disease groups, like the American Diabetes Association, with revenues of hundreds of millions of dollars; high-profile foundations like Susan G. Komen, a patient group focused on breast cancer; and smaller, lesser-known groups, like the Caring Ambassadors Program, which focuses on lung cancer and hepatitis C.

The data show that 15 patient groups – with annual revenues as large as $3.6 million – relied on the pharmaceutical companies for at least 20% of their revenue, and some relied on them for more than half of their revenue. The database explores only a slice of the pharmaceutical industry’s giving overall and will be expanded with more companies and groups over time.

“It’s clear that more transparency in this space is vitally important,” said Sen. Claire McCaskill (D-Mo.), who has been investigating the links between patient advocates and opioid manufacturers and is considering legislation to track funding. “This database is one step forward in that effort, but we also need Congress to act.”

What drives the money flow

The financial ties between drugmakers and the organizations that represent those who use or prescribe their blockbuster medicines have been of growing concern as drug prices escalate. The Senate investigated conflicts of interest in the run-up to the passage of the 2010 Physician Payments Sunshine Act – a law that required payments to physicians from makers of drugs and devices to be registered on a public website – but patient groups were not addressed in the bill.

Some of the patient groups with ties to trade groups echo industry talking points in media campaigns and letters to federal agencies, and do little else. And patients, supported by pharma, are dispatched to state capitals and Washington to support research funding. Some groups send patients updates on the newest drugs and industry products.

“It’s through groups like this that patients often learn about illnesses and treatments,” said Rick Claypool, a research director for Public Citizen, a consumer advocacy group that says it does not accept pharmaceutical funding.

For the patient group Caring Ambassadors Program, industry funds are needed to make up for a lack of public funding, said the group’s executive director, Lorren Sandt. According to IRS filings and published company reports, in 2015, the group received $413,000, the bulk of which came from one company, AbbVie, which makes a hepatitis C treatment and has been testing a new lung cancer drug, Rova-T, not yet approved. She said the money had no influence on the Caring Ambassadors Program’s priorities.

“There aren’t a lot of large pockets of funding outside of the pharmaceutical money,” Sandt said. “We take it where we can find it.”

Other patient groups such as the National Women’s Health Network, based in Washington, make sacrifices to avoid pharmaceutical funding. That includes operating with a small staff in a “modest” office building with few windows and outdated computers, according to executive director Cindy Pearson. “You can see the effect of our approach to funding as soon as you walk [in] the door.”

Pearson said it’s hard for patient groups not to be influenced by the funder, even if they proclaim independence. Patient groups “build relationships with their funders and feel in sync and have sympathy” for them. “It’s human nature. It’s not evil or weak, but it’s wrong.”

Charity as marketing

Patients newly diagnosed with a disease often turn to patient advocacy groups for advice, but the money flow to such groups may distort patients’ knowledge and public debate over treatment options, said Dr. Adriane Fugh-Berman, the director of PharmedOut, a Georgetown University Medical Center program in Washington that is critical of some pharmaceutical marketing practices.

“[The money flow limits] their advocacy agenda to competing branded products when the best therapy might be generics, over-the-counter drugs or diet and exercise,” she said.

AbbVie – whose specialty drug Humira made up 65% of the company’s net revenue in 2017 and is used to treat patients with autoimmune diseases, including Crohn’s disease and certain kinds of arthritis – gave $2.7 million to the Crohn’s & Colitis Foundation and $1.6 million to the Arthritis Foundation, according to the company’s public disclosures included in the database. The list price for a month’s supply of Humira, a biologic drug, is $4,872, according to Express Scripts, a pharmacy benefits manager.

Even though Humira will face competition from near-copycat drugs called biosimilars, it is expected to remain the highest-grossing drug in the United States through 2022, according to drug industry analysts at EvaluatePharma.

The Arthritis and Crohn’s foundations have been largely silent on the cost of Humira and vocal on safety concerns about biosimilars. The Arthritis Foundation has championed state laws that could add extra steps for consumers to receive biosimilars at the pharmacy counter, potentially keeping more patients on the brand-name drug. Experts say those laws could help protect Humira’s market share from generic competitors.

A coalition of patient groups, Patients for Biologics Safety & Access, opposes the automatic substitution of a cheaper biosimilar when doctors prescribe a biologic. In 2015, members of that coalition, including the Crohn’s & Colitis Foundation, the Arthritis Foundation and the Lupus Foundation of America, accepted about $9.1 million from pharmaceutical companies in the database, according to public disclosures. They include AbbVie and Johnson & Johnson, makers of blockbuster biologics.

The Arthritis Foundation did not deny receiving the money but said the foundation represents patients, not sponsors. It is “optimistic” about biosimilars’ ability to help patients and save them money, said Anna Hyde, vice president of advocacy and access. “The Foundation supports the Food and Drug Administration’s scientific standards in evaluating the safety and efficacy of biosimilars, and we support policies that encourage innovation and foster a competitive marketplace.”

The Crohn’s & Colitis Foundation maintains “more than an arm’s-length distance” from its donors in the pharmaceutical industry, who have no say over the foundation’s strategic objectives, said president and CEO Michael Osso.

He added that the foundation’s position on biosimilars is “evolving.”

Lupus Foundation CEO Sandra Raymond said she could not explain how her group, also based in Washington, was involved in the coalition. She confirmed the Lupus Foundation received $444,000 from Pfizer in 2015 but said the money was not linked to any relationship with Patients for Biologics Safety & Access.

“I never went to a meeting,” Raymond said. “A former employee signed us up for a whole host of coalitions. I think we put our name on something or someone did.”

She said the Lupus Foundation was no longer a member of the coalition. Days after Kaiser Health News reached out to the coalition, its website was updated, excluding the Lupus Foundation.

For its part, AbbVie – which overall donated $24.7 million to patient groups in 2015, according to the new database – stipulates that its grants to nonprofits are “non-promotional” and provide no direct benefit to its business, according to a company statement. The company gives to patient groups because they serve as an “important, unbiased and independent resource for patients and caregivers.”

Insulin and influence

The American Diabetes Association said in an email to KHN that it received $18.3 million in pharmaceutical funding in 2017, accounting for 12.3% of its revenue; that was down from $26.7 million in 2015. The money flowed in as insulin makers continued to hike prices in those years – up to four times per product – leading to hardships for patients.

The only “Big Three” insulin maker in the database, Eli Lilly, gave $2.9 million to the American Diabetes Association in 2015, according to disclosures from the company and its foundation. Sanofi and Novo Nordisk are the other two major insulin makers, but neither was in the S&P 500 and therefore not included in the database. Over the past 20 years, Eli Lilly has repeatedly raised prices on its best-selling insulins, Humalog and Humulin, even though the medicines have been around for decades. The drugmaker faced protests – by people demanding to know the cost of manufacturing a vial of insulin – at its Indianapolis headquarters last fall.

The ADA launched a campaign decrying “skyrocketing” insulin in late 2016 but did not call out any drugmaker in its literature. When legislators in Nevada passed a bill last year requiring insulin makers to disclose their profits to the public, the ADA did not take a public stance.

The American Diabetes Association said it doesn’t confront individual companies because it is seeking action from “all entities in the supply chain” – manufacturers, wholesalers, pharmacy benefit managers and insurers.

“As a public health organization, the ADA’s commitment and focus is on the needs of the more than 30 million people with diabetes,” said Dr. William Cefalu, its chief scientific and medical officer. “The ADA requires support from a diverse set of partners to achieve this objective.”

Eli Lilly said it contributes money to the American Diabetes Association because the two share a “common goal” of helping diabetes patients.

“We provide funding for a wide variety of educational programs and opportunities at ADA, and they design and implement those programs in ways that are aligned with their goals,” Eli Lilly said in a statement. “We’re proud to support the ADA on important work that helps millions of people living with diabetes.”

Most patient groups say that funders have little or no influence in shaping their programs and policies, but their agreements are private.

They weren’t always backed by Pharma

Into the ’80s and early ’90s, patient lobbying was generally limited and self-funded with only one or two affluent patients from an organization traveling to Washington on a given day, said Diana Zuckerman, PhD, president of the nonprofit National Center for Health Research.

But the power of patient-lobbyists became apparent after a successful campaign by AIDS patients led to government action and a national push to find drugs to treat the then-terminal disease. Dr. Zuckerman said she will never forget when two women visited her office and asked how breast cancer patients could be as effective as the AIDS patients.

“At the time, there were no breast cancer patients advocating for money or anything else. It’s hard to believe,” she said. “I still remember that conversation, because it was really a turning point.”

Soon after, breast cancer patients started visiting the Hill more frequently. Patients with other diseases followed. Over time, patients’ voices became a potent force, often with industry support.

Even some wealthy, high-profile organizations take industry money: For example, $459,000 of Susan G. Komen’s $118 million in 2015 revenue came from drugmakers in the database, according to public disclosures. Asked about the pharma money, the foundation said it has institutional processes in place to ensure that “no corporate partner – pharma or otherwise – decides our mission priorities,” including a scientific advisory board – free of sponsor influence – that reviews its research program.

Today, patient advocacy groups flush with more industry dollars fly patients in for testimony and training about how to lobby for their drugs.

Some years ago, as the groups increased in number, Dr. Zuckerman said, she started getting email invitations from advocacy groups to attend so-called lobbying days explicitly sponsored by the pharmaceutical industry. The hosts often promised training and usually some kind of keynote speaker at a luncheon in Washington – plus a potential scholarship to cover travel. Now, lobbying days involving dozens of patients from a single group are part of the landscape.

Dan Boston, president of lobbying firm Health Policy Source, said, “It would be naive to think these people on a Tuesday afternoon just happen to turn up in XYZ places,” adding that the money isn’t necessarily a bad thing. Money tends to flow toward citizen groups that already have the same priorities as their funders, he said.

Marching into the future

Patient groups have been successful at campaigning for drug approvals, at times sparking controversy.

When scientists within the FDA advised against the approval of Exondys 51, a drug to treat Duchenne muscular dystrophy, parents of children with the rare genetic disorder and patients rallied to lobby for it in Washington. They were seen as pivotal to the FDA’s 2016 decision to grant approval for the drug, made by Sarepta Therapeutics. The decision was controversial in part because the FDA noted that clinical benefits of the drug – aimed at a subset of people with Duchenne muscular dystrophy – were not yet established.

Sarepta Therapeutics, which is not featured in the database, has taken measures to support its patient base. In March, it announced an annual scholarship program – 10 grants of up to $10,000 each for students with Duchenne muscular dystrophy to attend university or trade schools. Sarepta is also among the funders of Parent Project Muscular Dystrophy, a patient advocacy group at the forefront of the push for Exondys 51’s approval.

The Pre$cription for Power database will grow to include new disclosures. Not all drugmakers are willing to disclose their company giving. Eleven of the 20 companies examined – Allergan, Baxter International, Biogen, Celgene, Endo International, Gilead Sciences, Mallinckrodt, Mylan, Perrigo Co., Regeneron Pharmaceuticals, and Vertex Pharmaceuticals – declined to disclose their company giving or did not respond to repeated calls.

Paul Thacker, a former investigator for Sen. Chuck Grassley (R-Iowa) who helped draft the Physician Payments Sunshine Act in 2010, said there is reason to question the flow of money to patient advocacy groups. The pharmaceutical industry has fostered relationships in every link of the drug supply chain, including payments to researchers, doctors and professional societies.

“There’s so much money out there, and they’ve created all of these allies, so nobody is clamoring for change,” Mr. Thacker said.

Since the Physician Payments Sunshine Act began requiring the industry to report its payments to physicians, the industry is more reluctant to co-opt them, so “pharma has to find other megaphones,” PharmedOut’s Dr. Fugh-Berman said.

And, in times of public outrage over high drug prices and soaring insurance costs, patients are particularly sympathetic messengers, she said.

“Sick consumers make for good press,” Dr. Fugh-Berman said. “They make for good testimony before Congress. They can be very powerful spokespeople for pharmaceutical companies.”

KHN’s coverage of prescription drug development, costs and pricing is supported by the Laura and John Arnold Foundation. Kaiser Health News is a nonprofit news service covering health issues. It is an editorially independent program of the Kaiser Family Foundation that is not affiliated with Kaiser Permanente.

President Donald Trump repeatedly talks tough about reining in the pharmaceutical industry, but his administration’s efforts to lower drug prices are shrouded in secrecy.

Senior administrative officials met Friday to discuss an executive order on the cost of pharmaceuticals, a roundtable informed by Trump’s “Drug Pricing and Innovation Working Group.” Kaiser Health News examined documents that shed light on the workings of this working group.

The documents reveal behind-the-scenes discussions that are influenced by the pharmaceutical industry. Joe Grogan, associate director of health programs for the Office of Management and Budget (OMB), has led the group. Until March, Grogan served as a lobbyist for Gilead Sciences, the pharmaceutical company that priced its hepatitis C drugs at $1,000 per pill.

To solve the crisis of high drug prices, the group discussed strengthening the monopoly rights of pharmaceuticals overseas, ending discounts for low-income hospitals and accelerating drug approvals by the Food and Drug Administration. The White House declined to comment on the working group.

The group initially met May 4 in the Eisenhower Executive Office Building and has since met every two weeks. In addition to OMB, the working group includes officials from the White House National Economic Council, the Domestic Policy Council, Health and Human Services, the FDA, the Federal Trade Commission, the Department of Commerce, the Office of the U.S. Trade Representative and the Department of Justice.

According to the documents – the latest of which is dated June 1– the working group focused on the following “principles” and “talking points”:

1. Extending the patent life of drugs in foreign markets to “provide for protection and enforcement of intellectual property rights.” This will ensure “that American consumers do not unfairly subsidize research and development for people throughout the globe.” Extending monopoly protections for drugs overseas has been one of the pharmaceutical industry’s top priorities since the Trans-Pacific Partnership was defeated last year. That policy would push up global drug prices, according to Médecins Sans Frontières.

2. Promoting competition in the U.S. drug market – both by “modernizing our regulatory and reimbursement systems” and limiting “barrier to entry, including the cost of research and development,” according to the documents. The working group also discussed two broad policy ideas that have been championed by the pharmaceutical industry, according to sources familiar with the process:

3. Value-based pricing, under which pharmaceutical companies keep the list prices of drugs unchanged but offer rebates if patients don’t improve, is one option. It’s unclear who would audit the effectiveness of the drugs, what criteria they would use to evaluate them, and who would receive the rebates. Grogan invited Robert Shapiro – an adviser for Gilead and former secretary of Commerce under President Bill Clinton – to brief the working group on value-based pricing on May 18. Shapiro is the chairman and cofounder of Sonecon, a Washington, D.C., firm that consulted with Gilead, Amgen, and PhRMA, according to his curriculum vitae.

4. Grogan and Shapiro also discussed issuing 10-year U.S. Treasury bonds to drug manufacturers to pay for expensive hepatitis C drugs like Sovaldi and Harvoni under Medicare and Medicaid, to avoid rationing drugs to the sickest patients. The 2015 Senate investigation, for example, found that, though Medicaid spent more than $1 billion on Sovaldi, just 2.4% of Medicaid patients with hepatitis C were treated.

After the working group’s first meeting on May 4, Grogan distributed detailed policy recommendations on options for expediting generic drug approvals, creating a new tax credit “of up to 50%” for investments in generic drug manufacturing, distribution, and research and development. The documents also propose scaling back the 340B program, which requires drug manufacturers to provide some medicines at a discount to hospitals that treat low-income patients.

Most of these policies would not ease patient costs, and at least one would increase prices, said experts who reviewed the documents at the request of Kaiser Health News.

“This six-page document contains the kinds of solutions to the cost-of-drugs problem that you would get if you gathered together all the executives of pharma and asked them ‘What sort of token gestures can we do?’ ” said Vinay Prasad, MD, a professor of medicine at Oregon Health and Sciences University who studies the costs of cancer drugs.

The pharma-friendly recommendations appear to clash with earlier press reports indicating that OMB Director Mick Mulvaney was considering requiring drug makers to pay rebates to Medicare patients, a measure the pharmaceutical lobby fiercely opposes.

Brand-name drug prices – which account for 72% of drug spending – go untouched in the handouts, said Fiona Scott Morton, PhD, a Yale economics professor and former attorney with the Justice Department’s antitrust division.

“The changes to generic markets to promote competition look helpful, but there need to be some more ideas to create more competition for branded drugs or consumers aren’t really going to notice this,” Scott Morton said.

Some of the text in the document is cribbed directly from policy papers published by the pharmaceutical industry’s powerful lobby – Pharmaceutical Research and Manufacturers Association (PhRMA).

Under the subtitle, “Encourage Use of 21st Century Tools for Drug Evaluation, Review, and Approval,” one handout proposes the FDA use less rigorous clinical trial standards to speed drug approvals.

The handout cites a PhRMA paper from March 2016 that includes an identical subtitle, “Encourage Use of 21st Century Tools for Drug Evaluation, Review, and Approval” and recommends the FDA implement less rigorous clinical trial standards.

These recommendations would not lower drug prices, experts say. Such measures “would be like a firefighter spraying gasoline on your burning garage,” Prasad said.

Another section – which recommends giving the FDA more discretion to evaluate generic copies of complex drugs – closely resembles a National Law Review article written by two lobbyists in the pharmaceutical division of Foley & Lardner, whose clients include generic drug makers.

The handouts further recommend allowing drug makers to supply data and off-label information to insurers and pharmacy benefit managers during the clinical trial period, before they secure FDA approval.

That’s a “terrible idea,” said Jerry Avorn, MD, a professor at Harvard Medical School and the chief of the Division of Pharmacoepidemiology and Pharmacoeconomics at Brigham and Women’s Hospital. “That’s why we have the whole approval process, to determine what’s actually true,” he said.

KHN’s coverage of prescription drug development, costs and pricing is supported in part by the Laura and John Arnold Foundation. Kaiser Health News is a national health policy news service that is part of the nonpartisan Henry J. Kaiser Family Foundation.

President Donald Trump repeatedly talks tough about reining in the pharmaceutical industry, but his administration’s efforts to lower drug prices are shrouded in secrecy.

Senior administrative officials met Friday to discuss an executive order on the cost of pharmaceuticals, a roundtable informed by Trump’s “Drug Pricing and Innovation Working Group.” Kaiser Health News examined documents that shed light on the workings of this working group.

The documents reveal behind-the-scenes discussions that are influenced by the pharmaceutical industry. Joe Grogan, associate director of health programs for the Office of Management and Budget (OMB), has led the group. Until March, Grogan served as a lobbyist for Gilead Sciences, the pharmaceutical company that priced its hepatitis C drugs at $1,000 per pill.

To solve the crisis of high drug prices, the group discussed strengthening the monopoly rights of pharmaceuticals overseas, ending discounts for low-income hospitals and accelerating drug approvals by the Food and Drug Administration. The White House declined to comment on the working group.

The group initially met May 4 in the Eisenhower Executive Office Building and has since met every two weeks. In addition to OMB, the working group includes officials from the White House National Economic Council, the Domestic Policy Council, Health and Human Services, the FDA, the Federal Trade Commission, the Department of Commerce, the Office of the U.S. Trade Representative and the Department of Justice.

According to the documents – the latest of which is dated June 1– the working group focused on the following “principles” and “talking points”:

1. Extending the patent life of drugs in foreign markets to “provide for protection and enforcement of intellectual property rights.” This will ensure “that American consumers do not unfairly subsidize research and development for people throughout the globe.” Extending monopoly protections for drugs overseas has been one of the pharmaceutical industry’s top priorities since the Trans-Pacific Partnership was defeated last year. That policy would push up global drug prices, according to Médecins Sans Frontières.

2. Promoting competition in the U.S. drug market – both by “modernizing our regulatory and reimbursement systems” and limiting “barrier to entry, including the cost of research and development,” according to the documents. The working group also discussed two broad policy ideas that have been championed by the pharmaceutical industry, according to sources familiar with the process:

3. Value-based pricing, under which pharmaceutical companies keep the list prices of drugs unchanged but offer rebates if patients don’t improve, is one option. It’s unclear who would audit the effectiveness of the drugs, what criteria they would use to evaluate them, and who would receive the rebates. Grogan invited Robert Shapiro – an adviser for Gilead and former secretary of Commerce under President Bill Clinton – to brief the working group on value-based pricing on May 18. Shapiro is the chairman and cofounder of Sonecon, a Washington, D.C., firm that consulted with Gilead, Amgen, and PhRMA, according to his curriculum vitae.

4. Grogan and Shapiro also discussed issuing 10-year U.S. Treasury bonds to drug manufacturers to pay for expensive hepatitis C drugs like Sovaldi and Harvoni under Medicare and Medicaid, to avoid rationing drugs to the sickest patients. The 2015 Senate investigation, for example, found that, though Medicaid spent more than $1 billion on Sovaldi, just 2.4% of Medicaid patients with hepatitis C were treated.

After the working group’s first meeting on May 4, Grogan distributed detailed policy recommendations on options for expediting generic drug approvals, creating a new tax credit “of up to 50%” for investments in generic drug manufacturing, distribution, and research and development. The documents also propose scaling back the 340B program, which requires drug manufacturers to provide some medicines at a discount to hospitals that treat low-income patients.

Most of these policies would not ease patient costs, and at least one would increase prices, said experts who reviewed the documents at the request of Kaiser Health News.

“This six-page document contains the kinds of solutions to the cost-of-drugs problem that you would get if you gathered together all the executives of pharma and asked them ‘What sort of token gestures can we do?’ ” said Vinay Prasad, MD, a professor of medicine at Oregon Health and Sciences University who studies the costs of cancer drugs.

The pharma-friendly recommendations appear to clash with earlier press reports indicating that OMB Director Mick Mulvaney was considering requiring drug makers to pay rebates to Medicare patients, a measure the pharmaceutical lobby fiercely opposes.

Brand-name drug prices – which account for 72% of drug spending – go untouched in the handouts, said Fiona Scott Morton, PhD, a Yale economics professor and former attorney with the Justice Department’s antitrust division.

“The changes to generic markets to promote competition look helpful, but there need to be some more ideas to create more competition for branded drugs or consumers aren’t really going to notice this,” Scott Morton said.

Some of the text in the document is cribbed directly from policy papers published by the pharmaceutical industry’s powerful lobby – Pharmaceutical Research and Manufacturers Association (PhRMA).

Under the subtitle, “Encourage Use of 21st Century Tools for Drug Evaluation, Review, and Approval,” one handout proposes the FDA use less rigorous clinical trial standards to speed drug approvals.

The handout cites a PhRMA paper from March 2016 that includes an identical subtitle, “Encourage Use of 21st Century Tools for Drug Evaluation, Review, and Approval” and recommends the FDA implement less rigorous clinical trial standards.

These recommendations would not lower drug prices, experts say. Such measures “would be like a firefighter spraying gasoline on your burning garage,” Prasad said.

Another section – which recommends giving the FDA more discretion to evaluate generic copies of complex drugs – closely resembles a National Law Review article written by two lobbyists in the pharmaceutical division of Foley & Lardner, whose clients include generic drug makers.

The handouts further recommend allowing drug makers to supply data and off-label information to insurers and pharmacy benefit managers during the clinical trial period, before they secure FDA approval.

That’s a “terrible idea,” said Jerry Avorn, MD, a professor at Harvard Medical School and the chief of the Division of Pharmacoepidemiology and Pharmacoeconomics at Brigham and Women’s Hospital. “That’s why we have the whole approval process, to determine what’s actually true,” he said.

KHN’s coverage of prescription drug development, costs and pricing is supported in part by the Laura and John Arnold Foundation. Kaiser Health News is a national health policy news service that is part of the nonpartisan Henry J. Kaiser Family Foundation.

President Donald Trump repeatedly talks tough about reining in the pharmaceutical industry, but his administration’s efforts to lower drug prices are shrouded in secrecy.

Senior administrative officials met Friday to discuss an executive order on the cost of pharmaceuticals, a roundtable informed by Trump’s “Drug Pricing and Innovation Working Group.” Kaiser Health News examined documents that shed light on the workings of this working group.

The documents reveal behind-the-scenes discussions that are influenced by the pharmaceutical industry. Joe Grogan, associate director of health programs for the Office of Management and Budget (OMB), has led the group. Until March, Grogan served as a lobbyist for Gilead Sciences, the pharmaceutical company that priced its hepatitis C drugs at $1,000 per pill.

To solve the crisis of high drug prices, the group discussed strengthening the monopoly rights of pharmaceuticals overseas, ending discounts for low-income hospitals and accelerating drug approvals by the Food and Drug Administration. The White House declined to comment on the working group.

The group initially met May 4 in the Eisenhower Executive Office Building and has since met every two weeks. In addition to OMB, the working group includes officials from the White House National Economic Council, the Domestic Policy Council, Health and Human Services, the FDA, the Federal Trade Commission, the Department of Commerce, the Office of the U.S. Trade Representative and the Department of Justice.

According to the documents – the latest of which is dated June 1– the working group focused on the following “principles” and “talking points”:

1. Extending the patent life of drugs in foreign markets to “provide for protection and enforcement of intellectual property rights.” This will ensure “that American consumers do not unfairly subsidize research and development for people throughout the globe.” Extending monopoly protections for drugs overseas has been one of the pharmaceutical industry’s top priorities since the Trans-Pacific Partnership was defeated last year. That policy would push up global drug prices, according to Médecins Sans Frontières.

2. Promoting competition in the U.S. drug market – both by “modernizing our regulatory and reimbursement systems” and limiting “barrier to entry, including the cost of research and development,” according to the documents. The working group also discussed two broad policy ideas that have been championed by the pharmaceutical industry, according to sources familiar with the process:

3. Value-based pricing, under which pharmaceutical companies keep the list prices of drugs unchanged but offer rebates if patients don’t improve, is one option. It’s unclear who would audit the effectiveness of the drugs, what criteria they would use to evaluate them, and who would receive the rebates. Grogan invited Robert Shapiro – an adviser for Gilead and former secretary of Commerce under President Bill Clinton – to brief the working group on value-based pricing on May 18. Shapiro is the chairman and cofounder of Sonecon, a Washington, D.C., firm that consulted with Gilead, Amgen, and PhRMA, according to his curriculum vitae.

4. Grogan and Shapiro also discussed issuing 10-year U.S. Treasury bonds to drug manufacturers to pay for expensive hepatitis C drugs like Sovaldi and Harvoni under Medicare and Medicaid, to avoid rationing drugs to the sickest patients. The 2015 Senate investigation, for example, found that, though Medicaid spent more than $1 billion on Sovaldi, just 2.4% of Medicaid patients with hepatitis C were treated.

After the working group’s first meeting on May 4, Grogan distributed detailed policy recommendations on options for expediting generic drug approvals, creating a new tax credit “of up to 50%” for investments in generic drug manufacturing, distribution, and research and development. The documents also propose scaling back the 340B program, which requires drug manufacturers to provide some medicines at a discount to hospitals that treat low-income patients.

Most of these policies would not ease patient costs, and at least one would increase prices, said experts who reviewed the documents at the request of Kaiser Health News.

“This six-page document contains the kinds of solutions to the cost-of-drugs problem that you would get if you gathered together all the executives of pharma and asked them ‘What sort of token gestures can we do?’ ” said Vinay Prasad, MD, a professor of medicine at Oregon Health and Sciences University who studies the costs of cancer drugs.

The pharma-friendly recommendations appear to clash with earlier press reports indicating that OMB Director Mick Mulvaney was considering requiring drug makers to pay rebates to Medicare patients, a measure the pharmaceutical lobby fiercely opposes.

Brand-name drug prices – which account for 72% of drug spending – go untouched in the handouts, said Fiona Scott Morton, PhD, a Yale economics professor and former attorney with the Justice Department’s antitrust division.

“The changes to generic markets to promote competition look helpful, but there need to be some more ideas to create more competition for branded drugs or consumers aren’t really going to notice this,” Scott Morton said.

Some of the text in the document is cribbed directly from policy papers published by the pharmaceutical industry’s powerful lobby – Pharmaceutical Research and Manufacturers Association (PhRMA).

Under the subtitle, “Encourage Use of 21st Century Tools for Drug Evaluation, Review, and Approval,” one handout proposes the FDA use less rigorous clinical trial standards to speed drug approvals.

The handout cites a PhRMA paper from March 2016 that includes an identical subtitle, “Encourage Use of 21st Century Tools for Drug Evaluation, Review, and Approval” and recommends the FDA implement less rigorous clinical trial standards.

These recommendations would not lower drug prices, experts say. Such measures “would be like a firefighter spraying gasoline on your burning garage,” Prasad said.

Another section – which recommends giving the FDA more discretion to evaluate generic copies of complex drugs – closely resembles a National Law Review article written by two lobbyists in the pharmaceutical division of Foley & Lardner, whose clients include generic drug makers.

The handouts further recommend allowing drug makers to supply data and off-label information to insurers and pharmacy benefit managers during the clinical trial period, before they secure FDA approval.

That’s a “terrible idea,” said Jerry Avorn, MD, a professor at Harvard Medical School and the chief of the Division of Pharmacoepidemiology and Pharmacoeconomics at Brigham and Women’s Hospital. “That’s why we have the whole approval process, to determine what’s actually true,” he said.

KHN’s coverage of prescription drug development, costs and pricing is supported in part by the Laura and John Arnold Foundation. Kaiser Health News is a national health policy news service that is part of the nonpartisan Henry J. Kaiser Family Foundation.