The Associated Press
September 30, 2004
Leading Democrats castigate King Pharmaceuticals
NASHVILLE – Two leading statehouse Democrats on Thursday castigated Bristol-based King Pharmaceuticals and the family of former company CEO John Gregory for pouring a stream of “dirty money” into Tennessee politics, and called on Republican candidates to return all donations associated with the company or the family.
It was the second broad attack on Gregory and King in recent weeks on the state political front. Tennessee Citizen Action also has called for an investigation into whether the company defrauded TennCare in its sales of the blood pressure medication Altace. Sen. Joe Haynes and Rep. Randy Rinks, the chairman of the Democratic Caucuses in their respective houses, said at a press conference on Thursday they had some serious questions about the relationship between the Gregory family and King Pharmaceuticals, TennCare, and the state Republican party.
Gregory and his family have in recent years donated more than $800,000 to political causes, all of them backing Republicans and many of them within the state. They are by far the largest single donors to state political PACs and organizations. Haynes referred to a meeting in 1999 between King representative Jim Holcomb and four GOP members of the state Legislature - whom he identified as Sen. Ron Ramsey and Reps. Jason Mumpower, David Davis and Steve Godsey, all from near King’s upper East Tennessee operations - and then-TennCare director Brian Lapps.
“Within 33 days after that visit, sales started being made to TennCare patients by King Pharmaceuticals,” Haynes said. “Since then, in five years, sales have exceeded $55 million.” Haynes said the price of the drug has been increased 13 times in that span. “This relationship does not pass the smell test,” Haynes said. “King Pharmaceuticals is funneling money to try to buy influence - what we would call dirty money - in order to keep the price high.”
Holcomb, a former state senator who now is the treasurer for the Tennessee Conservative Political Action Committee that is heavily subsidized by Gregory, said the meeting - but no lobbying - took place. “This is absolutely a lie,” he said. “This is about raising money for political campaigns. It’s not even about lowering the cost of medical services in Tennessee. That’s not even a legislative issue. On the face of it this is just shenanigans.”
Haynes and Rinks contend they were raising the issue now because they hear all the time on the campaign trail that the most pressing issue for many of their constituents is the high cost of prescription drugs. Ramsey vigorously denied having anything to do with the price of King Pharmaceuticals products and said the attack is just politics. “I did fly to Nashville to represent an employer in my district to try to provide more and higher paying jobs,” Ramsey said. “I’ll be that liaison with any employer in my district.”
He said legislators have nothing to do with the price of prescription drugs and fired back that “the bottom line to all these accusations is the Democrats are running scared. They see their 140-year rule of the state House and Senate slipping away and will obviously say or do anything to keep that from happening.”
He characterized the 1999 meeting with Lapps as one in which he and the other elected officials “wanted to be sure that TennCare knew a Tennessee company providing Tennesseans jobs could furnish drugs on the TennCare formulary.” He said the decision to start buying from King was solely up to TennCare, which was then run by the Republican administration of former Gov. Don Sundquist. “If they picked up Altace, which is manufactured here and provides 500 jobs, then I’m all for it, as opposed to a drug from New Mexico that provides zero Tennessee jobs,” Ramsey said.
Ramsey and Holcomb both said if Democrats want Republicans to give back the record amount of money Gregory and family have donated to GOP causes, they should be willing to return all campaign contributions from trial lawyers who, he said, are the real cause of disruption in medical care in Tennessee. A legislative study committee on the issue of tort reform last year concluded that large jury awards were not significantly driving up the cost of medical care in Tennessee. Ramsey said maybe they aren’t yet, but said they soon will be.
Since March, King has been the subject of a federal Securities and Exchange Commission investigation concerning pricing practices for government programs such as Medicaid. With regard to Altace, TennCare says the price has gone from $96.54 per 100 units in 1998, when King obtained the patent, to $189.60 this year. Altace is the 10th most-prescribed drug in TennCare, the bureau says.
