CA: Drug companies' PAC gives big after Schwarzenegger's vetoes

SACRAMENTO (AP) - For more than a decade, a trade group representing the nation's biggest drug companies was content to sit on the sidelines of California's legislative races.

But after Gov. Arnold Schwarzenegger vetoed four bills in September that would have made it easier for Californians to buy cheaper prescription drugs from Canada, the Pharmaceutical Research and Manufacturers of America Alliance quickly emerged as one of California's major players and one of the governor's key supporters.

The PhRMA group jumped into state legislative races late in the 2004 campaign - only two weeks after Schwarzenegger's Sept. 29 veto of the industry-opposed bills. It raised nearly $360,000 from its members - most of it during one week in mid-October - for distribution largely to Republican candidates backed by the governor.

Since then, the alliance has adopted the governor's plan to encourage manufacturers to give price breaks on prescription drugs. The group, which includes such companies as Bristol-Myers Squibb, Abbott Labs and Pfizer, is working to qualify Schwarzenegger's "California Rx" proposal as a ballot initiative.

And drug makers have poured nearly $7.7 million into a political committee supporting California Rx and two other ballot measures also pushed by Republican groups - one to prevent unions from using member dues for some political activity; and one to limit jury trial awards.

A Washington, D.C., fund-raiser for the governor held Tuesday was co-hosted by the organization's top federal lobbyist.

PhRMA's sudden turn raises new questions about the governor's vetoes, said Richard Hasen, a professor of law at Loyola University in Los Angeles and an expert in California campaign finance law.

"This is one of those classic cases where there's no way to tell whether the money followed the votes or the votes followed the money," Hasen said. "It is plausible to argue that these contributions are coming because the donors wanted to support politics already determined by the governor. But it is natural for skeptics to raise questions about the connections."

Merrill Jacobs, the PhRMA representative in Sacramento, said the group got involved because consumer groups and other opponents were "trying to put us out of business."

Any implications of a quid pro quo between the governor and PhRMA are "absurd and baseless," said Rob Stutzman, Schwarzenegger's director of communications.

The governor's veto message called the Canadian drug proposals flawed solutions that conflicted with federal free trade rules, and Stutzman said that was Schwarzenegger's only reason to reject the bills.

PhRMA's role in the November election came not in direct contributions to candidates but donations to a variety of third parties that then funneled the PhRMA money to the candidates. Jacobs said PhRMA has never contributed directly to candidates.

Records show that drug companies gave nearly $300,000 to the PhRMA PAC during a one-week period ending Oct. 14 for use in legislative races. Records show the PAC then distributed $249,500 on Oct. 18 and 19 to Republican candidates through a series of intermediaries, including four county Republican central committees, the California Chamber of Commerce and two other business-oriented PACs.

PhRMA PAC gave $49,500 on Oct. 19 to the California Business and Affordable Housing Council, which used it to pay for then-Assemblyman Abel Maldonado's campaign for the state Senate, campaign finance records show. Another $75,000 went to the chamber's Jobs PAC, which used it to pay for advertisements attacking Democratic Assembly candidate Mike Gordon of El Segundo.

Records show that PhRMA PAC money went to aid seven Republicans supported by the governor - Assembly candidates Dean Gardner of Bakersfield; Shirley Horton of Bonita, who was seeking a second term in the Assembly; Paul Betancourt of Fresno; Greg Hill of Redondo Beach, Gordon's opponent; Nellie McGarry of Merced; and Senate candidates Maldonado and Gary Podesto of Stockton.

One Democrat who was not supported by the governor, Assemblywoman Barbara Matthews of Tracy, got $25,000 from PhRMA.

Matthews, Horton and Maldonado won, while the other Republicans lost to their Democratic opponents.

Jacobs said PhRMA knew the money given to intermediary groups would "benefit business-oriented candidates" but didn't know which candidates. He also denied that PhRMA's increased political activity had anything to do with Schwarzenegger's vetoes. "There was something like 30 bills dropped on our heads - it was a wake-up call."

Still, it was after the legislative session had ended and while the governor had the Canadian bills on his desk that PhRMA began raising money. Jacobs said the group organized its fund-raising unit in the spring but member companies did not begin writing checks until after the governor's veto.

The governor's California Rx plan, which calls on manufacturers to voluntarily provide prescription drug discounts to the uninsured, came about during the closing days of the legislative session as Schwarzenegger faced growing pressure on whether to sign or reject the pending drug bills.

PhRMA had regular and ongoing contact with the administration about the proposed alternative drug plan while the Canadian bills sat on Schwarzenegger's desk, according to lobbying records and interviews. Jacobs said he attended one meeting with Kim Belshe, Schwarzenegger's health and human services secretary, in which she outlined what would become the California Rx program and called on the drug companies to support it.

In January, Schwarzenegger backed a bill that would create California Rx, although there's been little action so far to pass it. Last month, PhRMA created its fund to get an initiative identical to the bill on the ballot this fall. So far it has raised $7.7 million.

Stutzman said the governor has not taken a position on California Rx and still supports getting the bill through the Legislature. Neither has the governor taken a position on the tort reform measure or the union dues proposal but both have been a priority by Republican lawmakers and business groups that are closely allied with Schwarzenegger.

To find campaign finance reports for the governor and PhRMA and to find proposed ballot measures visit:

To find information on prescription drug bills: SB1333, SB1149 and AB1957, SB1144 visit:

PhRMA money to legislative candidates, initiatives

The Associated Press

http://www.bakersfield.com/state_wire/story/5347178p-5370982c.html

On Sept. 29, Gov. Arnold Schwarzenegger vetoed four bills that would have made it easier for Californians to buy cheaper prescription drugs from Canada. Here are the bills:

- AB1957, by Assemblyman Dario Frommer, D-Los Angeles. Would have authorized the state Department of Health Services to create a Web site to help Californians buy low-cost prescription drugs through Canadian pharmacies. Four states already have such programs. - SB1144, by Sen. John Burton, D-San Francisco. Would have authorized the state to seek federal permission to buy lower-cost Canadian prescription drugs for state prisons, state hospitals and mental health facilities.

- SB1149, by Sen. Deborah Ortiz, D-Sacramento. Would have authorized the state to identify Canadian pharmacies that meet recognized standards to safely handle and ship prescription drugs to California consumers.

- SB1333, by Sen. Don Perata, D-Oakland. Would have allowed the State Department of Health Services to reimburse pharmacies for drugs dispensed to low-income Californians that are purchased from a Canadian pharmacy.

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Starting on Oct. 7, the Pharmaceutical Research and Manufacturers of America Alliance for Research political action committee started receiving contributions from some of the nation's largest drug companies. Here are the contributions:

- Abbott Laboratories, Abbott Park, Ill., $100,000, Oct. 8, 2004.

- Bristol-Myers Squibb Co., New York, $50,000, Oct. 7, 2004.

- Johnson & Johnson Services Inc., New Brunswick, N.J., $49,000, Oct. 15, 2004.

- Merck & Co., Whitehouse Station, N.J., $60,000, Dec. 9, 2004.

- Novartis Pharmaceuticals Corp., East Hanover, N.J., $50,000, Oct. 14, 2004.

- Pfizer Inc., New York, $49,900, Oct. 12, 2004.

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Starting on Oct. 18, the PhRMA PAC gave $249,500 to seven political committees, who then gave money to a series of Republican candidates, most of them vigorously supported by Schwarzenegger. Here are the committees:

- San Diego County Republican Central Committee, San Diego, $25,000. Oct. 18, 2004. Used money to support re-election campaign of Assemblywoman Shirley Horton, R-Chula Vista.

- California Republican Victory Fund San Joaquin County, Stockton, $25,000. Oct. 18, 2004. Used money to support Senate campaign of Republican Stockton Mayor Gary Podesto and Assembly candidate Nellie McGarry of Merced.

- Jobs PAC, California Chamber of Commerce, Sacramento, $75,000. Used money for independent expenditure campaign attacking the Assembly campaign of Democrat Mike Gordon of El Segundo.

- Orange County Republican Party, Santa Ana, $25,000. Used money to support local Republican candidates.

- Placer County Republican Central Committee, Lincoln, $25,000, Oct. 18, 2004. Used money to support Assembly campaigns of Republicans Dean Gardner of Bakersfield and Paul Betancourt of Fresno and Podesto's Senate campaign.

- Californians for Civil Justice Reform PAC, Sacramento, $25,000. Oct. 19, 2004. Used money for independent expenditure campaign to help re-elect Democratic Assemblywoman Barbara Matthews of Tracy. She was the only Democrat aided by PhRMA money in California last year.

- California Business and Affordable Housing Council, Sacramento, $49,500. Oct. 19, 2004. Used money for independent expenditure campaign backing Assemblyman Abel Maldonado, R-Santa Maria, who was running for the state Senate.

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Since Feb. 18, drug companies have given $7.7 million to a PhRMA fund dedicated to promoting three proposed ballot measures for a special election expected this fall. Here are the donations:

- Abbott Laboratories, Abbott Park, Ill., $650,000, Feb. 22, 2005.

- Amgen Inc., Thousand Oaks, $650,000, March 3, 2005.

- AstraZeneca LP, Wilmington, Del., $650,000, Feb. 18, 2005.

- Daiichi Pharmaceutical Corp., Montvale, N.J., $10,000, March 7, 2005.

- GlaxoSmithKline, Philadelphia, $1,300,000, Feb. 28, 2005.

- Hoffman-La Roche Inc., Nutley, N.J., $80,000, March 8, 2005.

- Johnson & Johnson, New Brunswick, N.J., $1,300,000, March 7, 2005.

- Eli Lilly and Co., Indianapolis, Ind., $650,000, March 7, 2005.

- Millennium Pharmaceuticals Inc., Cambridge, Mass., $80,000, March 7, 2005.

- Novartis Pharmaceuticals Corp., East Hanover, N.J., $650,000, March 7, 2005.

- Organon USA Inc., Roseland, N.J., $80,000, March 7, 2005.

- Pfizer Inc., New York, $1,300,000, March 4, 2005.

- Schering-Plough Corp., Kenilworth, N.J., $80,000, March 2, 2005.

- Schwarz Pharma, Milwaukee, Wisc., $80,000, March 4, 2005.

- Sepracor, Marlborough, Mass., $80,000, March 7, 2005.

- Solvay Pharmaceuticals, Marietta, Ga., $80,000, March 7, 2005.

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The Pharmaceutical Research and Manufacturers of America California Initiative Fund is backing the following initiatives:

- California Rx, mirrors a plan backed by Gov. Arnold Schwarzenegger that is currently under consideration by the Legislature. Proposed statewide ballot measure, SA2005RF0065, is awaiting approval by the attorney general's office before it can enter the signature-gathering process.

- Paycheck protection, would limit the ability of public employee labor unions to make political contributions with dues paid by members. Proposed statewide ballot measure, SA2005RF0066, is awaiting approval by the attorney general's office before it can enter the signature-gathering process.

- Contingency limitation, would limit the ability of attorneys to be paid for their work on a contingency fee basis, in which they receive a percentage of any court settlement. Proposed ballot measure, SA2005RF0064, is awaiting approval by the attorney general's office before it can enter the signature-gathering process.

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Source: California secretary of state, California Senate, California Assembly.

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