Newspaper Examines Involvement of PhRMA in California Politics

The Pharmaceutical Research and Manufacturers of America "quickly emerged as one of California's major players and one of the governor's key supporters" after Gov. Arnold Schwarzenegger (R) last year vetoed four bills addressing prescription drug costs, the AP/Contra Costa Times reports. Before the vetoes, PhRMA had been "content to sit on the sidelines of California's legislative races" for more than a decade, according to the AP/Times.

Two weeks after the governor's Sept. 29, 2004, vetoes, PhRMA raised $360,000 from its members and largely distributed it through third parties to Republican candidates supported by Schwarzenegger. According to records, drug companies gave about $300,000 to the PhRMA PAC during a one-week period in October 2004 for use in California legislative races.

PhRMA PAC then distributed $249,500 through a "series of intermediaries," including four GOP committees, the California Chamber of Commerce and two other pro-business PACs, to seven Republicans supported by Schwarzenegger.

PhRMA also directed through a third party $25,000 to a candidate not supported by the governor, Assembly member Barbara Matthews (D-Stockton).

According to a PhRMA spokesperson, the group never gave any money directly to a state candidate.

Since directing money to state candidates, some PhRMA members have raised $7.7 million for a political action committee that supports the governor's proposed California Rx plan, which would provide discounts on prescription drugs to eligible state residents, as well as two other potential ballot measures supported by Republican groups.

According to lobbying records and interviews, PhRMA had "regular and ongoing contact" with Schwarzenegger's office about the California Rx plan while the reimportation bills were on the governor's desk, the AP/Times reports.

PhRMA spokesperson Merrill Jacobs said the group only became involved in the legislation because consumer groups and others were "trying to put us out of business." Jacobs said the group knew the contributions to intermediary groups would "benefit business-oriented candidates" but did not know which candidates.

Jacobs said the governor's vetoes did not impact PhRMA's financial contributions, adding, "There was something like 30 bills dropped on our heads -- it was a wake-up call."

The AP/Times reports that PhRMA began raising money while Schwarzenegger was reviewing the legislation. Jacobs said drug companies did not make contributions to PhRMA PAC until after the governor had vetoed the legislation.

Jacobs noted that he attended one meeting with Health and Human Services Secretary Kim Belshe, in which she described the governor's prescription drug plan and asked drug makers for their support.

Rob Stutzman, Schwarzenegger's director of communications, said any implications of a link between the governor's legislative decisions and PhRMA's contributions are "absurd and baseless." Stutzman said the governor chose to veto the legislation because the bills were flawed and conflicted with federal law.

Richard Hasen, a professor of law at Loyola University in Los Angeles, said, "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. 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" (Chorneau, AP/Contra Costa Times, 3/11).