Rep. Tom Price (R-GA), President-elect Donald Trump’s choice to head the Department of Health and Human Services, invested last year in a major prescription drug distribution company that over the years has been linked to a deadly nationwide epidemic of opioid abuse.
The San Francisco-based McKesson Corp., the largest drug distributor in the nation, has been the subject of two publicly disclosed U.S. Drug Enforcement Administration actions, according to The Washington Post. The company ultimately paid $163 million in fines in response to allegations that it “failed to report hundreds of suspicious orders for millions of pain pills” from Internet pharmacies and others, The Post reported.
Price, a wealthy orthopedic surgeon who Trump has picked to lead HHS and take a major role in repealing and replacing the Affordable Care Act, has come under mounting scrutiny by Senate Democrats and public watchdogs for possibly engaging in insider trading for years, a violation of federal ethics law.
Price bought and sold stock worth more than $300,000 in roughly 40 health care, pharmaceutical, and biomedical companies since 2012, according to a recent analysis by The Wall Street Journal. The Georgia Republican sits on the Ways and Means subcommittee on health, which oversees Obamacare, Medicare, and other government health programs, and he also chaired the Budget Committee until recently.
Over the past several years he has sponsored or co-sponsored 44 bills that potentially could have had an important financial impact on the U.S. health care system, the insurance industry, and drug manufacturers. His stock holdings included Aetna Inc., Pfizer Inc, Amgen Inc., Bristol-Myers Squibb Co. and Eli Lilly & Co.
On Thursday, Price listed McKesson Corp as one of the 43 stocks he intends to sell as part of a major divestiture of his financial holdings and business interests. That move comes ahead of the Senate hearings into his nomination to lead the nation’s premier health services and research agency -- hearings that likely will extend through mid-February because of the complexity of his case.
According to a list of Price’s stock purchases and sales between 2008 and 2016 compiled by the public watchdog Public Citizen, the Georgia lawmaker invested as much as $15,000 in McKesson on March 17, 2016. Public Citizen early this month formally requested the Securities and Exchange Commission (SEC) and the Office of Congressional Ethics to investigate suspicious stock trading by Price and Rep. Chris Collins (R-NY).
“Extensive stock trading activity in industries that Price and Collins oversee as congressmen, and unusually good timing and financial benefits of those stock trades, raise red flags about the potential use of insider information,” Craig Holman, government affairs lobbyist for Public Citizen’s Congress Watch division, said in a statement Jan. 5. “The public information available falls short of hard evidence of insider trading, but the patterns of trading activity certainly warrant further investigation to determine if it occurred.”
Congress and the Obama administration have attempted to come to grips with the problem of the questionable trading practices of lawmakers, with mixed results. In 2012, President Obama signed into law the Stop Trading on Congressional Knowledge (STOCK) Act that barred members from using “any non-public information derived from the individuals’ position … or gained from performance of individual duties for personal benefit.”
But the measure was subsequently weakened under pressure from lawmakers and members of the executive branch.
The decision by Price to invest in a company like McKesson with such a checkered past is a curious one at best. A spokesperson in Price’s congressional office didn’t respond to a request for comment on Thursday. Another spokesperson for Price, Phil Blando, told The Wall Street Journal last month that the conservative lawmaker takes his obligation to uphold the public trust very seriously and has complied with all relevant laws.
McKesson is notorious among DEA and Justice Department investigators and was part of a network of drug distribution companies that pumped tens of millions of prescription painkillers into rural and suburban communities throughout the country, especially in West Virginia, the Northeast and New England.
In 2008, for example, the DEA and six states sued McKesson for supplying hundreds of hydrocodone orders to rogue pharmacies, according to CBS. McKesson settled, paying $13 million in fines and promising to better monitor its prescription drug distribution operations.
The opioid epidemic, fueled by the illegal distribution of powerful painkillers, is tragic.
Between 2000 to 2015, nearly 180,000 people died of overdoses from prescription painkillers such as hydrocodone and oxycodone as part of one of the worst public health crises the country has faced in decades – one that became a compelling issue during the 2016 presidential and congressional campaigns.
The number of overdose deaths involving opioids increased from 28,647 in 2014 to 33,091 in 2015, an 8.9 percent rise, according to the National Center for Health Statistics, an arm of the Centers for Disease Control and Prevention.
Price, 62, is one of many wealthy businessmen and investors who have been tapped by the multi-billionaire Trump for starring roles in his new administration. And while Price’s estimated $13 million net worth is considerably less than those of the others, his aggressive investments in health care related businesses over the years has become a subject of concern among Democrats and even some Republicans.
“I will not participate personally and substantially in any particular matter in which I know that I have a financial interest directly and predictably affected by the matter, or in which I know that a person whose interests are imputed to me has a financial interest directly and predictably affected by the matter, unless I first obtain a written waiver,” Price stated in a letter yesterday to an HHS ethics official that was reported by Morning Consult.
According to the letter, Price will divest from the 43 companies within 90 days of his confirmation, adding that he would not participate “personally and substantially” in any matter involving any of the companies until he has sold his stock or obtained a written waiver from the ethics office.
He also said he intends to retain a limited partnership interest in an Atlanta-area health care real estate company called Diagnostic Ventures of Roswell LLL, and another venture called RMC3 LLC.