Biotech Firm Gets $500M Gift Wrapped Up in Fiscal Cliff Deal
A recent article in The New York Times reported on a cost-control exception provided to Amgen, the world’s largest biotechnology firm. According to the report, the sweetheart deal — hidden in the Senate’s final “fiscal cliff” bill — will cost taxpayers half a billion dollars. Bill Moyers talks to U.S. Representative Peter Welch (D-VT) about the bi-partisan bill he recently sponsored to repeal that giveaway, and the political factors that allow such crony capitalism to occur.
“When there is this back room dealing that comes at enormous expense to taxpayers and enormous benefit to a private, well-connected, for-profit company, we’ve got to call it out,” Welch tells Moyers. “Those members of Congress who are concerned about the institution, about our lack of credibility, about the necessity of us doing things that are in the public good as opposed to private gain, we’ve got to call it out.”
A full transcript of the show after the jump.
BILL MOYERS: Welcome. Like just about everyone else, I enjoy a good show, and the inauguration of a president is one of those spectacles of democracy that can make us remember we're part of something big and enduring.
So for a few hours this past Monday the pomp and circumstance inspired us to think government of, by, and for the people really is just that, despite the predatory threats that stalk it. Unfortunately the mood didn't last.
So help me, every now and then, as the cameras panned upward to that great dome towering over the ceremony, I was reminded of something the good feeling of the moment could not erase. It's the journalist's curse -- to have a good time spoiled by the reality beyond the pageantry.
In particular on this crisp January day, I thought about the latest revelation of the skullduggery that often goes on in the shadows below that dome. Just a couple of days before the inaugural festivities, The New York Times published some superb investigative reporting by the team of Eric Lipton and Kevin Sack, and their revelations kept running through my mind. The story told us of a pharmaceutical giant, Amgen, and three senators so close to it they might be entries on its balance sheet: Republican Minority Leader Mitch McConnell, Senate Finance Committee Chair Max Baucus – a Democrat -- and that powerful committee’s ranking Republican, Orrin Hatch. A trio of perpetrators who treat the United States Treasury as if it were a cash-and-carry annex of corporate America.
The Times story described how Amgen got a huge hidden gift from unnamed members of Congress and their staffers. They slipped an eleventh hour loophole into the New Year’s Eve deal that kept the government from going over the fiscal cliff. And when the sun rose in the morning there it was, a richly embroidered loophole for Amgen that will cost taxpayers -- that's you and me -- a cool half a billion dollars. Yes -- half a billion dollars.
Amgen is the world’s largest biotechnology firm, a drug manufacturer that sells a variety of medications. The little clause secretly sneaked into the fiscal cliff bill gives the company two more years of relief from Medicare cost controls for certain drugs used by patients on kidney dialysis.
The provision didn’t mention Amgen by name, but according to reporters Lipton and Sack, the news that it had been tucked into the fiscal cliff deal "was so welcome that the company’s chief executive quickly relayed it to investment analysts.” Tipping them off, it would seem, to a jackpot in the making.
Amgen has 74 lobbyists on its team in Washington and lobbied hard for that loophole, currying favor with friends at the White House and on Capitol Hill. The Times reporters traced its “deep financial and political ties” to Baucus, McConnell and Hatch, “who hold heavy sway over Medicare payment policy.”
All three have received hefty campaign donations from the company whose bottom line mysteriously just got padded at taxpayer expense. Lo and behold, among those 74 lobbyists are the former Chief of Staff to Senator Baucus and the former Chief of Staff to Senator McConnell.
You get the picture: two guys nurtured at public expense, paid as public servants, disappear through the gold-plated revolving door of Congress and presto -- return as money changers in the temple of crony capitalism. Inside to welcome them is a current top aide to Senator Hatch – one who helped weave this lucrative loophole – who used to work for -- you guessed it: Amgen. The trail winds deeper into the sordid swamp beneath that great dome, a sinkhole where shame has all but disappeared. As reporters Lipton and Sack remind us, just two weeks before this backroom betrayal of the public trust by elected officials and the mercenaries they have mentored, Amgen pleaded guilty to fraud. Fraud, look it up. Trickery, cheating, duplicity.
Amgen agreed to pay $762 million in criminal and civil penalties. The company had been caught illegally marketing another one of its drugs. The fact that their puppet master had been the subject of fines and a massive federal investigation mattered not to its servile pawns in the Senate, where pomp and circumstance are but masks for the brute power of money.
With me now is Congressman Peter Welch, Democrat from Vermont. He has just introduced bipartisan legislation to repeal that half billion-dollar giveaway to Amgen. We asked one of its co-sponsors, Republican Richard Hanna of New York, to join us but a previous commitment made it impossible for him to do so. Congressman Welch, welcome.
PETER WELCH: Thank you.
BILL MOYERS: What is it you're actually trying to do?
PETER WELCH: Well, there's two things. One, I want to get the taxpayers their money back. This is half a billion dollars, more than that, that is vintage crony-capitalism at the eleventh hour, in a small room, unknown to 430 members of Congress and probably 98 or 97 senators. A small paragraph, innocent looking, in the fiscal cliff bill, a must-pass piece of legislation for all Americans. And it benefits a single company, turns out to be Amgen, maybe a few others, but this is an Amgen-inspired plan that's going to cost Medicare and taxpayers half a billion dollars. Now I want that money back. But there's a second reason that's even in many ways much more important. Congress is not trusted as an institution.
And when there is no trust for that institution, and then we take actions like this, where for the benefit of a company that's very powerful and well-connected, we charge taxpayers a half a billion dollars extra. That means that that institutional disrespect increases. And it's going to make much more difficult the challenge we have to essentially make the tough decisions on all kinds of policies.
BILL MOYERS: You made a tough statement in Washington in which you said actually Congress is less popular than cockroaches and root canals because of actions like these.
PETER WELCH: No, but that's true. I mean, that poll that came out, it actually says it all. People don't trust the institution. And you know what? They're right not to trust it when this kind of thing happens. When there is this back room dealing that comes at enormous expense to taxpayers and enormous benefit to a private, well-connected, for-profit company, we've got to call it out. Those members of Congress who are concerned about the institution, about our lack of credibility, about the necessity of us doing things that are in the public good as opposed to private gain, we've got to call it out.
BILL MOYERS: You voted for the fiscal cliff deal. When did you know that this language was in it?
PETER WELCH: I never knew it. I didn't know until I read the story in the Times, when I was outraged. What happened here was a couple of things. One, this was a lame duck session negotiation. And it didn't even involve Congress, the truth of the matter is. It involved the president and his staff. It involved the Speaker. And it involved the Senate leaders. And that's pretty much it. But it didn't go through any committee process. So there was no opportunity for members to get a heads up that this was something that was cooking. Because had this been made public that Amgen was asking for this sweetheart deal, people would have objected. And they would have been so embarrassed.
BILL MOYERS: You mean other members of Congress?
PETER WELCH: Other members of Congress would have been very concerned, Republicans, too, by the way. I mean, this type of crony capitalism, they don't -- a lot of them really do not like. So we didn't have the process work in its normal way, where something that is going to cost taxpayers a half a billion dollars goes through a committee process and then people can raise questions, challenge the argument that is made by the special interests, and crack and bring it down. This was done just in the secrecy of a private negotiation.
BILL MOYERS: Describe how they get this in without almost no one else knowing it's happening.
PETER WELCH: They immediately get it in because when these negotiations are going on, it involves a very few people. And again, since this was a lame duck session and it was the fiscal cliff, no committees were involved. So it really was at that moment, at the very end of the fiscal cliff negotiations, when the Finance Committee leaders had some opportunity to fashion the final details and put a paragraph in or take a paragraph out, they were able to do it.
Now why did they do it? They did it because Amgen had longstanding ties built carefully and slowly and methodically over time. And obviously, that's a function of their campaign contributions. It's a function of their 74 lobbyists on the Hill. It's their constant care and feeding of members of Congress. And then at a certain point, when the lights are off and the press isn't--
BILL MOYERS: Metaphorically speaking.
PETER WELCH: And Congress doesn't know what's going on, members of Congress -- they can move. And they did.
BILL MOYERS: Some member of Congress, some Senator--
PETER WELCH: That's right.
BILL MOYERS: --had to say, "Okay."
PETER WELCH: That's correct. The information I have on who that was or how that happened is from The New York Times article. But that's exactly right. Because the committee staff is doing a lot of the detailed work. And if a paragraph is going to be put in or taken out, they have to get the okay, usually from the Chair or a ranking member or the two of them.
So those are the people who have the authority to tell a staff, you know, do it. And obviously, staff play a role, because they will advocate to their boss, "We ought to put this in for Amgen." But members of Congress have to act with some restraint.
You know, if you have an enormous position of authority, just because you can do it doesn't mean you should do it. And that's important in the long run, you know? In the short run, this is good for Amgen, really bad for the process, really bad for taxpayers.
But what it does is it breaks down, brick by brick, the trust that we need in each other in an institution in order for it to function. And, you know, every day Americans lose that little brick of trust in that institution, the power of the institution to do good things, even when it wants to, is diminished.
BILL MOYERS: I was struck that just at the time many members of Congress were crying, "We've got to cut spending. We've got to reduce this deficit," some members in the Senate were putting this in in a way that will cost that will add to spending and add to the deficit.
PETER WELCH: And that's true. And it's even worse than that. Because as you mentioned in your opening, two weeks before this, Amgen paid an over $700 million criminal and civil penalty for illegally marketing another drug that they manufacture. So the effect of this is largely that taxpayers are picking up $500 million of the $700 million fine. And you know what--
BILL MOYERS: Amgen's getting about two thirds of the fine it paid back from the taxpayer.
PETER WELCH: That's right. And this is what -- you know that if this were put on the floor for an up or down vote, people would have to put a mask on to vote for it. It would never pass. So, you know, there's some chance we may get this reversed. Because you can't defend what Amgen did. You cannot--
BILL MOYERS: How are you going to get it reversed, Congressman? Because too many of your colleagues want the same process to work for them at some point in their own strategy.
PETER WELCH: Well, that's the obstacle. And the obstacle, too, is that to get -- we've got a simple repeal provision. It's like a one paragraph bill that says, "Repeal this giveaway," in effect. And the challenge for us will be to get that on the floor. The Republicans are the majority. They have the authority to say yes or no as to whether this will get on the floor. So the challenge for us will be to advocate this and essentially correct a mistake.
One of the other complaints people have been making about Congress a lot is that when we have a big bill like the fiscal cliff, that certain provisions get snuck in. And they're right about that. And that's where the process has to act with more restraint. If the bill is about the fiscal cliff, urgent issue for this country and its wellbeing, let's not use that as a freight train for certain members on behalf of certain special interests to get sweetheart deals part of this.
BILL MOYERS: There are a lot of Tea Party members in the House, elected in 2010, when the Republican surged back. But many of them were elected opposing government spending and corporate giveaways like this. Do you think you'll get some support from the Tea Party in the House?
PETER WELCH: I do. I actually do. You know, a lot of the Tea Party folks are ferociously concerned about spending. And they especially hate the crony capitalism type of spending. In these giveaways to private companies for private gain. I mean, the Amgen CEO in 2010 made $21 million. It's a $17 billion company in sales. It has a $64 billion market capitalization.
In the news, even though this is, you know, small potatoes for them in some ways as you mentioned in your opening the head of Amgen gave the good news. To the Wall Street analyst to give a little bit of boost to the Amgen stock price.
So I mean, you can't -- it doesn't get worse than this. And it confirms people's expectations or their views that this institution is not on the level. And you know what? Those of us in Congress from the Tea Party to progressive members of the Congress have a responsibility to do everything we can to build trust in that institution so that when it does make tough decisions on taxes, on spending, on energy policy, that America has some credibility that we got it more right than wrong.
BILL MOYERS: Tell me about the lobbyists. Who are these people?
PETER WELCH: Well, the problem with lobbyists, a lot of them come off the Hill, a lot of them come out of Congress. Many members of Congress leave the capital and go to K Street. And it's a real reflection of how money has overtaken politics. And the real problem with that system is not the individual lobbyists. A lot of times they'll have legitimate points to present to members of Congress.
The problem is the amount of money that lobbyists represent. And what tends to happen in Congress is that the concerns of those lobbyists, the concerns of Amgen, become much more of the topic of discussion, debate, and resolution than the concerns of middle America, the concerns of the farmers.
You know, in Congress, we didn't even vote in the House on a farm bill. This is the first time in the history of this country where a House Agriculture Committee, on which I sat, but in a bipartisan vote, we worked together, passed the farm bill, and the House didn't even take it up for a vote. But Amgen was able to have their provision, $500 million, put into the bill with no problem.
BILL MOYERS: I brought with me the Justice Department press release that came out in December about Amgen's crime. Quote, "Earlier today, at the federal courthouse in Brooklyn, New York, U.S. District Judge Sterling Johnson, Jr. accepted a guilty plea by American biotechnology giant Amgen Inc. for illegally introducing a misbranded drug into interstate commerce. The plea is part of a global settlement with the United States in which Amgen agreed to pay $762 million to resolve criminal and civil liability arising from its sale and promotion of certain drugs. The settlement represents the single largest criminal and civil false claims act settlement involving a biotechnology company in U.S. history." How does a company that just pleaded guilty to criminal charges in federal court and is slapped with three quarters of a billion dollars in fines even allowed a place in the negotiations in the Senate?
PETER WELCH: Yeah, you would think they would be shunned. And you would think that they would have absolutely no opportunity to come in and get the fine paid by the taxpayer. But the way it works is that they've established relationships with those 74 lobbyists. They've established relationships with the very substantial political contributions they've made to all kinds of people on the Hill. And they have established relationships in part because they have facilities in many districts that members of Congress represent.
And they were able, in effect, to be in the room when most of us in Congress, let's say in the House, 435 members were not in the room. We were not in the discussion. We didn't know it was happening. So if you're that well connected to the people who will be at that table, at that moment, when the final draft is being put together, and no one has a chance to get a heads up to review it, to ask a question, then you can sneak something in and get away with it. And that's essentially what happened.
BILL MOYERS: Yeah, what you're saying is that Amgen's friends in the Senate recouped some two thirds of the fine they just paid for fraud?
PETER WELCH: That's right. That's exactly right.
Well, a lot of the worst things that happen in eroding trust and really hurting the economy are legal. This is legal. What Amgen did now is legal. Should it be? Is it ethical? Is it the right thing for the country? Absolutely not. But they literally accomplished in the back room, with their access to important people, what they could never have accomplished on the floor of the House or on the floor of the Senate.
BILL MOYERS: Congressman, people out there -- you're right, people out there are disgusted. But they're also despairing. They've seen this time and again. They've see, we report on it. They see it. They get angry. And then nothing happens.
PETER WELCH: Well, that's right. And that's why I'm so glad that Congressman Hanna, we've got a bipartisan bill here.
BILL MOYERS: Republican.
PETER WELCH: A Republican, a very good member from New York. And there's a lot of us who really take seriously that we've got two jobs. One is to try to make good decisions on policy that are going to get America going again. But the other (and each of us with a vote has this job) is to try to restore trust in the institution. And that means that when there is this kind of egregious rip off, we've got to stand up and do everything we can to help expose it and to help reverse it. So I want the money back for the taxpayers. I mean, I'm a frugal Vermonter. So that matters. And let's get it.
BILL MOYERS: Don't you fear retaliation? You're up against a powerful corporation, a whole system that works, as you've just described it, and mighty members of the Senate?
PETER WELCH: Well, I don't. Vermont's a great state to represent. And people there are practical and they're fair. They won't like this. And they're going to have the final say about whether I pay some price, because I'm standing up to this Amgen deal.
But secondly, what's the point? I mean, I've got a job to do. This is clearly wrong. And, every day, if I can get up and try to fight the battle that is nowhere near as tough as what it is for middle class families raising kids, trying to figure out how to pay the tuition, trying to figure out how to pay the heating bill in a cold winter, how to make it by the end of the month. I mean, that's the people that have the tough job. So everything that I can do to just display some fairness and awareness of what they're doing, let's do it.
BILL MOYERS: Congressman Peter Welch, thanks for coming by. And good luck to you.
PETER WELCH: Thank you.
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