President-elect Donald Trump’s pick to run Health and Human Services is taking heat for his controversial stock holdings in companies affected by laws he’s worked on and voted for. But federal records show several senators who will take part in his confirmation hearings have substantial health-related holdings as well.
At least six members of the two Senate committees tasked with questioning or confirming Rep. Tom Price, R-Ga., hold shares in health care companies — such as Merck, Medtronic and Gilead — according to a Kaiser Health News analysis: Sens. Thomas Carper, D-Del., Bill Cassidy, R-La., Susan Collins, R-Maine, Tim Kaine, D-Va., Mark Warner, D-Va., and Sheldon Whitehouse, D-R.I.
“This conflict of interest problem is one that members [of Congress] have danced around over a period of years much too lightly,” said former Rep. Lee Hamilton, who founded the Indiana University Center on Representative Government after spending more than 30 years in Congress. “And I think it needs to be corrected in order to have confidence in the institution.”
KHN examined the most recent annual financial disclosures for the 40 senators who sit on either the Finance Committee, the Committee on Health, Education, Labor and Pensions, or both. The HELP Committee’s courtesy hearing with Price has been scheduled for Wednesday, and the Finance Committee’s more pivotal hearing has been scheduled for Jan. 24.
About half the senators reported holding stocks in their households, but only six disclosed owning stocks in health and biomedical firms.
Of the six, Whitehouse and his family have the most health stocks split between various IRAs, education savings accounts and other accounts and belonging to Whitehouse, his wife and his children. In all, they disclosed between $402,000 and $1.3 million in holdings in 2015. The disclosures don’t give exact numbers and instead include ranges.
Price has been criticized following a Wall Street Journal investigation that found he traded more than $300,000 in health-related stocks while serving on a health subcommittee of the House Committee on Ways and Means. Democrats have called for investigations into whether Price made trades based on insider knowledge.This story also ran on NPR. It can be republished for free (details).
Earlier this month, Trump transition spokesman Phillip Blando blasted Democrats’ hypocrisy and singled out Carper, Warner and Whitehouse for owning health stocks, calling for similar questions to be asked about their trades and holdings. He declined last week to comment further on the senators’ stock holdings, but raised the issue again on Tuesday in an email to reporters in which he also called out Senate Minority Leader Chuck Schumer, D-N.Y., for his bonds in mortgage companies. Schumer has called for an investigation into Price’s actions before the nomination can move forward.
Price has told ethics officials he would divest his stock in dozens of publicly traded companies.
Owning the stocks is legal, but not everyone agrees on whether it’s fair, said Tim LaPira, a political science professor at James Madison University, adding that the Senate is on average wealthier than the House. “Of course they can invest their money as they please,” LaPira said.
The major concern, political experts said, is that members of Congress will help pass laws to benefit companies in which they own stock. According to the Senate ethics rules, “a Member, officer, or employee may not use his or her official position for personal gain.”
“My general view is that if you are regulating and passing legislation that impacts an industry, you ought not to have an investment in that industry,” Hamilton said.
Although insider trading has been illegal for members of Congress since 2012, it’s nearly impossible to prove, LaPira said.
Research studies have shown that members of Congress tend to make higher returns on the stock market than the general public. “We found that in general, they earn about 12 percent a year more than the average bear,” said Alan Ziobrowski, a retired Georgia State University professor who published the bombshell 2004 study of Senate stock performance from 1993 through 1998. He did a similar study of House stock performance in 2011.
Ziobrowski said members of Congress could have access to information that can aid in stock picking, including earlier notice that laws are about to change or additional information gathered from industry lobbyists. Ziobrowski said a follow-up study found that members of Congress “quit fooling around on the stock market” after his 2004 study was released, but that no one has repeated his analysis since.
“It’s a battle we fought,” he said. “I’m retired. Let somebody else carry the flag.”
Whitehouse and Collins serve on the HELP Committee, whose jurisdiction includes measures pertaining to health, “biomedical research and development.” Carper and Warner are on the Finance Committee, which deals generally with money and taxes as well as “health programs under the Social Security Act and health programs financed by a specific tax or trust fund.” Cassidy is on both committees.
Since 2015, Whitehouse appears to have been an active trader and filed 10 periodic transaction reports in 2016. Annual reports for 2016 aren’t due until mid-May, but periodic reports must be filed within 45 days of a trade, according to the 2012 STOCK Act, which stands for Stop Trading on Congressional Knowledge.
Around the time the House released its near-final version of the 21st Century Cures bill, which was intended to speed the FDA’s drug approval process, Whitehouse’s family purchased more stock in Gilead Sciences, which makes the famously pricey hepatitis C drug Sovaldi and has more than two dozen drugs in the research pipeline.
The Whitehouses’ total Gilead purchases that month ranged from $4,000 to $60,000. The family also purchased shares of Amgen and Abbott stock. Whitehouse later voted in favor of the bill. The Gilead stock slightly decreased in value following these purchases but got a slight bump just before the bill was signed into law on Dec. 13. Some of the Gilead stock was sold about a week later.
“Senator Whitehouse does not direct his trading and doesn’t control the allocation of investments among different types of assets,” his press secretary, Rich Davidson, said in an email.
Carper’s family owned up to $285,000 in health stocks, though they could total as little as $54,000 due to the broad ranges in the reports. They are all in his wife’s name, but Hamilton said that’s irrelevant. His wife sold some of her stock in MetLife, a company that sells health and life insurance, on Dec. 15, according to his latest transaction report.
In an emailed statement, Carper defended his record and said he believes President-elect Trump’s Cabinet nominees should be scrutinized. “I have been a public servant for more than three decades and have always submitted thorough financial disclosures about my family’s income and holdings,” he said. “Any attempt to cast a shadow of impropriety on our financial decisions is inaccurate and unreasonable.”
Maine Republican Collins and her family had between $78,000 and $295,000 in health-related stocks in 2015, and they were held in her husband’s name. He sold all of his Express Scripts stock on Dec. 16, a few days after the 21st Century Cures Act was signed into law. Express Scripts is a prescription benefits plan manager. Collins’ office did not reply to requests for comment.
According to Louisiana Republican Cassidy’s annual disclosure, his wife owned between $1,000 and $15,000 in iShares US Pharmaceuticals, an exchange-traded fund based on an index of the drug industry.
Disclosure forms show that the family bought and sold other health related stock in 2016, including purchases of Johnson and Johnson, Abbott and Novartis shares in March. In October, Cassidy’s wife sold her stock in Johnson & Johnson and bought stock in CVS Health and Amgen.
Cassidy’s office did not respond to requests for comment.
KHN compiled a database of assets listed as “corporate securities stock.” It included all stock owners in the immediate family, including spouses and dependent children. Two of the original 40 senators filed their reports on paper instead of electronically. The paper forms do not classify assets as “corporate securities stock,” so those had to be examined individually.
Warner, who filed on paper, disclosed that his limited liability company, MRW Biotech Investors, holds between $250,000 and $500,000 in shares of Ziopharm Oncology, Inc. Warner’s LLC invested in a venture capital fund that invested in Ziopharm before it went public. Ninety-six percent of the investment company is owned by Warner’s trust.
“Sen. Warner’s investments are managed by an independent trustee, and have been since before he became governor of Virginia in 2002,” said Rachel Cohen, Warner’s press secretary.
Kaine is new to the HELP Committee this year. His 2015 disclosure revealed that his children and their cousins collectively owned a trust set up by their grandmother that contained between $51,000 and $115,000 in health stocks, most of which were Bristol Myers Squibb.
Amy Dudley, communications director for Sen. Kaine, said: “Over the years, Sen. Kaine’s wife’s mother has placed stock shares from a number of companies into a trust account to help her ten grandchildren with college expenses. Senator Kaine makes no decisions about which stocks are deposited into his trust or how the deposited shares are managed and sold.”
This story has been updated with comment from Sen. Kaine’s office.
Some elements may be removed from this article due to republishing restrictions. If you have questions about available photos or other content, please contact firstname.lastname@example.org.