“Like Sharks to Blood” – Health Sector and Big Pharma Spent Big on Lobbying for COVID-19 Funding As Congress Doles Out $3 Trillion

Counting Money

To date, Congress has authorized roughly $3 trillion in COVID-19 relief assistance — the largest relief package in history. With more COVID relief money on the way, a new study led by two Brigham Young University business professors finds these newly available funds led to a significant surge in health sector lobbying activity, especially within the pharmaceutical industry.

The research, publishing Wednesday, August 12, in the Journal of General Internal Medicine, finds the lobbying expenditures ($248.4 million) and new lobbyist registrations (357) of the health sector represented nearly a fourth of all lobbying activity, across all industries, in the first quarter of 2020.

“This is like sharks to blood, or bees to honey, if you prefer a milder metaphor,” said study author Bill Tayler, an accounting professor in the BYU Marriott School of Business. “Congress is giving out a lot of money, so the lobbyists are swarming. Lobbying activity levels are typically fairly stable, so when you see jumps like this, it’s a big deal.”

According to the analysis, health sector lobbying spending increased more than 10% in Q1 of 2020 while non-health sector increased only 1%. Meanwhile, the number of new lobbyists registered in the health sector increased a staggering 140% while non-health sector registrations increased only 63%.

The BYU researchers, in collaboration with colleagues from Johns Hopkins University, Columbia University, and the University of Cincinnati, found that across all segments of health sector lobbying, the biggest lobbying increases came from the pharmaceutical industry. Indeed, 16 of the top 30 healthcare organizations in lobbyist expenditures were pharmaceuticals.

For example, Novartis International increased their lobbying expenditures by 259% this year, AbbVie Inc. increased theirs by 155% and Biogen Inc. increased their expenditures by a whopping 344%. The organization with the highest lobbying expenditures by far was Pharmaceutical Research and Manufacturers of America (PhRMA), a non-profit trade association largely sponsored by pharmaceutical companies, spending $11.5 million in the first quarter of 2020.

“This is the largest stimulus bill in history,” said study coauthor John Barrick, a fellow accounting professor at BYU and expert on lobbying policy. “It’s important to follow the money. Dollars spent on lobbying influence the allocation of funds and, right or wrong, I think that’s what people need to know.”

The data shows Big Pharma has had a very loud voice as Congress has tried to allocate funds to small businesses, the unemployed, healthcare, and more.

Overall, the top 30 healthcare organizations (16 of which were pharmaceutical organizations) spent almost $100 million on lobbying in Q1 of 2020, which represented a 55% increase in lobbying spending over Q4 of 2019. The authors said the results of the study illustrate just how much the health sector and others are willing to invest to influence Congress’ appropriation and allocation of funds.

“The return on investment on a dollar of lobbying appears much higher than a dollar of R&D,” said study coauthor Shivaram Rajgopal, a professor of accounting and auditing at Columbia Business School. Added senior author Ge Bai: “The health sector’s investment in lobbying has apparently generated handsome returns.”

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Reference: “Lobbying Expenditures of the Health Sector During the COVID-19 Pandemic” by Adam Olson PhD, CPA, John Barrick PhD, CPA, William B. Tayler PhD, CMA, Shivaram Rajgopal PhD and Ge Bai PhD, CPA, 12 August 2020, Journal of General Internal Medicine.
DOI: 10.1007/s11606-020-06085-6

Adam Olson, an assistant professor of accounting at the Carl H. Lindner College of Business at the University of Cincinnati is the first author on the paper. Olson completed his undergraduate degree in economics at BYU.

1 Comment on "“Like Sharks to Blood” – Health Sector and Big Pharma Spent Big on Lobbying for COVID-19 Funding As Congress Doles Out $3 Trillion"

  1. Sekar Vedaraman | August 15, 2020 at 11:43 pm | Reply

    Well, most people do beleive that money makes the world go around.

    Cannot blame the people and organizations which is basically most of humanity, from trying to get “FREE”MOney if someone is handing it out ….The famous American ingenuity is based on this principle and trying to make a quick buck is as American as Apple Pie.Note I left out Mom. I will let you figure out why.

    Maybe the Virus did humanity a favor by ensuring badly needed funding for basic and applied scientific and medical research. The “moonshot” for fixing one—- dreaded disease of one of the major political parties was based on emotion as a result of the loss of a progeny. Another one was based on abet on Government Bureaucrats betting on the Sucess of a technology and backing it with funds which basically went down the drain. Free markets are far superior at allocation of Resources needed.

    The idiocy of expenditures required by organizations for ensuring a sustaniable future needs to be fixed by ensuring that a appropriate level of revenues gnerated from the free market economics and greed based economics (which is actually the best model available currently in democratic nations) —- optimum levels are determined and permitted as a 100 % tax free benefit for creation of new breakthroughs on a sustainable basis. Creative – Destruction is not going to go away, and I am certinly not a very big fan of Govenment funded programs except basic research which increases the creation of new Knowledge and Understanding of Science.

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