WASHINGTON -- In a New York City ballroom days before
Christmas, a powerful Bush administration lawyer made an
unprecedented offer to drug companies, one likely to protect
their profits and potentially hurt consumers.
Daniel E. Troy, lead counsel for the U.S. Food and Drug
Administration, extended the government's help in torpedoing
certain lawsuits. Among Troy's targets: claims that
medications caused devastating and unexpected side
Pitch us lawsuits that we might get involved in, Troy told
several hundred pharmaceutical attorneys, some of them old
friends and acquaintances from his previous role representing
major U.S. pharmaceutical firms.
The offer by the FDA's top attorney, made Dec. 15 at the
Plaza Hotel, took the agency responsible for food and drug
safety into new territory.
"The FDA is now in the business of helping lawsuit
defendants, specifically the pharmaceutical companies," said
James O'Reilly, University of Cincinnati law professor and
author of a book on the history of the FDA. "It's a dramatic
change in what the FDA has done in the past."
Troy's switch from industry advocate to industry regulator
overseeing his former clients is a hallmark of President
Troy is one of more than 100 high-level officials under
Bush who helped govern industries they once represented as
lobbyists, lawyers or company advocates, a Denver Post
In at least 20 cases, those former industry advocates have
helped their agencies write, shape or push for policy shifts
that benefit their former industries. They knew which changes
to make because they had pushed for them as industry
The president's political appointees are making or
overseeing profound changes affecting drug laws, food
policies, land use, clean-air regulations and other key
Government watchdogs call it a disturbing trend, not
adequately restrained by existing ethics laws.
Among the advocates-turned-regulators are a former
meat-industry lobbyist who helps decide how meat is labeled; a
former drug-company lobbyist who influences prescription-drug
policies; a former energy lobbyist who, while still accepting
payments for bringing clients into his old lobbying firm,
helps determine how much of the West those former clients can
use for oil and gas drilling.
"When you go to work in lobbying, it is clearly understood
and accepted that your job is to advocate for the interests of
those who hired you," said Terry L. Cooper, a University of
Southern California ethics and government professor. "When you
go to work in government, you are supposed to be responsible
for upholding and maintaining whatever you can identify as the
The Bush administration says the regulators were chosen for
"The president appoints highly qualified individuals who
make their decisions based on the best interests of the
American people," said White House spokesman Jim Morrell. "Any
individual serving in the administration must abide by strict
legal and ethical guidelines, including full disclosure of
past lobbying activities."
Six of the former industry advocates have faced ethics
investigations or resigned amid conflict-of-interest charges.
Those and at least 14 others have been lambasted by
Government ethics standards are part of the problem because
they don't fully address the kind of issues that now permeate
Washington, Cooper and some inside government say. The rules
focus mainly on direct financial conflicts. Other, more
nuanced conflicts aren't addressed
"There are so many ways around, over and under these
(ethics) bans ... they almost never work," said Paul Light,
who for decades has studied the appointment process for the
Brookings Institution, a think tank in Washington. "There're
more screen doors than steel doors."
A March 16 report from the Interior Department's inspector
general, for example, concluded that department's "byzantine"
conflict-of-interest rules were "wholly incapable" of
addressing ethical questions involving a former energy
lobbyist, J. Steven Griles, as the department's No. 2
The report called the department's ethics system "a train
wreck waiting to happen."
Bringing bias to a federal job isn't new. Presidents of all
political persuasions have appointed people who shared their
As president, Bill Clinton peppered the federal bureaucracy
with Democratic state officials, lawyers and advocates from
various environmental or public-interest groups.
Only a handful of registered lobbyists worked for Clinton,
Bush's embrace of lobbyists marks a key difference because
it allows "those who are affected by the regulations to
determine what the ground rules should be," said David Cohen,
co-director of the Advocacy Institute, which helps teach
nonprofits how to lobby in Washington.
While previous Republican presidents hired lobbyists, "the
Bush administration has made it rise in geometric
proportions," Cohen said, meaning Bush is "capturing the
instruments of government and using them for the ends" that
favor Bush's political supporters.
"In the Bush administration," said U.S. Sen. Joe Lieberman,
D-Conn., "the foxes are guarding the foxes, and the
middle-class hens are getting plucked."
Republicans and their lobbying allies reject the idea that
industry is embedded in the administration.
"Foxes? No," Vice President Dick Cheney told The Denver
Post. "I think we have a good track record."
The clout of industry is balanced by the power of labor
unions, trial lawyers and public-interest groups, said Jerry
Jasinowski, chairman of the National Association of
"The notion that somehow business gets everything and we've
gotten a free ride is absurd," he said.
Still, the lobbyists-turned-policymakers control or
influence health care, food safety, land use, the environment
and other issues touched by government.
The drug-industry lobbyist who fought price controls joined
the Health and Human Services Department and has helped drug
companies avoid the limits.
Top aides in the Department of Health and Human Services
provide analysis and advice to the president on key consumer
issues, including prescription-drug policies. In doing so,
they consider the needs of pharmaceutical companies seeking
revenue for future research, and consumers struggling to
afford increasingly costly medications.
In June 2001 Bush installed Ann- Marie Lynch, a lobbyist
for the drug- company trade group Pharmaceutical Research and
Manufacturers of America, to help set those policies.
As a lobbyist, Lynch fought congressional attempts to cap
prices for drugs. Price controls, she argued, would hamper
Thirteen months after Lynch became deputy assistant
secretary in the office of policy, her division issued a
report that praised brand- name drugs. It warned that
"government-controlled restrictions on the coverage of new
drugs could put the future of medical innovation at risk and
may retard advances in treatment."
Consumer advocates say that's nonsense. Other countries
innovate despite price controls, said Gail Shearer, director
of health policy analysis for Consumers Union, nonprofit
publisher of Consumer Reports.
"They haven't taken as seriously their job of making
medicines affordable to all Americans," Shearer said. "When
you talk about the need for (drug) innovation, you have to put
it in the context of, will people get the wonder drugs?"
Critics say the report influenced congressional debate over
a Medicare drug policy that, among other things, banned
government from using Medicare's buying power to cut drug
prices. The legislation will mean an extra $139 billion in
profit over eight years to drug companies, Boston University
Republicans in Congress used arguments that came "directly
out of Ann-Marie Lynch's mouth" and from the trade group she
previously worked for, said Rep. Sherrod Brown of Ohio, lead
Democrat on the Energy and Commerce Committee's health
Lynch declined to talk to a reporter. HHS spokesman Bill
Pierce said the report was not intended to sway Congress.
Provisions banning Medicare from negotiating drug prices date
to 2000, he said.
Lynch also blocked the release of about a dozen completed
research reports that challenge drug-company claims, three
former employees said. Pierce said Lynch decides research
topics and which reports are released.
One 2001 report, for example, criticizes Medicare plus
Choice (now known as Medicare Advantage). Its findings
suggested that running the Medicare prescription-drug benefit
through private health companies - the method the
administration ultimately chose - would be more expensive and
would not serve rural areas well.
"Very few of (the private companies) manage to bring in the
benefit cost effectively," said Mark Merlis, the private
health policy consultant who wrote the report.
Thomas A. Scully
The former hospital lobbyist presided over an agency that
helped a chain he once represented win a favorable settlement
in a Medicare fraud case.
Thomas A. Scully represented the nation's for-profit
hospitals as a lobbyist before being hired by the Bush
administration in June 2001 to head the federal Centers for
Medicare & Medicaid Services.
Eight months after Scully arrived at the Medicare and
Medicaid agency, it moved to settle final claims involving HCA
Inc., a hospital chain that was the biggest member of Scully's
former employer, the Federation of American Hospitals. HCA
Inc. faced allegations it fraudulently overbilled the
government for Medicare cases.
Under the terms agreed to in June 2002 by Scully's agency,
HCA would have settled for $250 million. Medicare fraud cases
typically are ironed out with Justice Department
participation, but Scully agreed to those terms on his own,
said John R. Phillips, an attorney who represented
whistle-blowers in the case.
"The $250 million was a total sellout by Scully, who
totally negotiated it behind Justice's back," Phillips
It also was handled in a way that protected the company
from a full review of its cost reports and the triple- damage
civil fines that can be imposed in fraud cases, he said.
Sen. Charles Grassley, R-Iowa, asked Justice in October
2002 if that deal was "too lenient."
Justice delayed the settlement until June 2003.
HCA, the nation's biggest for-profit hospital company,
eventually paid that $250 million, plus $631 million in civil
penalties and damages and $17.5 million to states.
Scully's ethics agreement did not require him to officially
avoid cases involving HCA. But Scully said he steered
"I recused myself from everything involving HCA-specific
issues or policy and was not involved in any way, shape or
form," Scully said. "Every time anything came up (regarding)
HCA, I left it to my deputies."
But Grassley in a June 25, 2002, letter to a Justice
Department lawyer said comments by Scully "have given me great
concern that there is an active, ongoing effort underway to
change or modify enforcement (on Medicare fraud) policy that
in my view could significantly undermine the (law)."
Scully has since left the administration for consulting
jobs with a lobbying firm and an investment company that
represent Medicare providers.
Daniel E. Troy
The lawyer who represented major drug companies still
fights for causes that benefit them as chief counsel at the
Food and Drug Administration.
Daniel E. Troy was well-known at the FDA before he arrived
in summer 2001 to work as chief counsel, the top legal
position in the department.
As a lawyer in private practice, Troy repeatedly sued the
FDA, arguing that it had only limited ability to regulate drug
companies. He filed those suits through the Washington Legal
Foundation, a group funded by businesses, including drug
companies. Donors include charitable foundations run by Pfizer
Inc., Procter & Gamble Co. and Eli Lilly & Co.
Troy also represented Pfizer through his firm, Wiley, Rein
& Fielding. Troy said in an e-mail to a reporter that his
Pfizer work was mainly communications and insurance law, and
averaged only 80 hours a year.
At the FDA, Troy still is fighting for causes that benefit
It's unclear whether any of pharmaceutical firms responded
to his December request for lawsuits the FDA might get
By the time Troy made that offer, he had already intervened
in three drug-company cases as FDA chief counsel. One involved
In court briefs, the FDA argued that it determines which
warnings a drug company must give consumers. Lawsuits filed in
state courts arguing that drug-company warnings are inadequate
therefore were invalid, the FDA says. One of the cases Troy
challenged involves thousands of consumers who say they were
harmed by painful withdrawal from an antidepressant.
Lawsuits accusing drug companies of telling consumers too
little about side effects constitute the largest category of
cases against drug companies, law professor O'Reilly said.
If Troy's legal position prevails, O'Reilly said, it would
be catastrophic for consumers hurt by drugs. He said it would
bar cases like the one filed against the makers of fen-phen,
the combination of diet medications tied to heart problems.
The makers of those drugs are settling with consumers for $14
billion. That case predates Troy's policy.
Troy, who declined to be interviewed, said in a written
statement that the FDA is intervening in the lawsuits to
protect "the safety, effectiveness and availability of
important medical products."
He said that would be "adversely affected if judges and
juries acting under state law had the power to substitute
their judgment for the expert determinations made by FDA
Clinton's Justice Department, he added, took the same legal
position, arguing that federal law pre-empts state law.
But prior to Troy, professor O'Reilly and one FDA official
said, the government got involved only when a judge asked.
Troy, in contrast, is seeking cases in which to intervene.
And the FDA now is staking a new legal claim, experts say:
that its authority to determine drug labeling always trumps
any claims made in state court.
The FDA is "taking sides in private litigation," said
Thomas McGarity, a University of Texas Law School professor
and president of the Center for Progressive Regulation, which
supports government regulation on health and safety
The FDA asks drug-company attorneys to alert the agency to
cases because otherwise "our rules might be undermined by
contrary state findings" the agency is unaware of, said Peter
Pitts, an FDA spokesman.
He added: "For people to infer that (FDA) decisions are
made with anything but the public health as our focus is
untrue, unfair and very ill-considered."
FDA officials also say they want to discourage frivolous
lawsuits, which drive up costs.
A former FDA chief counsel in the Nixon administration,
Peter Barton Hutt, said he supported the FDA's legal position
but added, "I probably wouldn't be out there encouraging"
Troy oversees other FDA changes that provoked accusations
that he is siding with drug companies.
In October 2001, the Health and Human Services Department
gave Troy's office final approval over warnings telling
companies they could be in violation of FDA rules. Those had
previously been sent out by the FDA's drug-marketing division
and district offices.
After that change, the number of warnings of questionable
claims by pharmaceutical companies quickly dropped from an
average of seven a month to two.
FDA spokesman Pitts said fewer letters were sent because
the process was centralized.
"If you torture statistics long enough," Pitts said, "they
confess to anything."
Others see this as dangerous to the public.
"This ... may be a welcome development for the drug
industry, but it poses serious dangers to public health," Rep.
Henry Waxman of California, the top Democrat on the House
Committee on Government Reform, said in an Oct. 1, 2002,
letter to HHS Secretary Tommy Thompson.
Waxman said the bad policy decision was "exacerbated by the
appointment of Daniel Troy."
The investigative arm of Congress, the General Accounting
Office, in October 2002 also found that, under the new system,
warning notices "have taken so long that misleading
advertisements may have completed their broadcast life cycle
before FDA issued the letters."
Waxman described the delays as "a development that benefits
the powerful pharmaceutical industry at the expense of
As a USDA official, the former lobbyist for the meat
industry who opposed labeling told a hearing that mad cow
disease was not a threat.
Mad cow disease had yet to surface in the United States
last June when a U.S. Department of Agriculture official - a
meat-industry lobbyist only eight months earlier - bet his job
on the promise that the ailment couldn't sneak into the
country through imports.
Congress had just passed a law requiring meat labels to
state which country a cow lived in before slaughter. Food
safety groups say those labels could, among other things, help
consumers avoid buying beef from countries with mad cow
The USDA opposed such labeling. The person making the
agency's case, Deputy Undersecretary Charles Lambert, knew the
arguments against such labels. He'd made them as a lobbyist
for the National Cattlemen's Beef Association.
Lambert spent 15 years at the Cattlemen's Association
working in Denver before coming to Washington, D.C., where he
worked as lobbyist and chief economist. He left in December
2002 to join the USDA as undersecretary for marketing and
When asked about mad cow and the labels, Lambert said mad
cow disease wasn't a threat.
"Is there a possibility that it could get through?" Rep.
Joe Baca, a California Democrat, asked Lambert at a hearing
Lambert answered, "No, sir."
"None at all?" Baca asked.
"No," Lambert replied.
"You would bet your life on it - your job on it,
Lambert answered, "Yes, sir."
The disease was discovered in the U.S. six months later -
apparently brought here by a cow from Canada.
Lambert now says, "I overstated my case."
More than a dozen other high-ranking USDA officials
appointed under Bush also have ties to the meat industry.
"Whether it's intentional or not, USDA gives the impression
of being a wholly owned subsidiary of America's cattlemen,"
said Carol Tucker Foreman, director of the Consumer Federation
of America's Food Policy Institute. She served as a USDA
assistant secretary in the Carter White House. "Their
interests rather than the public interests predominate in USDA
When he came to the USDA, Lambert signed an agreement
stating that in his first year he would "not participate
personally and substantially in any particular matter
involving specific parties in which (Cattlemen's) is a party
or represents a party, unless I am authorized to
During that period he met at least 12 times with current or
former members of Cattlemen's and its affiliates, an office
calendar obtained by The Denver Post shows.
Lambert said that at any meeting where policy was
discussed, he acted only as a facilitator and that another
USDA person was present. The calendar shows meetings where
other USDA people were present, although it is not always
clear what was discussed.
The rest of those meetings were at social settings, he
"You're not required to sever all personal and past
relationships ... when you come to federal employment,"
Lambert said in an interview.
The EPA official, a lawyer, formerly worked for a firm that
represents utility companies, which are among the biggest air
When the Environmental Protection Agency issued proposed
changes to air pollution rules Jan. 30, the wording troubled
Martha Keating, a scientist with environmental advocacy group
Clear the Air.
"It struck me that I had seen this before," Keating
At least 12 paragraphs were identical to or closely
resembled a Sept. 4, 2003, proposal given to the Bush
administration by Latham & Watkins, a law firm that
represents utility companies.
The EPA official overseeing the proposed changes is Jeffrey
Holmstead, who until he joined the EPA in October 2001 had
worked as a lawyer at Latham & Watkins. His clients
included a chemical company and a trade group for utility
companies. Power plants are among the biggest air
Holmstead oversees the EPA division that governs air
Environmental groups say the rewrite poses a health threat
because it slows the reduction of mercury emissions by as much
as 11 years. Those emissions can end up in water where they
contaminate fish. Forty-three states have issued advisories
about fish consumption because of mercury pollution, the U.S.
Public Interest Research Group said.
One effect of the proposal would be that 168 of 236
Western-based plants, including those in Colorado, would not
be required to reduce those emissions at all, Keating
Lobbyists commonly suggest wording for legislation. But
even EPA Administrator Mike Leavitt objects to how this
language was lifted.
"To take something from a source without noting it doesn't
seem to be the normal course of business, and it shouldn't
have been done," EPA spokeswoman Cynthia Bergman said,
speaking for Leavitt.
Holmstead declined to comment.
Six Democratic senators are asking for an investigation.
Ten attorneys general and 45 senators - including three
Republicans - have asked Leavitt to void the proposed rule
because of undue industry influence.
The inspector general hasn't decided whether to
investigate. Bergman said the final pollution rule is still
J. Steven Griles
The tenure of the veteran energy lobbyist at the Interior
Department was labeled an "ethical quagmire" by the agency's
At the U.S. Department of the Interior, which oversees some
507 million acres of national parks, refuges and rangeland,
top officials weigh the competing merits of resource
conservation and development.
Bush named J. Steven Griles, a veteran energy industry
lobbyist, as the department's second-highest official in June
Griles earned $585,000 a year as a lobbyist, representing
an array of oil, gas and other energy interests. As Interior's
deputy secretary, he continues to receive $284,000 a year for
four years to pay him for the value he had created for the
firm by bringing in clients.
Upon entering the government, Griles had pledged to remove
himself from deliberations that affected his former
This year, the department's inspector general called
Griles' tenure an "ethical quagmire."
"Mr. Griles' lax understanding of his ethics agreement and
attendant recusals, combined with the lax dispensation of
ethics advice given to him, resulted in lax constraint over
matters in which the deputy secretary involved himself," the
inspector general concluded.
That report or a subsequent review by the U.S. Office of
Government Ethics found other issues:
A former business partner of Griles' hosted a party for
Griles and top Interior officials for land and mining.
Also, a former Griles client, Advanced Power Technologies
Inc., won some $2 million in no-bid contracts from his
department after two people Griles supervised pressed APTI's
And Griles urged the EPA not to press concerns over a plan
to open 8 million acres in Wyoming and Montana to gas drilling
by companies including six of his former clients. The project
is proceeding while a task force studies the matter.
The investigations of Griles found no illegalities.
Secretary of the Interior Gale Norton announced that her
right-hand man had been "cleared."
Review of ethics guidelines
Neither the Bush administration nor Congress has called for
a systematic review of government's ethics guidelines.
They should, says Stuart Gilman, president of the Ethics
Resource Center, a nonprofit group in Washington that works
with companies and government groups.
"The question is, are we dealing with the problems we're
currently confronting in government?" Gilman said.
Complaints about ethical breaches within government in some
cases can be politically motivated, said Gilman, who also
worked in the Office of Government Ethics under Presidents
George H.W. Bush and Clinton.
At the same time, Gilman said, governmental leaders have a
responsibility to eliminate both real and perceived conflicts
"For government to function, government must have the
confidence of people," Gilman said. "If people don't believe
the government is acting fairly, it encourages everyone to
Denver Post staff writers John Aloysius Farrell and Mike
Soraghan and researchers Tamania Davis, Barbara Hudson and
Regina Avila contributed to this report.
© Copyright 2004 The Denver Post