Former Health & Human Services Secretary Tommy Thompson, embroiled in a tight Wisconsin senate race against Democratic congresswoman Tammy Baldwin, has been the target of many news stories examining the remarkable business career he launched since he left the Bush administration seven years ago.
As disturbing as this pattern already is, an AlterNet focus on a single portal to Thompson’s sudden multi-million wealth--his health care unit clients at the legendary Washington lobbying firm, Akin Gump--reveals Thompson’s breathtaking appetite for capitalizing on public service, only parts of which have been previously reported. A four-term Wisconsin governor, Thompson’s decision to seek a senate seat at 70, after years of prospecting for gold in Washington, suggests a brazen belief that the incestuous lobbying intertwines he embodies are so old-hat voters have become inured to them.
This story examines seven Akin clients aided by HHS decisions in the Thompson era who subsequently hired him as a consultant and/or his longtime counsel Lawrence A. “Ladd” Wiley. Wiley left HHS with Thompson to join Akin in 2005 and, unlike Thompson, files as a registered lobbyist. Thompson says he doesn’t lobby, but only provides strategic advice to his clients. Wiley is still an Akin partner, while Thompson, who was paid $771,000 by Akin in 2011, left the firm to run for the senate.
Some of these Akin clients have been tainted by scandal, including a criminal guilty plea and a deferred prosecution agreement. Virtually all have donated to his senate or presidential campaigns, totaling at least $124,458, including contributions from Akin partners of $31,308. Thompson has received millions in direct payments or stock options from these clients, some of which have conceded they hired him because of his “connections,” even while Thompson says he doesn’t lobby.
The Food and Drug Administration, a pivotal agency under HHS, took actions that benefited several these clients during and after the Thompson era. Thompson tried to appoint a veterinarian, Dr. Lester Crawford, to head the FDA in 2001, but the White House blocked the appointment, so Crawford served as either acting commissioner or deputy commissioner throughout Thompson’s term. When Thompson left in 2005, Crawford was formally nominated FDA commissioner, but resigned that September in the midst of a grand jury investigation. He pled guilty in 2006 to concealing his interests in companies the FDA regulated. Dr. Andrew von Eschenbach, who’s given $2500 to Thompson’s senate campaign and presented a special citation to Thompson just before leaving at the end of the Bush administration, succeeded Crawford.
Thompson and Wiley created an organization in 2006 called the Alliance for a Stronger FDA that includes 180 organizations associated with the agency and lobbies for greater funding. Wiley is its executive director, Thompson once its chair, with Crawford and von Eschenbach honorary chairs. Akin is the Alliance’s lobbyist and was paid $240,000 this year. The FDA, which increasingly survives on user fees, depends heavily on the Alliance for funding support.
Thompson also appointed another close confidant from Wisconsin, Stewart Simonson, Assistant Secretary of Public Health Emergency Preparedness in April 2004, and Simonson, who remained at HHS until mid 2006, also made decisions that benefited Thompson’s Akin clients. Like Wiley, Simonson had worked in Thompson’s counsel office when he was governor and at HHS. When Thompson was chair of Amtrak in the late 90s, Simonson became corporate secretary and counsel. Simonson helped steer Project Bioshield, a $5.6 billion plan for biological warfare countermeasures, through congress in 2004, assuring skeptics that it would not be used “as a cash cow” for politically-wired companies. Put in charge of running the program by Thompson despite an absence of background in the field, he became the butt of even Republican criticism, with Congressman Tom Davis noting that he “just appears to be over his head.”
Shortly after Simonson left HHS in 2006, he was named vice president of Constella Group, a medical research firm that paid Thompson’s health unit at Akin as much as $180,000-a-year. Thompson became chair Constella’s newly formed advisory board shortly before Simonson was hired. Simonson, other Constella officials, and another company Simonson now runs have given $8350 to Thompson’s campaigns. Constella’s CEO Donald Holzworth said Thompson could “make introductions for us” and the company did get millions in HHS-tied contracts before and after Thompson’s term as secretary, one of which raised conflict of interests issues reported by the Milwaukee Journal Sentinel.
Here are the other clients:
AGA Medical Holdings—The longtime principal owners of this scandal-scarred company, Franck Gougeon and an investment firm called Welsh Carson Anderson & Stowe, have combined to contribute at least $29,100 to Thompson campaigns. A few months after Thompson left HHS in 2005, AGA gave him a five-year contract that required him to devote 20 percent of his time to the company, serve as its board chair and “assist with FDA and regulatory affairs,” as well as “clinic trial awareness, media and investor communications.” A company spokeswoman explained his consulting agreement included “helping with connections in Washington, and it’s actually been extremely helpful to the company.” While Thompson oversaw the FDA, it approved AGA’s four major heart defect product lines—from septal occuluders to vascular plugs.
In 2008 alone, Thompson’s AGA compensation tallied $616,405, including stock options and a $120,000 payment to Akin Gump. AGA paid Akin for Thompson’s consulting services; the firm was not AGA’s registered lobbyist. In June 2008, AGA signed a three-year deferred prosecution agreement with the Department of Justice acknowledging that it had made “improper payments in China” to physicians and a patent official, paying a $2 million fine. AGA’s filings with the SEC indicate that it “consented to a two-count criminal statement of information,” admitting “a substantial violation of the anti-bribery provisions” of the Foreign Corrupt Practices Act. AGA initially disclosed these payments to DOJ in 2005, just as Thompson became the company chair. He remained chair throughout the protracted probe. AGA’s founder and CEO Gougeon, who contributed $2300 to Thompson’s short-lived presidential campaign in 2007 and $2500 to the senate campaign, resigned a few days after the DOJ agreement was signed. The company paid him a $500,000 bonus that June, as well as an annual retainer of $170,000. Thompson also chaired the board’s compensation committee.
In 2010, St. Jude Medical paid $20.80 a share to acquire AGA. Thompson was entitled under his AGA contract to 422,012 shares and options when the sale closed, entitling him to a $5.7 million payout. The financial disclosure form he filed as a senate candidate, covering 2011, listed him as owning up to $100,000 in St. Jude stock, and none in AGA. Since the $1.3 billion AGA sale occurred less than a year after its public offering, the company was described as “one of the quickest exits in Wall Street history,” and the sudden switch was attributed to the difficulties AGA was experiencing in getting FDA approval for a critical new product. Of course, Obama appointees were now running the agency.
Novartis AG—Another Thompson client damaged by scandal, Novartis’ PAC has donated $2000 to Thompson’s senate campaign. A Swiss-owned company, it is not a major donor to American campaigns. Thompson’s financial ties to the company are murky but plentiful. When Thompson filed a financial disclosure statement in 2007 for his presidential campaign, he revealed $200,000 in consulting fees that Novartis had paid him in 2006. Akin Gump filed as Novartis’ lobbyists in 2011 and 2012, earning a $120,000 annual fee. Thompson’s financial disclosure for 2011 reveals that he owns up to a million dollars in Novartis stock, and earned between $15,000 and $50,000 in capital gains on sales of other shares in 2011.
Like AGA, Novartis “entered in to a global civil, criminal and administrative settlement” with the federal government, paying a $425 million fine and pleading guilty to a misdemeanor criminal violation. In the 2010 integrity agreement with the Inspector General of HHS, Novartis acknowledged that it had promoted Trileptal, an epilepsy anticonvulsant, for uses not approved by the FDA, and that it had violated the False Claims Act in connection with Trileptal and other drugs. The FDA approved Trileptal in September 2001, while Thompson was HHS secretary, and Thompson and Novartis CEO Daniel Vasella staged a press conference in May 2001, announcing with great fanfare the speediest FDA approval of a drug in years, Novartis’ leukemia medication Gleevac.
In 2006, while Simonson was still running the HHS office overseeing emergency preparedness, the agency awarded Novartis a $220 million pre-pandemic flu vaccine contract. The company announced that it would build a plant in North Carolina partially funded by this contract, and in 2009, another contract was awarded for $486 million, covering a substantial share of the plant’s cost as well as a vaccine supply. Akin lobbied for the two contracts.
Vasella and Thompson became so friendly while Thompson was at HHC they rode motorcycles together through DC—Thompson aboard a Harley, and Vasella aboard a BMW 1200. New accounts last year indicated the Justice Department was conducting a new fraud investigation of the firm. Constella Group is a research consultant for Novartis, interlinking Thompson’s clients.
MDVIP—Thompson virtually invented this “Doctor-to-the-Stars” concierge company that charges annual fees just to get a physician to return patients’ calls, agree to see them quickly, or provide other “open door” services. Founded in Boca Raton in 2000, the company pioneered this VIP service and is now the largest provider in the country. When Congressman Henry Waxman wrote Thompson at HHS in 2002 protesting MDVIP’s practices as a violation of Medicare laws, charging that the company was requiring Medicare patients to pay an annual fee as “a condition” for them to receive Medicare covered benefits, Thompson replied with a ruling that, to this day, is described as “the legal authority” for these fees. Waxman complained that if permitted, there would be “no financial protection against overcharges” for Medicare patients, yet Thompson was in such a rush to approve it that he got an HHS legal unit to complete a review in two weeks.
MDVIP executives and their families have contributed $30,500 to Thompson’s senate campaign. Proctor & Gamble, which acquired a partial stake in MDVIP in 2007 and full ownership in 2010, has given another $15,000. The company retained Thompson as a consultant and Akin as a lobbyist in 2005, and Proctor & Gamble paid Akin $290,000 to represent MDVIP between 2010 and 2012. Thompson’s 2011 disclosure indicates it was still a consulting client. The company named him to lead its Committee on Cost Reduction Through Preventive Care, but his annual earnings from MDVIP have never been disclosed.
Akorn Inc.—One of Thompson and Wiley’s first clients at Akin in 2005, the company was awarded a breakthrough $21.9 million HHS contract in February 2006, announced by assistant secretary Simonson. Akin’s lobbying filings indicate that Wiley was part of the team lobbying Simonson’s office for this procurement contract, a shockingly cozy arrangement. Akorn has paid Akin $460,000 in lobbying fees. The Project BioShield contract generated what Homeland Security Newswire called “ever more intense criticism,” because “a major goal of BioShield is the treatment of acute radiation syndrome,” but Akorn’s products “will not do it.” The Newswire also pointed out that the bid solicitation only called for 100,000 doses and an option for another 100,000, while Akorn was awarded a 400,000-dose contract with an option for 500,000 more.
Akorn’s anti-radiation drugs were granted fast-track approvals by the FDA in 2004, while Thompson still oversaw the agency. Thomson still listed Akorn as a consulting client on his 2011 financial disclosure form, but no compensation is disclosed.
PharmAthene—This is the Akin client that’s drawn the most attention in prior Thompson coverage. His appearance a day after the tenth anniversary of 9/11 on ABC News when he twice brought PharmAthene up, without any prodding from the two interviewers, provoked outrage. PharmAthene is “doing an excellent job” in developing a second-generation anthrax vaccine, Thompson volunteered, “and I think our country needs to get behind them.” He never revealed that the company was one of his Akin consulting clients and one of Wiley’s lobbying clients. In fact it has paid over a million dollars in lobbying fees to Akin, with Thompson’s consulting fee undisclosed (his disclosure form indicates he held stock in it in 2011).
An Akin spokeswoman promised the Washington Business Journal last fall that if Thompson referred to PharmAthene publicly again, he would “also mention that they are a client.” In fact, a PharmAthene press release in 2009 had already quoted Thompson saying much the same thing with no reference to his Akin representation. Even as Thompson concealed his representation of PharmAthene during the September 12, 2011 interview, while using his 9/11 credentials to promote it, he also virtually announced his senate candidacy. The company’s PAC and its chief executive have given $10,300 to his campaigns.
PharmAthene won two contracts totaling $128 million to develop its vaccine from an HHS unit in 2002 and 2003, when Thompson was still secretary, eventually topping over $200 million in developmental funding, designed merely to make it make it eligible for a contract to actually produce the vaccine. In August, however, news reports indicated that the FDA put “a clinical hold” on PharmAthene’s production “without a reason.”
Gilead Science—The company’s PAC and executives have contributed $27,500 to the senate campaign, and have paid Akin $1.4 million in lobbying fees since 2008. Thompson listed it as a consulting client for 2011 in his senate disclosure, but the fees he received in addition to Akin’s lobbying fees aren’t disclosed. Thompson announced in 2004 that he would grant expedited approval of Gilead’s HIV drugs if they were combined with two other medications manufactured by other companies. In 2009, the HHS Inspector General subpoenaed Gilead’s records, but no further action has since been taken.
Research assistance by Jacob Anderson, Andrea Hilbert, Max Jaeger, and Catherine Thompson