Payments Call into Question Objectivity of CMA’s Opposition to Prop. 61

SACRAMENTO, CA – An investigation by the Yes on Prop. 61 campaign found that the drug industry has contributed at least a half million dollars to the California Medical Assn. (CMA) that – directly or indirectly – subsidized the salaries paid to CMA’s executive officers, the same officers who have put their organization on record as opposing Prop. 61, the measure to cap prescription drug prices.

Many of the major pharmaceutical companies voluntarily publish so-called transparency reports disclosing their charitable donations and grants to various non-profit organizations, including patient-advocacy groups and universities.

Transparency reports filed by Pfizer, Genentech and AstraZeneca reveal those companies made payments totaling $754,000 directly to CMA and its foundation over the past eight years. The lion’s share of the declared payments were made by Pfizer: $467,000 to CMA and $260,000 to CMA’s sister foundation.

“Any reasonable-minded person has to question whether all these payments played a role in CMA’s decision to oppose Prop. 61,” said Garry South, chief strategist for Yes on Prop 61/Californians for Lower Drug Prices. “Directly or indirectly, the CMA salaries paid to these officers and directors were subsidized by the drug industry itself.”

“But the disturbing part is that this is probably just the tip of the iceberg,” South said. “Our suspicion is that the drug companies have almost certainly shelled out far more to CMA than what we’ve found so far. We have to remember these transparency reports are voluntary and may contain only what contributions the drug companies are willing to reveal.”

Yet these findings do not completely square with CMA’s 2013 annual report – the only annual report available to non-CMA members. That reports list three other major pharmaceutical companies as prominent financial sponsors, including Eli Lilly and Co., Novo Nordisk and Johnson & Johnson. But these three did not report any donations to either the CMA or to its foundation on their transparency reports for several years.

According to CMA’s 2014 tax records (the most recent tax filings in the public record), the organization’s eight directors received almost a half million dollars in compensation from the CMA that year. These payments are in addition to whatever these directors earn as practicing physicans.

News reports show that in Oct. 2103 Dr. Richard E. Thorp became CMA’s president. In the CMA’s 2014 tax filing, Thorp was said to receive compensation of $228,613. The next highest-paid CMA officer, Dr. Luther F. Cobb, received $95,740. Another director, Dr. Steve Larson, was paid $38,620, according to the same 2014 tax filing. Cobb and Larson, the current CMA president, currently sit on the board.

This is the latest in a string of revelations about the cozy ties between the supposedly independent opponents of Prop. 61 and prescription drug companies.

In recent days, the following organizations opposing Prop. 61 have been exposed for their cozy financial ties to the drug industry:

  • The San Carlos-based Bonnie J. Addario Lung Cancer Foundation received $1.4 million from seven giant drug companies (including $646,000 from Genentech, Inc.)
  • The Latino Diabetes Assn., a small Montebello non-profit, whose vice chair signed the anti-Prop. 61 ballot argument, received donations from one drug company (GlaxoSmithKline) and undisclosed assistance from another drug-maker (AstraZeneca Pharmaceuticals LP), from a public affairs company now working against Prop. 61 (Cerrell Associates) and from a Georgia-based firm whose top executives currently or previously worked for drug companies (Healing Our Village, Inc.).
  • The Studio City-based Ovarian Cancer Coalition of Greater California and its partner, the Ovarian Cancer National Alliance, received at least $295,000 from six drug industry giants, including $142,000 from Genentech, Inc.
  • The president of the California NAACP, Alice Huffman, has been paid at least $390,000 since 2005 by the prescription drug industry while simultaneously engineering her organization’s endorsement of the drug industry’s political agenda. To critics, it looks like Huffman was “selling” the organization’s endorsement in return for these lucrative contracts.

In addition, the Prop. 61 campaign previously reported that a half-dozen leaders of the CMA received five- and six-figure payments directly from drug and medical-device manufacturers.

Proposition 61, on the November ballot, would require the state of California to negotiate with drug companies for drug prices that are no more than is paid for the same drugs by the U.S. Department of Veterans Affairs (DVA).  Unlike Medicare, the DVA negotiates for drug prices on behalf of the millions of veterans it serves, and pays on average 20-24 percent less for medications than other government agencies, and up to 40 percent less than Medicare Part D.  Prop. 61 empowers the state, as the healthcare buyer for millions of Californians, to negotiate the same or an even better deal for taxpayers, saving the state billions.