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Especially Interested

Corporate lobbyists don’t have to spend money on these congressmen — Sen. Judd Gregg and Sen. Bill Frist are personally invested in companies that depend on their votes.

Drug Deals

His stock in Bristol-Myers Squibb has gone nowhere but up.

by Jeff Shear

Big contributions aren’t the only way money can sway members of Congress. Consider the member who owns substantial stock in a company but sits on a subcommittee that oversees that corporation’s business practices. How is a constituent to know whose interests the member puts first?

Take Republican Sen. Judd Gregg, for example, a tall, flinty Yankee and the former governor of New Hampshire. As of his last financial disclosure statement, in 1995, Gregg owned between $100,000 and $250,000 of stock in Bristol-Myers Squibb. To date, the pharmaceutical company’s chairman emeritus, Richard L. Gelb (#400), has not given Gregg a penny for his upcoming 1998 Senate race, and Bristol-Myers’ PAC has given him only $1,000. But Gregg’s ownership of so much Bristol-Myers stock means legislation that benefits the company also benefits Gregg.

Gregg proved himself a strong advocate for the pharmaceutical industry in the 104th Congress. A case in point is the FDA Export Reform and Enhancement Act of 1995. The failed legislation would have enabled pharmaceutical firms — including Bristol-Myers — to sell drugs lacking FDA approval in other countries. (Incidentally, at least two of the bill’s co-sponsors in the House also owned significant stock in pharmaceutical companies.)

The fate of the bill in the Senate, however, rested largely on Gregg, the chairman of the Labor and Human Resources Subcommittee on Aging, which had jurisdiction over the measure. What’s more, Gregg was the Senate’s chief deputy whip, the No. 3 man in control of Republican votes. But although he held hearings on the bill, Gregg could not drive the measure to the Senate floor for a vote.

Undaunted, he used his seat on an appropriations subcommittee to attach an amendment onto last year’s appropriations bill that served the same purpose as the failed bill, enabling drugmakers to export products that have yet to pass FDA muster. The amendment carried without debate and became law in April 1996.

Over the next 10 months, Bristol-Myers stock soared 65 percent, from $82 a share to $136 a share. Although Gregg has not yet disclosed his 1996 stock holdings, his staff has given no indication that he sold any of his Bristol-Myers stock. If he has kept it, his stock increased in value by between $60,000 and $150,000 during those 10 months.

Gregg’s aides take offense at even the suggestion that there might be a conflict of interest. Arguing that this was a “jobs” measure to keep the firms from moving their manufacturing offshore, they point out that Sen. Ted Kennedy (D-Mass.) co-sponsored the amendment and that the earlier bill had passed from committee on a 16-0 vote. Although Gregg’s staffers claim the senator undertook his legislative effort on behalf of his constituents, they cite only one small New Hampshire drug firm that expressed interest in the legislation.

Amazingly, there is no law or congressional rule requiring — or even recommending — that members of Congress recuse themselves from legislation or subcommittees that have a direct impact on their major stock holdings. The main check on such conflicts of interest lies with voters. “Members have to account to their constituents through financial disclosure,” says Ellen Weintraub, former counsel to the House Ethics Committee. “That’s public information. If there’s a conflict the member can’t defend, that could become a political problem.”

Frist Aid

This senator handles his family company’s legislative prescriptions.

by Robert Dreyfuss

Some companies hire lobbyists to work Congress. Some have their executives lobby directly. But Tennessee’s Frist family, the founders of Columbia/HCA Healthcare Corp., the nation’s largest hospital conglomerate, has taken it a step further: They sent an heir to the Senate. And there, with disturbingly little controversy, Republican Sen. Bill Frist has co-sponsored bills that may allow his family’s company to profit from the ongoing privatization of Medicare.

The senator’s father, Dr. Thomas Frist Sr., was a founder of Columbia/HCA, the country’s biggest chain of for-profit hospitals, a $20 billion health care empire that includes 340 hospitals, 135 outpatient surgery centers, and 200 home health care agencies in 38 states. The family has spent lavishly on political campaigns for years. Patricia C. Frist — wife of Bill’s brother, Columbia/HCA vice chairman Tommy Frist Jr. — won herself a place on this year’s Mother Jones 400 list (see #326) by giving $100,000 in soft money to the Republican National Committee. Add in PAC and coordinated executive donations, and the company’s largesse comes to more than $360,000 just for 1995-96 — not including campaign contributions from other family members.

But the Frists’ ace in the hole is Bill, whose finances depend directly on Columbia/HCA’s success. In 1994 Sen. Frist disclosed that his personal fortune of $20 million included more than $13 million in Columbia/HCA stock.

Frist is an outspoken advocate for giving Medicare recipients more “options” — options that could direct billions of Medicare dollars to Columbia/HCA. In January, Frist, along with Sen. Jay Rockefeller (D-W. Va.), introduced a bill that would for the first time allow hospitals and doctors to join together as private entities that could contract with Medicare. That would enable these so-called provider-sponsored organizations (PSOs) to compete directly with HMOs for Medicare patients. Not surprisingly, Columbia/HCA stands to make a tidy profit from the new business.

Frist also opposes a White House plan that would save Medicare $6 billion by reducing payments to HMOs and, if approved, PSOs as well. According to various recent studies, the government is overpaying HMOs for Medicare patients by at least 5 to 7 percent. But even though he acknowledges that HMOs are being overpaid, Frist argues, “That might be a good thing. It will attract more managed care companies into the market and drive prices down.”

Frist is not troubled by his apparent conflict of interest. “Everybody knows my background, where I come from, and the hats that I wear,” he says. “Sure it could become an issue. Some may want to make it an issue.” But Frist adds, “There is a stone wall that comes between any [PAC] money that I get or interests that I have, and what I do here.”

Over the past several years, Columbia/ HCA has swooped in and purchased scores of hospitals in states from Florida to California. According to a 1996 New England Journal of Medicine article, what follows when Columbia/HCA takes over is less charity care, the replacement of senior health professionals with less experienced (and less expensive) workers, and the risk of lower quality service as profit supersedes care. In late March, federal investigators from the FBI, IRS, and Department of Health and Human Services seized files from several Columbia/HCA facilities in El Paso, Texas. As Mother Jones went to press, the government had not yet announced the scope and purpose of the investigation. According to the Houston Chronicle, investigators were looking for evidence that doctors were being paid to refer patients to Columbia/HCA facilities.

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