Big Pharma's Man in the Senate

Drug CEOs privately fret that Senator Bob Menendez will be forced to resign

A defiant Senator Bob Menendez is refusing calls that he resign in the wake of a sweeping federal bribery indictment. Menendez is clinging stubbornly to the Senate seat he has had since 2006. In refusing to step down, he mentioned how he survived a 2015 federal indictment that charged he helped a friend in exchange for six-figure contributions, luxe hotel stays and private jet trips. Federal prosecutors dropped the case against him after a jury deadlocked at trial.

There is one group of business executives who privately hope that Menendez manages to pull it off once again: pharmaceutical CEOs. Although Big Pharma has a number of allies in the House and Senate, Menendez is by far the industry’s most loyal and reliable vote.

New Jersey is home to the headquarters of 14 of the top 20 drug firms. Pharma employs about 300,000 New Jerseyians and brings over $84 billion into the state. Menendez has gotten $1.5 million from drug firms over his career (a fraction of the $9 million to Biden, the top ranking senator for all time when it comes to pharma industry dollars).

Menendez has earned his reputation as “Big Pharma’s guy in the senate.” If someone wants to know what the drug industry position is on an issue, just check how Menendez plans to vote. For instance, when Bernie Saunders and Amy Klobuchar, introduced a bill that would have made it legal for Americans to buy prescription medications from Canada, it had widespread support in public opinion polls. Prices north of the border can be as much as 90% less for the identical drugs, produced in the same manufacturing plants by the same companies. A dozen Republicans supported the bill. But it failed after a dozen Democrats, marshaled by Menendez, voted no.

As negotiations got intense over the Biden administration’s proposal that Medicare be given the power to negotiate the prices of its most costly drugs, Pharma CEOs started sending Menendez money. The promise to lower drug prices had helped the Democrats win a majority in 2018. Drug execs wanted to make certain, however, that progressives did not write the legislation. Menendez received donations from the CEOs of Merck, Eli Lilly, Pfizer, Bristol Myers Squibb, Genentech, Otsuka, Sage Therapeutics, and UCB. Executives at Amgen and Lundbeck also sent him money.

None of the Pharma CEOs and top executives who gave Menendez money had donated to any other senator, Democrat or Republican, in that period.

At first, Menendez totally opposed the Medicare negotiation bill passed in the House. He parroted the industry’s talking point that it was important to “protect innovation on life-saving treatments.” Once he realized he could not muster support to kill the bill, he did his best to slow the debate, modify the rules to benefit Pharma, reduce civil penalties for manufacturers who sold at high prices, and delay any changes for a couple of years. Most recently, he has diverted attention from industry pricing by focusing on another problem, middlemen who force higher drug prices, so-called Pharmacy Benefit Managers. PBMs are a serious problem, as I wrote in my investigation of the drug industry, PHARMA. However, they are only a small part of high drug prices. The main reason the U.S. has the most expensive medications in the world is the unfettered pricing power of the drug companies, something allies like Menendez protect at every opportunity.

Menendez is not Big Pharma’s only go-to lawmaker at crunch times. The drug industry, and its lobbying group, PhRMA, spends generously on a few dozen Republicans and Democrats in both chambers of Congress. The industry also spends lavishly on trade associations and 501(C)(4)s, nonprofits that double as “dark money” operations that are not legally required to disclose their donors.

The newer members of Congress do not have Menendez’s track record when it comes to delivering for Big Pharma. That makes drug CEOs nervous. Industry representatives who spoke to me on background said their companies were preparing for the worst, a Menendez resignation before the next election. They had also, all said, turned their attention to lobbying Governor Murphy so Menendez’s replacement is an industry friend rather than a foe. “It’s damage control at this stage,” one told me, “we don’t want to go from Bob [Menendez] to Bernie [Saunders] in New Jersey.”