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What a boring-sounding award reveals about the creative lengths to which lobbyists will go to influence members of Congress

Rep. Erik Paulsen receiving the Champion of Health Care Innovation Award
Office of Rep. Erik Paulsen
Rep. Erik Paulsen receiving the Champion of Health Care Innovation Award from the American Life Science Innovation Council.

In August 2017, Rep. Erik Paulsen, via his Twitter account, posted an announcement: “Honored to receive Champion of Health Care Innovation Award from American Life Sciences Innovation Council.”

Included in the tweet was a photo of Paulsen sitting at a conference table with seven men and women, looking thoughtfully engaged in a conversation about health care innovation. “Thank you for the recognition!” Paulsen exclaimed in the tweet.

Paulsen was not the only lawmaker to receive this recognition: In 2017, at least eight other members of the U.S. House and Senate, both Republicans and Democrats, took to social media or to press statements to announce that they, too, had been honored by the American Life Sciences Innovation Council for championing health care innovation.

As with Paulsen, other politicians who received the award offered little information about anything specific he or she did to deserve the honor. Tweets from accounts belonging to Sen. Joe Donnelly, an Indiana Democrat, and Rep. Claudia Tenney, a New York Republican, are similarly ambiguous in relaying the blandly positive news.

That’s largely because there is not much to say about this award — or the organization that awards it. There exists little evidence of what the American Life Sciences Innovation Council does, beyond giving out its “champion” award. There is also scant information about who supports the group: Because it is a nonprofit 501(c)(4) organization, it does not need to disclose to the public who funds its activities, and by how much.

To experts, however, ALSIC bears the signs of an industry-backed operation: It has no full-time staff, lists as its address a UPS Store in Washington, D.C., and has a five-person board of directors with deep ties to the pharmaceutical industry. The last public event touted on the group’s thin website was in February 2012.

This obscure organization, and the even more obscure award it hands out, offer a revealing glimpse into a decidedly not obscure phenomenon: powerful industries and interests seeking to influence Washington politics. Sometimes that is done through lobbying campaigns — and sometimes it is done by other, more creative means.

Championing a pharmaceutical industry agenda

The American Life Sciences Innovation Council was founded in October of 2011, and was granted tax-exempt status by the Internal Revenue Service in 2012. It joined a sea of some 86,000 tax-exempt 501(c)(4) organizations that were active in 2012, according to the IRS.

This nonprofit designation is reserved for groups that have a mission of “social welfare,” a broad category that includes everything from local volunteer groups to big advocacy organizations like the Sierra Club. They are not required to disclose their donors, though they must make their IRS Form 990, which includes basic information like how much the organization raises and spends, available to the public each year.

There are restrictions in the law over the extent to which 501(c)(4) organizations can engage in political activity, but many of them skirt these limits by not using certain words in their communications, like “vote” and “ballot.” They instead emphasize their stances on issues — an activity that can, under the law, include running ads with strong stances on certain issues in the run-up to an election.

ALSIC does not run ads on issues, nor does it appear to engage in any explicitly election-related activity, though voters in various districts around the country have reported receiving mailers from ALSIC touting particular members of Congress.

The statements that exist to express the group’s mission reveal its priorities are to promote policies friendly to the pharmaceutical industry. According to its tax filings, ALSIC’s mission is “to educate the public and policymakers about the effects of government regulation on key factors that drive life science innovation,” including intellectual property protection, a “transparent and predictable” regulatory environment, and “adequate reimbursement driven by market forces.”

To pharmaceutical industry watchdogs, those factors “driving innovation” align closely with drug companies’ policy goals in Washington. According to Peter Maybarduk of Public Citizen, an advocacy group critical of the pharmaceutical industry, the ALSIC statement offers “all code terms, or in some cases, not even code, for the pharma corporations’ lobbying priorities in Washington.”

“Strong intellectual property protection,” Maybarduk explains by way of example, reflects the industry’s desire to preserve a status quo in which government regulators routinely grant to companies lengthy rights to exclusively market certain drugs — sometimes, even, ones that were made possible through taxpayer-funded research.

This state of affairs, Maybarduk says, “is the basis of high drug prices … there is no market competition — not much effective market competition. When they say ‘strong intellectual property protections,’ what we hear is increasing efforts to expand monopoly power.”

ALSIC’s criteria for awarding its “Champion of Health Care Innovation” honor also line up with the pharmaceutical industry’s priorities. The group says it “acknowledges House and Senate members who have demonstrated leadership” on four issues. One of them is “expressing concern or calling for repeal of the Independent Payment Advisory Board,” which was an initiative included in the Affordable Care Act intended to bring down Medicare costs through an evidence-based, not political, process.

The IPAB has not yet become operational — and the U.S. House voted to kill it earlier this month — but it has been a frequent target of criticism by the pharmaceutical industry and its powerful trade association, the Pharmaceutical Research and Manufacturers of America, or PhRMA, which lobbies actively in Washington. ALSIC’s website says IPAB “was designed to be immune from the impact its decisions have on innovators and other employers in the life sciences arena and could lead to drastic policy changes with serious consequences to American jobs.”

A lean operation

ALSIC says a key part of its mission is to “share its research and policy positions with policymakers.”

There is, however, no evidence ALSIC has done any of its own research on any of these issues; instead, the “recent news and studies” page on its website shares research and opinion papers from other publications and journals.

For a group tasked with influencing the debate over health care policy, ALSIC is a lean operation. Its annual tax filings reveal that it has no full-time paid staff, nor any office expenses. The address listed on its website — formatted to look like that of an office suite — is for a UPS Store in northwest Washington, D.C.

ALSIC’s 2015 tax filing shows its largest disbursement in 2015 was a $685,000 payment to Mohler Consulting LLC, a firm owned by David Mohler, one of the five members of ALSIC’s board of directors. (“Organization used services from Mohler Consulting LLC to handle production & execution of media advocacy campaigns,” the filing reads.)

On a board where each member has some kind of connection to the pharmaceutical industry, Mohler’s connections run perhaps the deepest. He is the founder of Washington-based East End Group, which bills itself as a “full-service federal government affairs firm focused on health care and the life sciences.” In 2017, East End Group did $2.4 million worth of lobbying, including a combined $480,000 of work for pharma giants AstraZeneca and GlaxoSmithKline. East End was also retained by PhRMA, which paid for $180,000 worth of East End Group's services in 2017.

Before founding East End Group, Mohler worked for PhRMA as the pharmaceutical industry’s “chief policy and political advocate in Congress, the White House, and executive branch agencies,” according to the biography on his firm’s website.

Also on the board of directors of ALSIC is Steve Knuth, the president of the Public Affairs Company, an all-purpose political services shop with offices in Minneapolis and Sioux Falls, South Dakota. Knuth, who has a background in Republican politics, “currently provides alliance development services throughout the United States for PhRMA,” according to Public Affairs Co.’s website. (The address on ALSIC’s tax filing is that of the Public Affairs Co., in downtown Minneapolis.)

Mohler and Knuth did not respond to requests for comment for this story. (Calls to the 1-800 number listed on ALSIC's website were not returned.) The other three members of the board of directors are associated with various health care, pharmaceutical, and medical technology companies, some of which are no longer in operation.

Links to a powerful industry

Though there are several indications that ALSIC is linked to the pharmaceutical industry, because of its status as a 501(c)(4) organization, information that would comprehensively reveal the extent to which industry interests support the group is not available to the public.

(Public records do show that, in 2011, ALSIC received a $935,000 grant from the Council for American Medical Innovation, another Washington-based 501(c)(4) organization that shares an agenda friendly to the pharmaceutical industry.)

Because of the lack of conclusive information about funding, it’s impossible to say how deeply linked ALSIC and pharmaceutical interests are. To money-in-politics experts, however, ALSIC’s characteristics are common among industry-backed “social welfare organizations” with political agendas.

Robert Maguire, who researches political nonprofits at the Center for Responsive Politics, says he looks for several signs when considering a nonprofit’s links to a specific interest, including a “small board with ties to an industry in particular,” disbursements to consulting firms tied to members of the board, “no clear social welfare or trade association function beyond one small set of things,” and the lack of regular office space or paid staff. “It seems like this group has a lot of these characteristics,” Maguire says.

Steven Knievel, a health policy advocate with Public Citizen, says it’s not uncommon for the drug industry to be behind groups like ALSIC, or other groups that present themselves as broadly supportive of public health or innovation.

“It’s one of the many influence mechanisms at their disposal, whether it be direct lobbying, or through contributions to campaigns — it’s one more tool they use to prevent reforms they don’t want.”

Indeed, the pharmaceutical industry already spends a fortune on lobbying campaigns in Washington, and funding campaigns of members of Congress. It spent $277 million on lobbying in 2017 — its most ever — and over $100 million more than the next biggest-spending industry, insurance, according to the Center for Responsive Politics, which tracks political spending.

CRP finds that the “pharmaceutical and health products” industry has given over $10 million to candidates for the 2018 election cycle. Paulsen has received the sixth-most of any U.S. House member — a total of $133,000 — in campaign money from the industry so far in this election cycle. (Paulsen’s 3rd Congressional District has a strong health industry presence, and is home to medical tech giant Medtronic, among others.)

DFL Sen. Amy Klobuchar and GOP Rep. Jason Lewis got the next-most in the Minnesota delegation from the pharmaceutical and health products industry, per CRP, both receiving around $24,000 for this campaign cycle.

‘The influence game’

ALSIC’s function as a “social welfare” group, which includes giving out the award received by Paulsen and others, may offer a benefit to pharmaceutical interests that lobbying and campaign contributions cannot, experts say.

“It’s not necessarily that they’re trying to help someone win an election,” CRP’s Maguire says, “but they’re trying to help them burnish their record, to help the member have something to put on their résumé that most people won’t look back on.”

Some constituents have looked a little deeper, however. Paulsen’s announcement of his award on Twitter is clogged with comments skeptical of the honor and the group. (Paulsen’s office did not respond to requests for comment.)

A letter to the editor from Roger Renfrew — who said he received a mailer from ALSIC touting GOP Rep. Bruce Poliquin, who had gotten its award — appeared in the the Daily News of Bangor, Maine, in September 2017. He noted the pharmaceutical connections of ALSIC’s board.

Another letter to the editor appeared in the Modesto Bee of Modesto, California, in 2013, expressing skepticism about ALSIC and its support for GOP Rep. Jeff Denham.

According to Maguire, “What it looks like they’re doing is, basically, this is a small industry nonprofit that gives these members something they can tout in political ads, to show as an accomplishment to their constituents, and some constituents aren’t buying it.”

Tyler Cole, legislative director at Issue One, a nonprofit that focuses on political and government ethics reform, emphasizes there’s nothing untoward or illegal about interest groups recognizing members of Congress.

“That’s pretty standard. I’d say most groups seem to have more reportable activity,” Cole said, explaining that groups that give awards typically also have more traditional functions, like lobbying or giving out campaign contributions. “We can’t seem to find other activities they do,” he said of ALSIC, “other than give awards.”

“Voters and citizens are entitled to have the full context of the actions of their members of Congress,” he said, saying that recipients of the ALSIC honors could be more forthcoming about the circumstances of the award. (One recipient, Sen. Heidi Heitkamp, D-North Dakota, did include ALSIC’s four-point criteria in her announcement that she received the award.)

“It’s hard for me to say exactly what should be done, because you can’t force a member of Congress to be honest,” Cole said. “It’s part of the D.C. influence game, and it’s the reason they do it.”

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Comments (5)

A Depressing Phenomenon

A fine piece on a depressing phenomenon. Why should a group seeking private benefits for any industry have tax-exempt status? Lobbying at least has some visibility, and lobbyists pay income tax on their earnings. One more way in which we lack transparency in the workings of our society.

excellent article!

This is the kind of in-depth revelatory journalism that is rare these days. Well done.

Nice work

…Mr. Brodey.

Business As Usual For Mr. Paulsen

Mr. Paulsen is a long time champion of the pharmaceutical and medical device industries and is richly rewarded by them for his enduring support. He does what they want him to do and they in turn provide generous campaign contributions. That they also shower him with phony awards which he is happy to accept, is just business as usual for Mr. Paulsen.

Follow the money

Nice article Mr. Brodey. Scraping the frosting of bullshit is not always easy but MN's Third Congressional District appreciates your effort.

Money for special interests comes through PAC's but also through individual donations. For example Steven (and Jennifer Knuth) whom you reference in your report, along with Steven's brother, Michael, have contributed collectively as individuals, $57,000 to Erik Paulsen since he was elected to congress. These contributions qualify the Knuth’s to be yearly membership in Paulsen's Leadership and Eagle Clubs, which according to Paulsen's fundraising letter, "Membership entitles you to Club breakfast, lunch or dinner meetings where Erik will keep you updated on what is happening in Washington".

That's a pretty high cost just to have a public servant keep you up to date on what is happening in Washington. Money buys access, the allegiance, and the votes of our elected representatives.

It would be great if you could attend and report on the Club meetings. :) Keep up the good work!