PhRMA’s envoys

Introduction

The U.S. pharmaceutical industry, which is mounting a multi-million dollar campaign to prevent importation of prescription drugs from across the northern borders, enlisted an ex-envoy to Canada and his former top aide to lobby the government with which they once conducted diplomacy.

Gordon Giffin, who served as the U.S. ambassador to Canada from August 1997 to April 2001, and his chief of staff, Maryscott “Scotty” Greenwood, have been quietly lobbying that country’s various government agencies for the Pharmaceutical Research and Manufacturers of America, the powerful industry trade group, since December 2002, Canadian lobbying disclosure records reviewed by the Center for Public Integrity revealed.

Giffin and Greenwood, both employees of McKenna Long & Aldridge LLP, lobbied on Canada’s “prescription drug policy,” a critical legislative subject for the industry with hundreds of millions of dollars at stake and a huge political issue in Canada, as well as in the United States.

The former ambassador is a partner at McKenna Long & Aldridge, a large international law firm that has offices in several U.S. cities, including Washington, D.C., as well as Brussels, the headquarters of European Union. Greenwood is the managing director of its international trade and public affairs divisions. Neither is registered to lobby in the United States.

The two lobbied the Department of Foreign Affairs and International Trade, Health Canada, Industry Canada, and the Privy Council Office, all agencies that could potentially regulate the cross-border sale of prescription drugs. The Privy Council Office, the seat of prime ministerial power, wields similar power to the White House in Canada’s parliamentary system. Health Canada is the department responsible for healthcare issues, while Industry Canada regulates key sectors of the country’s economy.

In a telephone interview with the Center, Giffin said there was nothing wrong with his dealings with the Canadian government on behalf of PhRMA. “I don’t believe there are any ethical issues associated with my activities,” said the Georgian, a one-time legislative aide to former Democratic Sen. Sam Nunn. That same day—Jan. 13, 2005—Giffin terminated his registration to lobby for PhRMA. Giffin also terminated his registration to lobby for Refreshments Canada, a trade group of more than 30 brands of non-alcoholic beverage manufacturers. But he’s still registered to lobby on “prescription drug pricing policy, regulations and procedures” for Gilead Sciences, a California-based biopharmaceutical company.

Greenwood, too, defended her lobbying. “I think the laws are very clear what’s appropriate and what’s not,” she said. “The fact that someone has experience in the private sector as well as in government should not bar them from using that experience. The other thing is that officials are changing all the time. Just because you appear before an agency doesn’t mean that it’s the same people that you knew when you were there.” Greenwood—who is also the executive director of Canadian American Business Council, a non-profit group that represents Canadian and U.S. businesses—is still registered to lobby for PhRMA, Refreshments Canada and Gilead Sciences.

PhRMA spokesman Jeff Trewhitt said the organization did contact “policymakers” at the Canadian Health Ministry to “explain our opposition to importation,” but wouldn’t discuss details. “We basically don’t discuss lobbying or campaign contributions.”

Prescription medicine can be significantly cheaper in Canada, where the country’s health care system regulates prices—anywhere from 32 percent to 62 percent lower, according to a 2003 report by MarketResearch.com. The lower costs make the drugs an attractive lure to many Americans, especially those in border states. In 2003, Americans bought from their northern neighbor about 12 million prescription drug products—close to 5 million shipments-worth approximately $700 million, according to a government report. The Canadian International Pharmacy Association, which represents the country’s mail-order pharmacies, says exports to the United States have created 4,000 jobs in Canada.

If importation becomes legalized, the U.S. industry stands to lose perhaps billions of dollars in potential revenue, as millions more are likely to buy their prescriptions drugs from Canada as well as other countries.

No wonder that the industry is fighting hard to stem importation. Maintaining that such sales are illegal, PhRMA has been lobbying the two governments to crack down on importation and to block U.S. congressional moves to legalize it.

Since 1998, PhRMA has spent more than $65 million* lobbying various federal agencies, the Center found. Since 1992, PhRMA’s political action committee and its employees have given more than $3.2 million in campaign donations, more than 90 percent of it to the Republicans. Most of these contributions—$2.7 million—were made in the 2002 election cycle. Additionally, various pharmaceutical companies have spent tens of millions of dollars more in campaign money. “[Campaign] contributions we make are in the spirit of the law,” PhRMA’s Trewhitt said.

PhRMA maintains that revenue loss is not the main reason it is opposing the Canadian drugs. Overseas drugs pose risks to patients, the trade group says, and they are not necessarily cheaper.

“There are serious fundamental faults with importation,” Jeff Trewhitt, a PhRMA spokesman, said. “Many of the products are substandard,” he said, adding that many of the drugs that U.S. consumers buy are not made in Canada or the United States, but are “cheap knock-offs” from the third world.

But David MacKay, executive director of the Canadian International Pharmacy Association, insists PhRMA’s campaign on the safety issue is a red herring. “If safety is the issue, we should alert the American public because it is their [the pharmaceutical industry’s] products that we are selling.

“After four years of business, not one person was harmed by mail-order medicines,” he added. “Over 100,000 die as a result of medical mistakes in the United States. Show me a dead American [who died consuming the imported medicine.]”

Many Canadians also oppose sales to the United States, fearing that a prescription drug rush from the south of the border may eventually cripple their healthcare system, causing drug shortages and price increases. Currently, government regulations force the drug makers to keep the price low.

A Department of Health and Human Services task force that looked into the issue agrees with the industry’s arguments. In its report last December, the panel, led by Surgeon General Richard H. Carmona, concluded that a federally sanctioned importation program would be too costly and would have little or no benefit for consumers.

The Canadian government has also indicated recently that it would prohibit the Internet mail-order sale of prescription drugs to Americans. A Health Ministry spokesman told the Associated Press last week that such a proposal would be presented to the cabinet by the end of January.

U.S. and Canadian supporters of importation attributed Canada’s new resolve against it to pressure tactics by the Bush administration, which has so far supported the industry’s position. During his visit to Ottawa last fall, President Bush discussed the issue with Prime Minister Paul Martin. Several importation advocates in both countries say Ottawa may have struck a deal with Washington to get concessions on other economic issues, but the White House denied wielding any carrot or stick.

Despite PhRMA’s lobbying blitzkrieg and opposition from the administration, Congress has considered legalizing cross-border drug purchases. The House passed such a bill in July 2003, which was stalled in the Senate.

Other business interests

It is not known how much money PhRMA spent lobbying across the border. Canada does not require, as the United States does, lobbyists to report the amount of their earnings from clients, Christiane Fox, a spokeswoman for the lobbyists registration branch within Industry Canada, told the Center.

Besides Giffin and Greenwood, PhRMA also employed a Canadian lobbying firm for 11 months in 2003 and 2004. Ward Health Strategies, based in Hamilton, lobbied on “cross-border Internet drug selling” until its contracts were terminated, records showed.

In his conversation with the Center, Giffin declined to disclose the nature and frequency of his lobbying or the officials he met. But he added, “I am in Canada frequently.”

Aside from lobbying for PhRMA, Giffin has other business relations in the country where he served as the 19th U.S. ambassador. He is on the boards of at least four Canadian businesses, the Canadian Imperial Bank of Commerce, Canadian National Railway Company, Canadian Natural Resources Limited and TransAlta Corporation, according to McKenna Long & Aldridge’s Web site.

Giffin is not the first U.S. envoy to Canada who registered to lobby in that country. His predecessor, James Blanchard, a former Michigan governor, subsequently lobbied for UPS, Kellogg and Kmart.