15W EDN E SDAY, J U LY 8 , 2009T H E E X A M I N ER
POLITICSK Street
NEWSMAKERS
ON THE HILL
CHARLES SCHUMER
The Managed Funds Association, the top
lobbying group for hedge funds, retained
former Schumer aide Carmencita
Whonder and her firm Brownstein Hyatt
to lobby on hedge fund taxation and
regulation. Whonder served Schumer
on the Senate's banking committee
until October 2007. Schumer has been
a leading proponent in recent years
of re-regulating hedge funds and has
opposed the push to tax hedge fund man-
agers' income at a higher rate.
KATHARINE WEYMOUTH
Following the revelation by Politico that The
Washington Post was offering health care
lobbyists and chief executive officers --
for $25,000 per head -- off-the-record
"non-confrontational" access to health
care reporters and congressional and
administration staff, the Post's publisher
has asked her general counsel "to
review recent events to make sure that
our business processes are consistent
with, and will not in any way compro-
mise, our journalism."
ALBERT WYNN
The former Democratic congressman from Mary-
land, who a year ago resigned his seat early to
become a lobbyist, registered his first client
last month. Wartsila North America, which
builds power plants and marine engines,
hired Wynn and his firm, Dickstein Shapiro,
to lobby on energy issues. Wynn, a former
member of the House Energy and Com-
merce Committee, quit in 2008 after 16
years when he lost his Democratic primary.
Wartsila's parent company has been criticized
for aiding Sudan's oppressive government.
WINNER
AIRLINES: The Commodity
Futures Trading Commission
announced it would consider
curbs on oil specu-
lation and other
energyfuturestrans-
actions. Airlines,
that use oil futures
as a hedge against
price spikes and would likely be
exempt from such regulations,
have lobbied for such restric-
tions for years.
LOSER
HEALTH INSURERS: When The
Washington Post -- whose edi-
torials agree with America's
HealthInsurancePlans'lobbying
agenda in oppos-
ing a government
insurance option
and supporting an
individual insurance
mandate -- canceled its July
salon on health reform, insur-
ance lobbyists lost a chance to
lean on policymakers in a "non-
confrontational" setting.
POWER GAME
P
resident Barack Obama's ambitious
health care reform could be derailed
by an abstruse lobbying battle
between two key White House allies:
the pharmaceutical industry and the senior
citizens lobby.
AARP has sided with generic drug mak-
ers against the name-brand giants on the
backstage issue of biologic drugs. Biologics
are prescription drugs more complex (and
more expensive) than standard drugs, and
they are generally derived from living mat-
ter. Examples are insulin and the anemia
drug Epogen.
The senior citizens lobby has privately
threatened to withhold support for a
broader health care reform bill if the legis-
lation doesn't pave a clear and quick path for
generic versions of biologics.
To promote innovation, the Food and Drug
Administration protects ordinary drugs such
as Lipitor or Viagra from competition for five
years. But the FDA also provides a clear path-
way for approval of generic versions once the
drug's FDA exclusivity expires.
For biologic drugs, there is no generic
pathway, effectively leaving name-brand
biologic drug makers with perpetual monop-
olies. Patients, consumers, insurers and
the government could save billions if the
FDA creates a pathway for generic biolog-
ics -- also known as "biosimilars," because
making identical copies of them is difficult or
impossible. Obviously, the powerful biotech
companies could lose billions to competition
with generics.
The Food and Drug Administration says
it lacks authority to approve generic biolog-
ics, handing this hot potato to Congress. The
result is a lobbying battle royale. The most
contentious issue: How many years should
the FDA protect biologics from competi-
tion?
Generic drug makers support the Promot-
ing Innovation and Access to Life-Saving
Medicines Act sponsored by Rep. Henry
Waxman, D-Calif., which provides for quick
approval of biosimilars. For lowering health
care costs, Waxman's bill is also backed by
AARP and employers such as AT&T, General
Motors and Chrysler.
"On the other side," one health care lobby-
ist supporting Waxman's bill told me, "there's
BIO, PhRMA and $100 million -- and that's
why we've been running into a brick wall."
The Pharmaceutical Research and Manu-
facturers Association was the top industry
lobbying group in the first quarter of this
year, spending $6.9 million -- more than any
entity other than the Chamber of Commerce
and ExxonMobil. PhRMA's biggest member,
Pfizer, spent $6.1 million lobbying in the first
quarter.
PhRMA's well-armed ally is the Biotechnol-
ogy Industry Organization, or BIO. PhRMA,
BIO and their member companies combined
in 2008 to spend $101 million on lobbying.
Pharmaceutical companies provided $1
million to Obama's campaign last year, three
times what they gave John McCain.
The big drug makers oppose Waxman's
bill and instead support the "Pathway to
Biosimilars Act," sponsored by Rep. Anna
Eshoo, D-Calif. Eshoo's "pathway" is rockier
for generics than Waxman's and, most impor-
tantly, would grant the name-brand biologic
drug makers at least 12 years of exclusivity
-- effectively preventing competition from
generics.
PhRMA and BIO would normally walk
over the generics, especially considering how
closely Obama has been working with the
brand-name companies on stem-cell research
and health care reform. But the generics have
a ringer here: AARP, which spent $4.1 mil-
lion lobbying in this year's first quarter and
a massive $27.9 million last year.
The seniors lobby raised the stakes of the
biologics debate late last month when one
of its lobbyists wrote a pointed e-mail to
Sen. Edward Kennedy's staff on the Health,
Education, Labor, and Pensions Committee,
which is drafting a health care reform bill:
"Can you just confirm to me to that the
[health care reform] bill you plan to report
out will contain an exclusivity period that will
be notably less than 12 years? If you cannot,
I cannot recommend a letter of support or a
major grassroots effort in support. Indeed,
people will probably have to be critical, par-
ticularly about that provision. I hope you
won't force us to do that on such an impor-
tant bill that I know you all have worked so
hard on."
Democrats are now in the position of alien-
ating the name-brand drug makers who have
carried so much water for them on the health
care reform debate, or the seniors who are
crucial electorally.
The White House, through the Office of
Management and Budget, has suggested it
sides with the generics and the seniors here.
But unless this is handled expertly, Obama's
reform could become collateral damage in
this backroom lobbying brawl.
The backroom brawl that could sink health care reform
TIMOTHY
P. CARNEY
Timothy P. Carney, The Examiner's lobbying
editor,canbereachedattcarney@washingtonexa
miner.com.Hewritesanop-edcolumnthatappears
on Friday.
By Aleksandra Kulczuga
Special to The Examiner
A central plank of the Obama
administration's proposed financial
overhaul -- creating a single regu-
lator to oversee diverse financial
institutions -- has pitted traditional
banks against retailers and other
commercial entities, which argue
the regulations will hurt them.
Regulation critics object that
companies such as Target could
be forced by Obama's proposals
to eliminate their industrial loan
companies, the financial institutions
behind many store credit cards.
Target is resisting the push to
regulate ILCs the same as ordinary
banks, and the company has said it
would "oppose any proposal that
would eliminate our ability to oper-
ate our banks."
While similar to a traditional bank
in taking Federal Deposit Insurance
Corp.-insured deposits, ILCs are not
subject to the Bank Holding Com-
pany Act of 1956 with its stricter
capitalization requirements and
regulations. ILCs are also exempt
from federal prohibitions on com-
mercial ownership of banks. Only
a handful of states offer an ILC
charter, and they have become an
important part of business for cor-
porations that use them.
Traditional banks and Wall Street
firms, on the other hand, have long
lobbied for a consolidated regula-
tory structure, and they support
this aspect of the Obama adminis-
tration's proposed reforms.
"The events of the last 18 months
have made clear that we need sys-
temic regulatory reform to fill the
gaps in the system," said Travis
Larson of the Securities Industry
and Financial Markets Association,
while withholding comment directly
on ILCs. "Some financial institu-
tions, it seems, have made efforts to
game the system and take advan-
tage of these gaps. Broadly speaking,
consolidation of regulatory agencies
is appropriate."
ILC defenders, such as Sen. Bob
Bennett, R-Utah, argue that ILCs
did not play any role in the finan-
cial meltdown and do not need new
regulation. "The Obama financial
overhaul plan would eliminate ILCs
and therefore shut down a source
of credit during a time when our
country faces a credit crunch," said
a spokeswoman for Bennett, whose
state charters many ILCs.
Businesses could have to sell or
spin off their ILCs if the proposed
regulations pass. Regulation sup-
porters argue consumers will not
see a difference. It will, however,
pinch the profit margins of the ILCs
such as GE Capital.
Breaking up commercial-owned
ILCs has long been a lobbying prior-
ity of traditional banks. In 2007, the
American Banking Association lob-
bied in support of a bill sponsored
by Rep. Barney Frank, D-Mass.,
that would have limited commercial
ownership of ILCs.
Banks back regulatory push that could pinch industrial lenders
PHIL COALE/AP FILE
Target and other retail giants that offer
store credit cards are fighting a push to
regulate banks. The move could force
the retailers to close their industrial
loan companies that back the cards.
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