Rep. Mike Ross, Opponent of Public Option, Raises Eyebrows With Healthy Haul From Pharmacy Chain

By Marcus Stern, ProPublica. Posted September 23, 2009.

This story was co-published by ProPublica and Politico.

Arkansas Rep. Mike Ross -- a Blue Dog Democrat playing a key role in the health care debate -- sold a piece of commercial property in 2007 for substantially more than a county assessment [2] (PDF) and an independent appraisal [3] (PDF) say it was worth.

The buyer: an Arkansas-based pharmacy chain with a keen interest in how the debate plays out.

Ross sold the real estate in Prescott, Ark., to USA Drug for $420,000 -- an eye-popping number for real estate in the tiny train and lumber town about 100 miles southwest of Little Rock.

"You can buy half the town for $420,000," said Adam Guthrie, chairman of the county Board of Equalization and the only licensed real estate appraiser in Prescott.

But the $420,000 was just the beginning of what Ross and his pharmacist wife, Holly, made from the sale of Holly's Health Mart. The owner of USA Drug, Stephen L. LaFrance Sr., also paid the Rosses $500,000 to $1 million for the pharmacy's assets and paid Holly Ross another $100,001 to $250,000 for signing a non-compete agreement. Those numbers, which Ross listed on the financial disclosure reports he files as a member of Congress, bring the total value of the transaction to between $1 million and $1.67 million.

And that's not counting the $2,300 campaign contribution Ross received from LaFrance two weeks after the sale closed.

Holly Ross remains the pharmacist at Holly's Health Mart under USA Drug. Neither she nor her husband agreed to speak with ProPublica for this story.

At the time of the 2007 sale, the county assessor's office valued the pharmacy's building and the land on which it sits at $263,000 -- nearly $160,000 less than the Rosses got for it. Because assessors' valuations don't always reflect true market value, ProPublica hired Guthrie to appraise the property. He placed the current value of the lot and building at $198,000, substantially lower than the county's assessment, which was raised from $263,000 to $269,000 this year. Guthrie explained the difference between his appraisal and the county assessment by saying that county assessments have been running higher than actual market value.

Mike Ross frequently speaks for a coalition of House moderates known as the Blue Dog Democrats, a group that helped force changes to the version of the health care reform bill drafted by the House Energy and Commerce Committee. The role has lifted him to national prominence in recent months.

Ross, a member of the committee, told reporters on Aug. 5 in Little Rock: "We held the bill hostage in committee for 10 days to make it better. ... We protected small businesses. ... And we ensured that if there is a government option, it will be just that, an option. It will not be mandated on anybody."

Ross bristled at suggestions he was trying to kill the bill.

"I wasn't trying to kill health care reform," he said. "If I was, I wouldn't have been in negotiations for 10 days."

LaFrance has amassed a privately held chain of more than 150 pharmacies operating in five Southern and Midwestern states under a variety of names, including USA Drug. It was the 15th largest drug chain in the country in 2008 with an estimated $906 million in sales, according to Racher Press, which publishes business intelligence reports.

The pharmacy industry is aggressively lobbying Congress in an effort to protect its interests in the health care debate. Ross, who belongs to the 52-member Congressional Community Pharmacy Coalition, has introduced and supported legislation backed by pharmacy trade groups.

On Aug. 1, the National Community Pharmacists Association issued a news release thanking Ross for an amendment to the health care reform bill that would create greater transparency in the operations of pharmacy benefit managers, who act as clearinghouses for insurance company reimbursements for pharmaceuticals.

In June, the National Association of Chain Drug Stores issued a news release thanking Ross for introducing legislation authorizing payments to pharmacists to train patients in how to manage their medications.

Health-related interests have donated $342,475 to Ross since 2007, according to federal campaign data maintained by the nonprofit Center for Responsive Politics. No other business sector has given Ross as much.

See more stories tagged with: prescription drugs, health care reform, pharmacy, mike ross, usa drug, tags: blue dogs, congressional community p, national association of c, national community pharma, stephen lafrance

Marcus Stern is a senior reporter for ProPublica. In 2006, he shared the Pulitzer Prize and George Polk Award for his role in breaking the story of former Rep. Randy "Duke" Cunningham's wide-ranging corruption for Copley News Service.

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