[Congressional Record (Bound Edition), Volume 150 (2004), Part 9]
[Extensions of Remarks]
[Pages 11573-11575]
[From the U.S. Government Publishing Office, www.gpo.gov]




                           DEMOCRACY ON DRUGS

                                 ______
                                 

                        HON. FORTNEY PETE STARK

                             of california

                    in the house of representatives

                         Thursday, June 3, 2004

  Mr. STARK. Mr. Speaker, I rise to draw my colleagues' attention to a 
new report by Common Cause, ``Democracy on Drugs, The Medicare 
Prescription Drug Bill: A Study on How Government Shouldn't Work.'' 
This report does a very good job of highlighting the egregious methods 
used to gain passage of the Medicare prescription drug legislation. I 
encourage each of you to review this report to remind yourselves how 
democracy was trampled in the passage of the Medicare prescription drug 
law.

    The Medicare/Prescription Drug Bill: A Study in How Government 
                             Shouldn't Work

                           Democracy on Drugs

                       (A report by Common Cause)

     Introduction
       Our Constitution reflects the over-arching concern of the 
     Founding Fathers that the rights of the minority be jealously 
     preserved and protected, even in the presence of a strong 
     majority. From start to finish, the $535 billion Medicare 
     bill passed by Congress and signed by President Bush late 
     last year has been a study in shutting out opposing voices 
     and suppressing the flow of vital information.
       This Common Cause report chronicles a series of incidents, 
     large and small, that add up to a consistent effort by the 
     Administration and Congressional leadership to bypass or 
     undermine the rules and laws that are in place to ensure that 
     our government works in an open and accountable manner and 
     that all voices are heard on critical public policy issues.
       The Medicare bill (see appendix) is the product of a 
     process that included:
       Charges of bribery, delayed votes, inappropriate cabinet 
     member lobbying and censoring of C-SPAN cameras.
       The Administration misleading Congress by withholding its 
     own cost estimates for the prescription drug legislation--
     estimates that greatly exceeded what the President was 
     telling the public. A career civil servant being threatened 
     with his job if he told Congress the truth.
       Congressional Members excluded from the House-Senate 
     conference committee that finalized the bill. Only a 
     ``coalition of the willing'' was invited to participate.
       A principal author of the bill was forced to step down as 
     head of a powerful House committee after it was reported that 
     he was negotiating a $2 million a year lobbying job with the 
     drug industry while he was moving the proposal through his 
     committee. And a key Administration official involved in 
     pushing the legislation was also offered lucrative private 
     sector healthcare jobs.
       The drug industry showered Congress with campaign 
     contributions and spent millions of dollars on highly paid 
     lobbyists who swarmed Capitol Hill while the bill was being 
     considered.
       A propaganda campaign waged by the Department of Health and 
     Human Services. The Administration paid people to pose as 
     journalists in television segments that praised the benefits 
     of the new Medicare law, and spent tens of millions of 
     dollars on a campaign promoting the new program.
     Charges of Bribery on the House Floor
       At the break of dawn on Nov. 22, 2003, Representative Nick 
     Smith (R-MI) was about to cast his vote against a Medicare/
     prescription drug bill so flawed and controversial that the 
     Republican House leadership held the vote open for three 
     hours while they pressured their own Republican colleagues to 
     vote for the bill. Votes in the House typically are open for 
     15 minutes.
       Strong-arming Members of the House to vote with the 
     leadership is routine business, but what went on in those 
     early morning hours appears to have slid over the line from 
     political pressure to outright bribery.
       A Nov. 23, 2003 column written by Rep. Smith appearing on 
     his website reads: ``I was targeted by lobbyists and the 
     congressional leadership to change my vote, being a fiscal 
     conservative and being on record as a no vote. Secretary of 
     Health and Human Services Tommy Thompson and Speaker of the 
     House Dennis Hastert talked to me for a long time about the 
     bill and about why I should vote yes. Other members and 
     groups made offers of extensive financial campaign support 
     and endorsements for my son Brad who is running for my seat. 
     They also made threats of working against Brad if I voted 
     no.''
       On Dec. 1, 2003, in a radio interview with Kevin 
     Vandenbroek of WKZO in Kalamazoo, Mich., Rep. Smith said: 
     ``They started out by offering the carrot, and they know 
     what's important to every member, and what's important to me 
     is my family and my kids. And I've term-limited myself, and 
     so Bradley my son is running for [my congressional seat] and 
     so the first offer was to give him $100,000-plus for his 
     campaign and endorsement by national leadership. And I said 
     No, I'm gonna stick to my guns on what I think is right for 
     the constituents in my district.''
       Since Rep. Smith went public with his allegations, he has 
     made several attempts to modify his original statement. 
     Speaking to David Frownfelder of the Daily Telegram in 
     Adrian, Mich. Rep. Smith said: ``I was told there would be 
     aggressive, substantial support for my son, Brad [in his race 
     for Congress] if I could vote yes on the bill. There were 
     offers of endorsements and so maybe a member [of Congress] 
     sitting close by said, `Boy that really could be big money.' 
     Tens of thousands or hundreds of thousands. But never was I 
     offered any exact amount of money in exchange for my vote. 
     Technically, in the legal description that I later reviewed 
     on what a bribe is, probably it didn't meet the legal 
     description of a bribe.''
     Censoring C-SPAN
       C-SPAN cameras perched above the House floor have for 25 
     years allowed the public to see for themselves how their 
     representatives are carrying on the public's business. But 
     the night of the vote on the prescription drug bill, the 
     House leadership censored the public's view of the chamber.
       In an interview on the 25th anniversary of C-SPAN's 
     television coverage of Congress, the head of C-SPAN, Brian 
     Lamb, noted that the congressional leadership has always 
     controlled the cameras in the House and Senate chambers, 
     generally focused on whoever is speaking, but also panning 
     across the chamber to show activity on the floor. Lamb 
     pointed out how the leadership's control of the cameras can 
     subvert C-SPAN's studiously nonpartisan, objective coverage 
     of Congress. Lamb said: ``You saw what happened in the middle 
     of the night over the vote on Medicare on the floor of the 
     House of Representatives, when they controlled the cameras. 
     And I noticed that the camera wasn't moving from--it usually 
     moves constantly from side to side. For almost the entire two 
     or three hours that they had it open, the camera was showing 
     the Democratic side. And that's where people don't get a fair 
     shot.''
       In other words, the Republican leadership of the House 
     intentionally diverted the C-SPAN cameras away from the 
     Republican side of the House floor. Consequently, there is no 
     visual record of who was talking to who that night while 
     votes were sought by the leadership.
     HHS Secretary on the House Floor
       Rep. Smith said he was pressured during the three-hour vote 
     by his own House leadership, but also, to his surprise, by 
     the Department of Health and Human Services (HHS) Secretary 
     Tommy Thompson, who made an unusual appearance on the House 
     floor that night.
       While House rules allow federal department heads to be in 
     the House chamber, it is rare for such an official to be 
     lobbying for legislation being considered by the House. 
     According to National Journal's CongressDaily, Secretary 
     Thompson defended the fact that he had broken House customs 
     by lobbying members on the House floor during the final, 
     three-hour roll call vote on the Medicare reform bill. ``I 
     spent five months working on this bill. I think it was only 
     proper my being on the floor,'' Thompson said. But it appears 
     Thompson's activities that night were a sharp departure from 
     House customs.
     Misleading Congress and Withholding Pivotal Information
       In 1997, Rep. Bill Thomas (R-CA) added language to the 
     Balanced Budget Act conference report citing the importance 
     of access by Congress to the estimates of HHS chief actuary 
     (then, as now, Richard Foster). Some of that language in the 
     conference report reads as follows: ``It is important to 
     emphasize that the Senate Committee on Finance, the House 
     Committee on Ways and Means, and the House Committee on 
     Commerce all rely on their ability to seek estimates and 
     other technical assistance from the Chief Actuary, especially 
     when developing new legislation. . . . The process of 
     monitoring, updating and reforming the Medicare and Medicaid 
     programs is greatly enhanced by the free flow of actuarial 
     information from the Office of the Actuary to the committees 
     of jurisdiction in the Congress. When information is delayed 
     or circumscribed by the operation of an internal 
     Administration clearance process or the inadequacy of 
     actuarial resources, the Committees' ability to make informed 
     decisions based on the best available information is 
     compromised.''
       Flying in the face of this statement, Foster, who has been 
     the chief auditor in HHS for several years, said that he was 
     threatened with dismissal if he released his official 
     estimate of the cost of the prescription drug bill. His 
     estimate added $156.5 billion to the estimated cost and 
     likely would have led to several conservative Republicans 
     voting against the bill.

[[Page 11574]]

       In a public statement, Foster said: ``For many years my 
     office has provided technical assistance to the 
     administration and Congress on a nonpartisan basis. But in 
     June 2003, the Medicare administrator, Tom Scully, decided to 
     restrict the practice of our responding directly to 
     Congressional requests and ordered us to provide responses to 
     him so he could decide what to do with them. There was a 
     pattern of withholding information for what I perceived to be 
     political purposes, which I thought was inappropriate.''
       Foster has said that he gave analyses in June 2003 to the 
     White House and the Office of Management and Budget--which 
     were not shared with Congress--predicting that prescription 
     drug benefits being drafted on Capitol Hill would cost about 
     $156 billion more than President Bush said he wanted to 
     spend. Since Congress passed the Medicare bill, the 
     Administration has revised its estimated 10-year cost of the 
     program to $534 billion. Its original estimate was $395 
     billion.
       Foster, the government's chief analyst of Medicare costs, 
     says that he was warned repeatedly by his former boss, Thomas 
     A. Scully, the Medicare administrator for three years, that 
     he would be dismissed if he replied directly to legislative 
     requests for information about prescription drug bills 
     pending in Congress. In an email released by Foster, Scully's 
     assistant, Jeffrey Flick, instructed the actuary to answer 
     Republican queries regarding provisions in the Medicare bill 
     but was warned--in bold font--not to provide information for 
     Democratic requests ``with anyone else until Tom Scully 
     explicitly talks with you--authorizing release of 
     information. The consequences for insubordination are 
     extremely severe,'' Flick wrote in bold type. Interviews with 
     federal officials, including Foster and Scully, make clear 
     that the actuary's numbers were circulating within the 
     Administration, and possibly among some Republican supporters 
     of the bill on Capitol Hill, throughout the second half of 
     last year, as Congress voted on the prescription drug bill, 
     first in June and again in November.
       At a hearing on Feb. 10, Secretary Thompson told lawmakers 
     as much. Thompson said, ``we knew all along'' that the 
     administration's cost estimates would be higher, but said he 
     did not have a final figure until Dec. 24, 2003, after the 
     bill was already signed into law.
       On April 26, the Congressional Research Service issued a 
     letter on the legality of Scully's decision to withhold 
     information from Congress. Its conclusions read in part as 
     follows: ``. . . actions which purposefully result in the 
     transmission of knowingly false information to the United 
     States Congress, and actions that involve the intentional and 
     active prevention of the communication of accurate 
     information to Congress in derogation of Federal law or 
     responsibilities, might in certain circumstances involve 
     activities which constitute violations of federal criminal 
     provisions . . . The issuance by an officer or employee in a 
     department or agency of the Federal Government of a `gag 
     order' on subordinate employees, to expressly prevent and 
     prohibit those employees from communicating directly with 
     Members or committees of Congress, would appear to violate a 
     specific and express prohibition of federal law.''
     Conference Committee Lockout
       When the House and Senate each passed their own version of 
     the Medicare bill, the Republican leadership at first 
     followed routine procedure by appointing a 17-member 
     conference committee to work out the differences between the 
     two pieces of legislation. Seven Democrats were appointed to 
     the committee. However, only two of those Democrats, Senators 
     Max Baucus (MT) and John Breaux (LA), were included in the 
     closed-door meetings that had actually produced the final 
     legislation. Why? Because they were among the few Democrats 
     who would not raise significant objections to the bill. 
     According to conference members from both parties, when the 
     bill was made available to the rest of the committee, they 
     were given just one hour to review the 678-page document 
     before they voted.
       The ranking Democrat on the Ways and Means Committee, Rep. 
     Charles Rangel (NY), was among the members of the original 
     conference committee. However, he was excluded from the 
     closed-door meetings. He arrived uninvited to one meeting, 
     and Rep. Thomas, the conference chairman, stopped substantive 
     discussion of the legislation until Rep. Rangel left.
       Democrats and others have complained the tactics like those 
     employed during the conference on the Medicare bill are 
     becoming more common. Similar lockouts were staged during 
     crucial conference committee meetings on huge energy and 
     transportation bills. More and more the role of the full 
     conference committee is perfunctory while the details of the 
     legislation are hammered out in closed meetings that include 
     only a small coterie handpicked by the party leadership.
     Scully Cashes In
       In December 2003, as the ink of the President's signature 
     was drying on the Medicare bill, Thomas A. Scully, the 
     government official responsible for Medicare, announced that 
     he was leaving the government for lucrative healthcare jobs 
     in the private sector. He joined Alston & Bird, a law firm 
     that represents hospitals, drug manufacturers and other 
     companies in the health care industry. Scully also accepted a 
     job with Welsh, Carson, Anderson & Stowe, a New York 
     investment firm specializing in telecommunications and health 
     care.
       Surprisingly, even though federal law generally bars 
     presidential appointees such as Scully from discussing 
     possible employment with firms involved in matters handled by 
     those officials, Scully obtained a waiver from the HHS ethics 
     officer so that he could negotiate with potential employers 
     while he helped write the Medicare law. These jobs did not 
     just drop into his lap in December. He had apparently been 
     negotiating with healthcare-related firms at the same time he 
     was helping the Administration push the controversial 
     prescription drug legislation through Congress, which 
     directly affected those industries.
       Apparently in response to criticism of Scully's waiver, the 
     White House ordered federal agencies to cease issuing ethics 
     waivers for senior Administration appointees that would allow 
     them to pursue jobs with private companies while influencing 
     federal policies that could affect those companies. A memo 
     issued on Jan. 6, 2004 by the White House Chief of Staff 
     stated that, effective immediately, such waivers could only 
     be approved by the White House.
     Tauzin Negotiates PhRMA Job While Negotiating Prescription 
         Drug Bill
       As Medicare chief Scully was job searching while also 
     helping pass the drug legislation, a powerful Member of 
     Congress was also looking for a new job.
       The Pharmaceutical Research and Manufacturers Association 
     (PhRMA), the trade group for name-brand drug producers, 
     reportedly offered Representative Billy Tauzin (R-LA) the top 
     position at PhRMA and a compensation package that ``would be 
     the biggest deal given to anyone at a trade association,'' 
     around $2 million a year, according to The Washington Post. 
     The offer came just two months after Rep. Tauzin helped 
     negotiate a $534 billion Medicare prescription drug bill 
     widely viewed as a boon to pharmaceutical companies, which 
     stand to make billions in profits while avoiding government 
     price restrictions.
       In February 2004, Common Cause called on Tauzin to resign 
     his chairmanship of the powerful House Energy and Commerce 
     Committee, saying ``Even if your job negotiations with PhRMA 
     began after your work on the Medicare bill was over, as you 
     have reportedly said, it leaves one wondering whether you 
     were trying to please PhRMA and what PhRMA may have promised 
     you in return.''
       Tauzin denied there were any dealings with industry in 
     exchange for his work on the bill, but he stepped down from 
     the chairmanship of the House Energy and Commerce Committee 
     in early February, while negotiations over the PhRMA lobbying 
     post continued. The job remains open and Tauzin may still be 
     eligible if it remains open at the end of his term.
     Drug Industry Money Undermined the Process
       As the Congressional fight on prescription drugs loomed, 
     the drug industry drew up plans for raising millions of 
     dollars to defeat efforts to reduce drug prices. The 
     financial stakes were huge and the industry began to spend 
     enormous amounts of money on campaign spending, lobbying, and 
     advertising to influence the outcome of the legislation.
       No group epitomized this more than PhRMA. PhRMA not only 
     had a tremendous stake in the bill, but also turned out to be 
     a major winner. The law prohibits the federal government from 
     negotiating for lower drug prices and prohibits the 
     reimportation of prescription drugs that are produced in the 
     U.S. but sold for significantly less in other countries, 
     which would also bring down the price of drugs.
       PhRMA increased its yearly budget 23 percent to $150 
     million in anticipation of the upcoming Medicare fight. While 
     PhRMA's interests range from international policy to local 
     initiatives, industry protection in the Medicare reform bill 
     was its top priority. According to published reports, PhRMA 
     planned to spend $1 million for an ``intellectual echo 
     chamber of economists--a standing network of economists and 
     thought leaders to speak against federal price control 
     regulations through articles and testimony, and to serve as a 
     rapid response team.'' Says one PhRMA document, ``Unless we 
     achieve enactment this year of market-based Medicare drug 
     coverage for seniors, the industry's vulnerability will 
     increase in the remainder of 2003 and in the 2004 election 
     year.''
       PhRMA is well known as one of Washington's most powerful 
     lobbying forces. The trade group alone spent $16 million on 
     lobbying in 2003, according to federal lobby disclosure 
     reports filed with the Senate Office of Public Records. 
     Including lobbying spent by all of PhRMA's companies, the 
     group spent at least $72.6 million lobbying in 2003--or 
     roughly $135,701 per member of Congress.
       PhRMA has capitalized on hiring former Members of Congress 
     and their staffs as part of its lobbying army. According to 
     reports, PhRMA lobbyists include former Reps. Vic Fazio (D-
     CA), Vin Weber (D-MN) and Bill Paxon (D-NY). Other drug 
     industry lobbyists

[[Page 11575]]

     include David W. Beier, former domestic policy advisor for 
     Vice President Al Gore; Dave Larson, former health policy 
     advisor to Senator Bill Frist (R-TN); and Edwin A Buckham, 
     former chief of staff to Rep. Tom DeLay.
       The industry maintains a constant presence among 
     policymakers. For example, in the weeks following the House 
     and Senate's passage of their respective Medicare bills in 
     June, pharmaceutical companies organized parties for 
     congressional staffers that worked on the legislation. 
     According to The Washington Post, the drug company Johnson & 
     Johnson planned a cocktail party near the Capitol. The 
     invitations read, ``in recognition of your part in the 
     historic passage of Medicare drug bills by both houses of 
     Congress . . .'' After Common Cause sent letters to Senate 
     conferees and House leaders stating that attendance by staff 
     members to the party could violate congressional ethics 
     rules, the leadership discouraged their staff from going and 
     the party was later cancelled. Congressional staff still had 
     the opportunity, however, to attend a ``Rooftop Rendezvous'' 
     thrown by PhRMA and hospital trade groups.
     HHS Propaganda Campaign
       Once legislation passes Congress and is signed into law by 
     the President, it is the job of the executive branch to 
     implement the new law, including informing the public of the 
     effect or the benefits of the new law. HHS, charged with 
     implementing the new prescription drug law, immediately 
     launched a multi-million dollar campaign promoting the new 
     prescription drug benefit under the guise of public service 
     advertising.
       Early this year, HHS created a TV ad designed to educate 
     the public on the new drug benefits, but many criticized the 
     ads as being political advertisements for the Administration 
     that mislead the public about the facts of the new program. 
     Adding to the concern about politicization of the 
     prescription drug program was a contract for $9.5 million for 
     producing and distributing the ads that went to a partisan 
     media company, National Media, Inc.
       HHS has also produced videos that were sent to broadcasters 
     around the country touting the new program. The videos 
     feature hired ``reporters'' who appear to be delivering 
     straight news stories, but do not identify the government as 
     the producer. Two videos end with the voice of a woman who 
     says, ``In Washington, I'm Karen Ryan reporting.'' The 
     ``reporter'' in the commercial is reading from a script 
     written by HHS.
       The General Accounting Office (GAO) is now investigating 
     these `fake video news' clips. The GAO will determine if they 
     constitute illegal ``covert propaganda.'' Federal law 
     prohibits the use of federal money for ``publicity or 
     propaganda purposes'' not authorized by Congress.
     Conclusion
       Posted on Congressional websites is a document called ``How 
     Our Laws Are Made.'' [http://thomas.loc.gov/home/
lawsmade.toc.html]. No one really believes the process 
     meticulously detailed in the document is followed exactly--
     legislating is a messy process. But the laws, rules and 
     procedures cited in the document are there to ensure that 
     democratic principles are not empty words in the 
     Constitution, but inform the way our government operates on a 
     daily basis.
       This report has told a tale of the rush to pass a thinly 
     supported prescription drug bill that was a prime political 
     goal of the Administration. In that rush, supporters showed 
     disregard for the law, congressional rules, and other 
     procedures and customs. We must reform and strengthen some of 
     those laws and rules and, perhaps more importantly, those 
     public officials must be held accountable. Americans must be 
     assured that democracy is not just another word, but an 
     integral part of how our government operates.

                          ____________________