Pharmaceutical companies secretly finance controlled groups in covert marketing exercise
United Seniors Association, based in Fairfax, Va., calls itself an "influential and effective" advocacy organization for older Americans. The Seniors Coalition, based in Springfield, Va., describes itself as an "advocacy organization that represents the interests and concerns of America's senior citizens."
(AARP) -- The 60 Plus Association, based in Arlington, Va., describes itself as "an advocacy group with a free enterprise, less government, less taxes approach to seniors issues."
If you're like millions of other older Americans, you've seen their names many times before—either on fundraising appeals or on television spots promoting political candidates. (One of the groups spent more than $10 million last year on politician-promoting ads featuring Art Linkletter, the folksy television personality.) More than ever before, they've been trying to influence political campaigns and shape policies that affect older Americans.
But who's really behind these organizations? And are they really working to help older Americans?
Aside from the similar descriptions and locations in the Virginia suburbs of the nation's capital, the three nonprofit organizations have several things in common.
For starters, all three organizations claim to be nonpartisan, though they support—almost without exception—the campaigns and causes of one political party.
All three organizations were formed by, or with help from, direct mail entrepreneur Richard Viguerie, and two have been operated in recent years by former officers or employees of Viguerie's companies.
All three organizations have been criticized over the years for questionable fundraising practices, and, recently, the Social Security Administration ordered one of them to halt what it determined to be misleading mailings.
All three organizations claim to speak for millions of older Americans, although as recently as 2001 none of the three listed any revenue from membership dues on their tax returns. Moreover, an investigation by the AARP Bulletin shows that virtually all of their largest contributions in recent years have come from the same source—the nation's pharmaceutical industry.
Perhaps it isn't surprising that the three organizations have so willingly done the pharmaceutical industry's bidding.
"I think of the pharmaceutical industry as being like an octopus, with a deep reach no other industry can match," says Frank Clemente, the director of Public Citizen's Congress Watch, a Washington-based consumer organization. "This is an industry that's not only spending more on direct lobbying than any other industry but also spending more on front groups and related entities than any other industry."
Kenneth Goldstein, a political scientist at the University of Wisconsin who oversees the Wisconsin Advertising Project, says the drug industry has also emerged as unquestionably "the top-spending industry" in terms of political advertising.
Indeed, the industry invested more than $30 million in the 2002 elections, with more than a third of that bankrolling television ads bearing the name of United Seniors Association. The United Seniors ads promoted candidates in five Senate and 20 House races around the nation, including one in Pennsylvania that pitted two incumbents—Democrat Tim Holden and Republican George Gekas—against each other in a redrawn House district.
Holden says that the pharmaceutical industry spent more than $1 million trying to defeat him because he supports a prescription drug plan administered by Medicare; Gekas favored a plan backed by the pharmaceutical industry. (Gekas could not be reached for comment.)
"It was unconscionable that the pharmaceutical industry would mislead people by hiding behind a name such as United Seniors," Holden told the Bulletin. "They misled the voters of the 17th District. They have such deep pockets that they can go in and influence people who are busy with their everyday lives and don't have time to figure out that a group called United Seniors is actually the pharmaceutical industry."
Clemente told the Bulletin that Public Citizen's Congress Watch will ask the Internal Revenue Service to investigate whether United Seniors has violated its nonprofit tax status by engaging in "electioneering activity."
WEALTH AND STEALTH
When the pharmaceutical industry speaks these days, many Americans may not be able to recognize its voice. That's because the industry often uses "front groups" that work to advance its agenda under the veil of other interests.
Michael Pfau, a professor at the University of Oklahoma who has studied "stealth" political advertising, says his research indicates that "most people miss sponsorship completely" and attribute ads run by organizations like United Seniors to the candidates themselves. "Some of these organizations today," Pfau says, "are what we would call, in public relations language, front groups."
Consider, for example, the case of Citizens for Better Medicare (CBM). The Washington-based nonprofit sprang to life in 1999 as the sponsor of a series of ads featuring "Flo," an arthritic bowler who urged viewers to help "keep the government out of our medicine cabinets." At its peak CBM was spending more than $1 million a week on ads at least partly designed to influence the 2000 elections.
Pharmaceutical Research and Manufacturers of America (PhRMA), the drug industry's chief trade association, bankrolled the $60 million-plus advertising blitz and installed a former employee, Timothy C. Ryan, as CBM's executive director. The organization was the linchpin of the industry's drive to stave off a government-operated prescription plan for older Americans.
In documents filed with the Internal Revenue Service in 2000, Ryan estimated that CBM would raise and spend more than $60 million through July 2003. But the Bulletin has learned the pharmaceutical industry quietly pulled the plug on CBM last year, just as PhRMA started channeling what it called "unrestricted educational grants" to United Seniors Association.
(Bruce Lott, a spokesman for PhRMA, says that CBM is "largely inactive." CBM executive director Nona Wegner, who's a former official of the Seniors Coalition, did not respond to requests for an interview.)
At about the same time, the pharmaceutical industry began using the 60 Plus Association as a screen for its efforts to defeat prescription drug legislation at the state level.
Among other things, it hired Bonner & Associates, a Washington-based firm that specializes in "Astroturf lobbying"—so named because it's the "artificial" version of grassroots lobbying—to fight such legislation in Minnesota and New Mexico. The firm's paid callers, reading from scripts that identified them as representatives of 60 Plus, urged residents to ask their governors to veto the legislation. Pharmaceutical giant Pfizer Inc. later said it had paid Bonner & Associates to make the calls.
Records obtained by the Bulletin show that the pharmaceutical industry has been a formidable financial force behind United Seniors Association, the Seniors Coalition and 60 Plus Association.
In 2001, for example, United Seniors took in a total of more than $3.1 million from PhRMA and CBM, amounting to more than 36 percent of its revenue for the year. In 2000 the Seniors Coalition got nearly $2.1 million from PhRMA and nearly $170,000 from CBM, amounting to more than 17 percent of its revenue. In its 2001 fiscal year, 60 Plus got a total of $275,000 from PhRMA, CBM and three drug companies (Merck, Pfizer and Wyeth-Ayerst) plus another $300,000 from Hanwha International Corp., the U.S. subsidiary of a Korean conglomerate with chemical and pharmaceutical interests—amounts that made up about 29 percent of its revenue.
"We're not a front for anybody," James L. Martin, the chairman of 60 Plus, told the Bulletin. "I get money from lots of sources. I've received money from the pharmaceuticals—I wish it was more."
All three organizations are rooted in the ultraconservative political movement and have frequently veered sharply from issues related to aging and older Americans.
Charles Jarvis, the chairman, president and CEO of United Seniors, is a former executive vice president of Focus on the Family, the Colorado-based organization run by conservative activist James Dobson.
In taking the helm of United Seniors, Jarvis succeeded Sandra L. Butler, a former Viguerie executive who remained on as the organization's highest-paid director in 2000.
United Seniors announced in November 2001 that it was backing a plan "to allow more production of domestic energy in Alaska's Arctic National Wildlife Refuge." Its news release did not mention the organization's receipt of more than $181,000 from Anchorage-based Arctic Power, which has promoted drilling in the refuge.
Jarvis did not respond to the Bulletin's request for an interview.
The Seniors Coalition was formed in 1990 by Viguerie and Dan C. Alexander, a Mobile, Ala., school board official who had been convicted of extorting kickbacks on school construction projects and later served four years of a 12-year prison term. For some of the time Alexander was in prison, he and his wife drew $23,000 a month in "consulting" fees from the Seniors Coalition while their teenage daughter served as its president.
In a news release issued in November 2002, the Seniors Coalition claimed "four million members," but the federal tax return it filed for 2000 identified PhRMA as its biggest donor and listed no revenue from "membership dues and assessments."
John Powell, the organization's chief operating officer, declined to be interviewed by the Bulletin.
Martin of 60 Plus worked for Viguerie for four years, and it has been reported that the group's contract with Viguerie's firm allows it to use 60 Plus's contributor list "in any manner, for any purpose, for its own account," at least until 2003.
The relationship goes back a long way. In 1994, for example, Viguerie helped 60 Plus raise $1.3 million, but the organization was left with less than $93,000 after paying fees and expenses (including postage) to Viguerie's operation.
The organization said in a 2001 news release that it is "supported by contributions from individual members—not corporations," though financial records obtained by the Bulletin show sizable corporate contributions—and no dues-paying members.
Like its counterparts, 60 Plus often takes positions on issues that have few if any direct connections to older Americans. Last year, for example, Martin endorsed the controversial Yucca Mountain site in Nevada "as an appropriate and safe site for storing used nuclear fuel."
THE SAME OLD SNAKE OIL?
In the mid-1990s, then-Sen. David Pryor, D-Ark., chairman of the Special Committee on Aging, blasted the Viguerie-connected nonprofit organizations as "fright factories," advising those who received their fundraising solicitations "to keep their wallets closed unless they know exactly who is behind them."
Indeed, the solicitations have often been laced with "histrionic and demonstrably false assertions," as a study team at the University of Pennsylvania once put it. "The politicians in Washington have 'stolen' the Social Security Trust Fund," blared one fundraising letter from United Seniors. "That's right. Every penny is gone!"
The organizations also ran into trouble by using envelopes with official looking symbols and language that seemed designed to make recipients believe they were urgent government documents.
Now, nearly 10 years later, some of the same issues have resurfaced with respect to the fundraising solicitations of United Seniors. The Social Security Administration recently secured a cease and desist order against the organization for mailings the government alleges are designed to "mislead the public into believing the mail is officially sent or approved by the Social Security Administration." United Seniors has appealed the order.
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