How Pfizer Cloaks Its Lobbying

Bloomberg News reported how companies have "increased their lobbying and other efforts to influence public officials by funding nonprofit groups to promote corporate goals without publicly disclosing backers." Such non-profit groups "can legally engage in lobbying and can air political ads that don't advocate the election or defeat of a candidate. The groups aren't required to report their financial backers except on their annual tax returns. Bloomberg News obtained lists of donors to nonprofits from state regulators, who often receive copies of the groups' tax returns. Donations to these organizations, which are known as 501(c)(4) groups after the section of U.S. tax code under which they operate, aren't tax-deductible."

One corporation who has used this strategy is Pfizer Inc., the world's largest pharmaceutical company.

Pfizer gave $145,000 in 2000 and 2001 to the 60-Plus Association and United Seniors Association, tax records show. The two groups paid for ads in 2002 supporting Republicans who backed the proposed Medicare prescription drug benefit, enacted the following year. One was Representative Nancy Johnson, 71, of Connecticut, according to a study of the campaign by University of Connecticut professor Sarah Morehouse and researcher Sandra Anglund.

Earlier, the 60-Plus and United Seniors groups joined an organization called Citizens for Better Medicare. In 1999 and 2000 it aired ads in western states opposing then-President Bill Clinton's proposed drug benefit, which would have been run by Medicare rather than by insurers and health-maintenance organizations, according to Public Citizen.

The drug industry's trade organization, Washington-based Pharmaceutical Research and Manufacturers of America, of which Pfizer is a member, gave at least $1.56 million to 60-Plus and United Seniors in 2001 and 2002, tax records show. The donations by Pfizer and the trade group were first made public in 2004 by a newsletter of AARP, the Washington-based senior-citizens' advocacy group.

Pfizer spokeswoman Darlene Taylor said in a statement that the New York-based company 'complies fully with all federal, state, and local laws and reporting requirements.' The company's Web site lists its political contributions that are publicly available through reports to the Federal Election Commission. It doesn't mention donations to nonprofit groups like the 60-Plus Association and United Seniors.

Ed Fulginiti, a spokesman for Arlington, Virginia-based 60- Plus, said in a statement his group doesn't reveal the names of its more than 1 million donors, whose gifts averaged less than $20. Charles Jarvis, chief executive officer of United Seniors, based in Fairfax, Virginia, wasn't available for comment.

Bloomberg quoted Taylor Lincoln, from the organization Public Citizen, who said donations like those above "appear to be in clear evasion of the intent of lobbying disclosure laws, even if they are legal." They also appear to be essentially deceptive. In the examples above, Pfizer cloaked its lobbying activities in the garb of grass-roots citizens' organizations.

We recently posted about how Pfizer CEO Henry McKinnell defended his huge compensation in the face of decreasing stock prices. He said his work should be judged not so much by stock prices but by how he has added "long-term value" to the company, and that only his board of directors is competent to judge that value.

I wonder whether the Pfizer board thinks that a reputation for evasive lobbying practices adds to that long term value? (And the previous post mentioned above wondered if a reputation for questionable marketing practices, as alleged in the recent European Consumers International report, also added to that long term value.)