PrintFebruary 22, 2008
Speaker Pelosi and the New York Times' Blind Eye
Since the 2006 Congressional victory by Democrats, The New York Times has ignored a highly questionable situation involving Speaker of the House Nancy Pelosi among other leading Democrats, instead focusing on alleged Republican offenses.
On August 2nd, 2007 Speaker Nancy Pelosi (D-CA) submitted a bill to the U. S. House of Representatives which raised a potential conflict of interest involving the Speaker's widely publicized family stock holdings, corporate sponsors, and former staffers turned lobbyists. The Speaker submitted the bill called the Early Treatment for HIV Act (ETHA) to the House with bipartisan support. It would allow states to decide whether or not to extend Medicare benefits for HIV treatment to some currently not covered.
Speaker Pelosi submitted ETHA one day after Medicare officials announced new rules to cut back on significant expenditures for the drugs PROCRIT® made by Johnson & Johnson and EPOGEN® made by Amgen. The new Medicare rules were primarily geared to reduce the use of the drugs for cancer patients. Those pharmaceuticals are used to treat anemia often seen as a side effect of HIV medications and for other conditions. Both companies enjoy massive revenues from the sales of those medicines, with Johnson & Johnson reporting $3.2 billion in earnings from PROCRIT® and a similar drug and Amgen showing $6.5 billion for EPOGEN® and a similar drug during 2006.
Last year Amgen started losing stock value as word of the cuts spread. A press release from Amgen at its' corporate website stated ""Recent changes in coverage rules and adjustments to Amgen's FDA approved labels for EPOGEN(R) and Aranesp have and will adversely affect Amgen's revenue." The company then announced layoffs.
The ETHA bill would increase the number of HIV infected persons able to receive government assistance. A PricewaterhouseCoopers analysis conducted in 2003 estimated that the act would increase eligibility for treatment by 30,000 people. In turn the government purchasing of the anemia medications associated with their treatment will certainly increase, making up some of the difference caused by the planned Medicaid purchasing reductions. In effect, this law could turn things around for Amgen and increase Johnson & Johnson stock values.
Considering that the bill was submitted only one day after the Medicare announcement, some viewed it as a reaction to the new guidelines and an attempt to improve the finances of those two drug makers. Unless Speaker Pelosi has divested herself of certain stocks that she held in 2006 by the time she sponsored ETHA, then she stood to profit from the bill. Inquiries to clarify her holdings have gone without response from her office. In addition she has strong connections to Amgen.
According to the ethics guidelines for the House of Representatives, an elected official must declare perosnal investments and holdings. Those declarations are available online and can be viewed at a website called opensecrets.org. The last declaration on record that covers the calendar year 2006 shows the Speaker owned over $500,000 dollars worth of Johnson & Johnson stock. Such a scenario creates the impression of a conflict of interest.
In addition, her close ties to biotech firm Amgen come into question. Two of her key staffers have left to become lobbyists working for Amgen directly or through lobbying firms. They include George Crawford, described by the San Francisco Chronicle as the Speaker's former chief of staff and Howard Moon, described in a Washington Post article as a former senior policy adviser who was named the government affairs director for Amgen.
In addition, Amgen has supported her campaigns through PAC money and by sponsoring fund raising events. While she does not appear to own stock in Amgen, the timing of the bill raises questions about just how closely she is tied to the company.
In addition, Amgen has supported her campaigns through PAC money and by sponsoring fund raising events. While she does not appear to own stock in Amgen, the timing of the bill raises questions about just how closely she is tied to the company.
Between 2002 and 2006 Amgen became a superstar stock amid soaring price hikes and massive profits. Nancy Pelosi attempted and failed to pass the Early Treatment of HIV Act during that run-up. In 2006 Amgen sponsored a fund raiser for Pelosi.
The Democrats won Congress in 2006 on a pledge to clean up the "culture of corruption" they ascribed to the majority Republicans. In one example, a Republican congressman in 2004 announced that he was considering taking a position with a pharmaceutical lobbying firm after he had negotiated pharmaceutical legislature. Congresswoman Pelosi charged at the time that the move was an "abuse of power".
The pharmaceutical industry was expected to be hit hard as Democrats strove to lower prescription drug prices through government negotiations. Pharmaceutical stocks were expected to fall. Speaker Pelosi herself was viewed by many as a threat to ‘big pharma'. One common investment technique for drawing profit from the markets is to buy when prices fall and sell when they go high again. According to the Speaker's 2006 disclosure she was invested in multiple pharmaceutical and biotech firms that make medications.
This new scandal recalls the early 2007 incident in which the Speaker promoted a minimum wage hike that would include all U.S. areas except American Samoa. Some large companies with canneries in Samoa are headquartered in the Speaker's district. Amgen is a powerhouse in Northern California, with a significant presence in the Speaker's district. That fact mirrors the Samoa controversy in which critics accused Pelosi of playing favorites with her district. And in 2007 it was revealed that the Speaker sponsored a massive earmark that would probably affect the value of property in which her husband was invested.
This summer, under extreme pressure from Congress, led by Pelosi, Medicare dropped its' planned regulation changes. J&J and Amgen stock immediately soared as The New York Times reported:
Medicare has eased up on some of its proposed restrictions on the use of popular anemia drugs made by Amgen and Johnson & Johnson.
The decision, announced late yesterday, could provide some relief for the two companies, which have already experienced steep drops in sales of the drugs. [....]
The federal Center for Medicare and Medicaid Services had proposed in May to sharply limit coverage for the drugs - Aranesp from Amgen and Procrit from Johnson & Johnson. Some analysts had predicted at that time that use of the drugs could be cut by as much as 50 percent. [....]
But investors reacted favorably, sending shares of Amgen by more than $2 in early after-hours trading, though it then began to drop back. Shares had closed at $56.19, up 57 cents.
Shares of the larger and more diversified Johnson & Johnson rose about 30 cents after hours, having closed at $60.07, up 30 cents.
How very interesting that The New York Times invests the efforts of a cadre of writers to investigate the wisp of a rumor concerning McCain while the Democrat Speaker of the House gets a free ride on such an apparently blatent abuse of power to enrich herself and friends.
And it doesn't end there. Congress pressured Medicare to backdown from the regulations with votes in the House and the Senate. The Sense of the Senate nonbinding resolution was approved unanimously (with no votes recorded therefore). As a Senator, Hillary Clinton would have also voted on this measure that proved a financial boon for Amgen. Senator Clinton is also tied to Amgen.
Bloomberg recently reported that President Clinton's former White House Deputy Chief of Staff Steve Ricchetti, now a lobbyist, received a $1.7 million payment to his firm from Amgen. He serves as a bundler for Senator Clinton's campaign. That means she is now receiving financial contributions assembled by a lobbyist at a firm that profited from the success of earning her vote.
One of those contributions was from Howard Moon, a former Pelosi advisor who donated $2,300 to the Clinton campaign a few weeks after Clinton voted to stay the hand of Medicare. In addition, in the days just before and after Pelosi submitted the ETHA bill on Aug. 2nd, 2007 a slew of Amgen executives made almost $30,000 dollars in private donations to the Pelosi campaign.
Barack Obama who claims not to take lobbyist money received over $12,000 in private donations from several Amgen corporate executives (listed as executives, directors, and vice presidents) as revealed by government watch dog group opensecrets.org. The donations listed occured just before the September 4th, 2007 Senate vote on the Sense of the Senate resolution and the day after.
This easily discovered appearance of unethical behavior on the part of Democratic leaders weighs far more heavily than the thin evidence provided against Senator McCain. Maybe the The New York Times has an ethics problem of its' own.
Ray Robison is co-author of Both in One Trench.
