Layers of Lobbying: Federal and state lobbying trends in spending, representation and messaging (2024)

— by Pete Quist and Dan Auble, June 2, 2022

This report is part of OpenSecrets’ Layers of Lobbying series examining federal and state lobbying trends. The series also includes the State Lobbying Disclosure Scorecard and Layers of Lobbying: An examination of 2021 state and federal lobbying from K Street to Main Street.

Intro

OpenSecrets’ first broad examination of federal and state lobbying illustrates how big organizations are spending millions of dollars to impact similar issues crossing state and federal policy-making using consistent messaging, and that they are generally spending more as the years pass.

In the 2019 and 2020 congressional session, interest groups spent $7 billion lobbying the federal government on issues including energy, infrastructure, communications, insurance and virtually every other economic and governance issue. At the same time, special interests were spending on lobbying efforts on those same issues in states around the country. While state lobbying disclosure requirements vary significantly from state to state, OpenSecrets has documented $3.5 billion spent on lobbying in state capitals during the two-year period from 2019 to 2020.

Unlike contributions to political campaigns that directly benefit politicians, most money spent lobbying does not go to a politician’s account. But understanding lobbying efforts is arguably even more critical to maintaining a healthy democracy. Lobbying spending is generally not subject to monetary limits, and organizations of all kinds spend vast sums to influence policy. Many special interests even make campaign contributions to pave the way for lobbying and that lobbying activity is where organizational interests are directly attempting to influence governmental policies.

Lobbying is a critical component of an organization’s political engagement, and good lobbyists are highly valued. Most money organizations spend lobbying is used to acquire the best representation possible through lobbyists who are well-connected and able to access many elected officials. In fact, the famous “revolving door” of elected officials themselves, or their staff members, becoming lobbyists is a direct result of this networking value.

The Merger

In 2021, the Center for Responsive Politics (CRP) merged with the National Institute on Money in Politics (NIMP) to form OpenSecrets. CRP had been tracking federal lobbying activities for nearly 25 years while NIMP collected state lobbying registrations for 15 years in every state and lobbying spending for at least seven years in 19 states where meaningful data was reported, where states made reports available in accessible formats, and where resources allowed. The merger of these two groups opened the door to create a combined dataset of federal and state lobbying efforts that can shine the light on this important realm of political spending.

While OpenSecrets is continuing to build the back-end database architecture and public-facing web displays at OpenSecrets.org, the combined forces of these organizations has already made progress towards multiple objectives possible, including:

• Cross-referencing CRP and NIMP IDs associated with groups engaged in lobbying activities, highlighting the presence of organizational interests working at the state and federal levels
• Alignment of economic sector categorizations and their application to various groups, permitting an increasingly consistent comparison of economic interests’ activities at different levels of government
• Increased capacity to measure lobbying transparency in the states, potentially paving the way for an expanded data collection effort in more jurisdictions
• Increased capacity to analyze efforts around the country to impact public policies through reports and lobbying database development

This report examines general trends in federal and state lobbying using the unique cross-jurisdictional database of lobbying spending and registrations made possible by these advancements, including a brief examination of the pharmaceutical manufacturing industry and a preview of more robust analysis to come.

The Big Picture

Billions of dollars are spent on lobbying at the state and federal levels each year. Federal lobbying totals are typically around $3.5 billion annually, adjusted for inflation, or $7 billion over a two-year congressional session. In the 19 states where lobbying spending data has been consistently available since 2015, lobbying spending generally reaches inflation-adjusted totals between $3.4 billion and $3.8 billion over a given two-year period.

While contributions represent political engagement by both organized interests and the general population, money spent on lobbying is dominated by organizations and their efforts are often directed toward specific policy outcomes. As with contributions, many of the same interests are active at both the state and federal levels.

Three economic sectors each spent more than $1 billion lobbying the 116th congressional session: health, finance/insurance/real estate and general business, the last of which was led by business associations, various manufacturing interests and retail stores.

Communications and energy interests also made strong showings. These sectors tend to be among the top lobbying interests every year at the federal level.

But how does that compare to lobbying in the 19 states for which OpenSecrets has spending data? In 2019 and 2020, those states’ top sectors were nearly identical. Unlike the federal level, however, communications interests were not a top-tier spending source in those states and government agencies, education and similar non-business interests were ranked among the top lobbying spenders with more than $280 million. Most of that $280 million came from cities and counties lobbying the states, a common occurrence during budgeting or when states consider legislation that may impact local governing efforts.

The federal lobbying firms receiving the most money in 2019 and 2020 are all recognizable names. This is a list of the top power brokers of Washington, D.C.

While the top two firms work internationally and Southern Group works regionally, firms making the most money at the state level tend to work within only one state, often touting their relationships or expertise with that state’s legislative practices.

For example, Brown & Weinraub is a New York-based firm that touts its team’s experiences having “advised and served as elected officials.” In Florida, Capital City Consulting notes that because their lobbyists have had “leadership roles in all aspects of state government, our consultants have access to the highest levels of policymakers in both parties.” Capitol Advocacy bills itself as “leading experts in California’s state policy, process, and politics.”

The top sector spending on lobbying at both the federal level and in the OpenSecrets state data was health from 2019 to 2020. Federal lobbying spending within the health sector was dominated by the pharmaceuticals industry, with health care institutions like hospitals and nursing homes coming in second.

At the state level, the top two interests within the health sector were reversed, with hospitals and nursing homes leading lobbying spending and pharmaceuticals coming in second.

However, even with the health care facilities leading the way at the state level, some of the top state lobbying spenders in the health arena — including two of the top five — were pharmaceutical interests. The Pharmaceutical Research & Manufacturers Association of America (PhRMA) reached more than $8.3 million, and Pfizer spent almost $4.9 million in the 19 states tracked by OpenSecrets over those two years.

Five pharmaceutical companies or organizations were top ten lobbying spenders within the Pharmaceutical industry in both federal spending and state spending in 2019-2020: PhRMA, Pfizer, Roche Holdings/Hoffman-LaRoche, Eli Lilly & Co and Gilead Sciences. Sixteen appeared in the top 10 at either the federal or state levels.

The pharmaceutical industry has hired some of the biggest firms on K Street to lobby at the federal level. Three of the top 10 lobbying firms working for pharmaceuticals interests are among the top 10 lobbying firms in D.C. overall.

The top firms working for the pharmaceutical industry at the state level tend to focus their work within a specific state, as is the case with many top-grossing lobbying firms at the state level. The majority of the firms paid most by pharmaceutical companies from 2019 to 2020 within the states where OpenSecrets collects lobbying spending data usually lobbied exclusively in California, New Jersey or New York– three states with some of the highest overall lobbying spending during that time span.

Even major national players in the pharmaceutical industry take advantage of local expertise and relationships when possible. Major players in the pharmaceutical industry often hire local firms even in states with mid-tier lobbying dollar totals, where lobbying is not as prevalent and high-priced local firms are less common.

Lobbying on Drug List Price Transparency

State legislatures are often referred to as the laboratories of democracy, allowing for policy experimentation that can then be emulated (or avoided) in other states or at the federal level. Groups looking to establish and protect gay marriage and legalize cannabis focused on state by state strategies while being stymied at the federal level.

And the states react to federal legislation and judicial decisions, making for a back and forth between the two levels. While the federal minimum wage was last increased in the late 2000s, many states have adopted minimum wage laws setting pay at higher levels than the federal minimum wage. Other states have no state minimum wage or minimums that have expired by falling below the federal level.

However, as similar issues arise in legislative consideration at the federal and state levels, many of the same interests appear and echo the same messages.

The pricing of pharmaceuticals is an example of an issue that has attracted lobbying spending from interests at the federal level and in multiple states. The prices patients see vary dramatically based on their insurance plan coverage and copays and whether they’ve met their deductibles, among other factors. But behind the scenes is an even more complex system of price listings and refunds. Pharmaceutical manufacturers list drugs at the price of their choosing, called the “wholesale acquisition cost” (WAC), or sometimes the “list price.” Health coverage plans decide to cover certain drugs or have preference levels for various drugs based in part on deals they get from pharmaceutical manufacturers in the form of reductions from the WAC, and they may or may not pass that savings on to the patient.

There is often also a Pharmacy Benefit Manager (PBM) that works between the manufacturer and insurance companies (or state pharmaceutical programs) to negotiate the rebates and discounts on behalf of the insurance company. Those PBMs may negotiate a rebate from the manufacturer and then pass only a portion of that rebate onto the insurance company, pocketing the difference in a practice called “spread pricing.” All of this can create incentives for higher pharmaceutical manufacturer WAC figures with larger rebates.

Drug prices continue to increase rapidly, and pharmaceutical pricing is a complex issue without a single simple fix that industry experts, lawmakers and members of the public have reached consensus on. However, one approach that has been drawing attention is to provide more transparency around increases in the WAC under certain circ*mstances.

In the 116th Congress, HR 3 included enhanced transparency of WAC increases for certain high-priced drugs covered by the government insurance programs Medicare and Medicaid and also included drug price negotiations. But Congress was not the only legislative body considering policies to shine light on drug manufacturer prices. During the same session, for example, Washington state considered and passed partner bills HB 1224 and SB 5292, which required manufacturers to submit annual reports justifying WAC increases on some of the most expensive drugs in the state. At the same time, Oregon passed HB 2658, requiring manufacturers to disclose to the state significant price increases 60 days prior to the increase. On the other side of the country, Maine was passing LD 1162, which required manufacturers to disclose significant WAC increases over the previous year or high initial WAC listings, including information used to determine that pricing. Many other states were concurrently considering legislation to increase the transparency of manufacturers list prices, although (as with most legislation generally) many were assigned to a committee and never resurfaced.

HR 3 passed the U.S. House in 2019 but was not taken up by the Senate. It was later reintroduced in the 117th session. The Pharmaceutical Research and Manufacturers Association (PhRMA), the Biotechnology Innovation Organization (BIO) and the Association for Accessible Medicines are among organizations that have lobbied against HR 3. PhRMA’s campaign opposing HR 3 centered around ideas that efforts to address pharmaceutical costs at the manufacturer’s pricing stage will reduce innovation and fail to address other price points in the supply chain such as costs passed through insurance companies. As a part of that campaign, the pharmaceutical industry trade group claimed that HR 3 would “undermine access to life-saving medicines and fail to address an insurance system that shifts the cost of treatments onto vulnerable patients.” Biopharmaceutical companies also voiced their opposition, including a collection of biopharmaceutical companies that signed on to inform the House Energy & Commerce and Ways & Means committees that the “aggressive government intervention” of passing HR 3 will upend the ecosystem of U.S. biomedical innovation” and patients’ “dreams will be shattered.” More than half of the signatories are also members of BIO.

Among PhRMA, BIO and the Association for Accessible Medicines, at least two lobbied on each of the aforementioned state bills as well, and were always in opposition. They all fit the mold of hiring local lobbyists or using in-house lobbyists rather than being represented by big national firms.

In Washington State, PhRMA testified on HB 1224 and companion bill SB 5292. PhRMA was represented in state House testimony by Eric Lohnes, at the time the senior director of state policy at PhRMA. In state Senate testimony, PhRMA was represented by local lobbyist Jeff Gombosky, a former lawmaker who held leadership positions in the state’s legislature before entering the revolving door. Gombosky and his wife Melissa Gombosky, who previously worked at PhRMA, own Gombosky Public Affairs. Even with different lobbyists, the key message was consistent. Instead of overtly opposing manufacturer price transparency, PhRMA’s lobbyists argue that bills shining a light on manufacturer list prices without illuminating other price points in the pharmaceutical supply chain do not go far enough and should not pass.

PhRMA was accompanied in testimony on both bills by BIO, represented by local lobbyist Bill Clarke. BIO’s messaging was consistent with PhRMA, arguing in both the House and Senate the legislation did not go far enough in shining a light on price points in the supply chain.

The Association for Accessible Medicine, which represents manufacturers of generic drugs, has also enlisted local lobbyists. In Washington, the association was represented by local lobbyist Abby Moore. The Association for Accessible Medicines’s message focused primarily on abrupt swings in generic drug pricing making it difficult to provide the legislation’s required notice of drug price increases, comparing the generics market to a commodities market.

PhRMA and BIO each testified against Oregon’s HB 2658. As was the case in Washington, one of PhRMA’s messages was that the bill should be shelved because it didn’t go far enough in supply chain transparency. PhRMA’s written testimony was provided by Chris Ward, a senior partner at global consulting firm Ward Health. Chris Ward has also worked as an executive at PhRMA.

BIO submitted written testimony in conjunction with the Oregon Bioscience Association, with BIO Director of State Government Affairs Brian Warren signing the letter. In Oregon, BIO’s message did not expressly include a reference to needing to make all price points in the supply chain more transparent, stating instead that focusing on other aspects impacting ultimate consumer prices would be more beneficial.

Across the country in Maine, BIO appeared again to oppose LD 1162. BIO’s message in Maine was consistent with its argument in Oregon: the bill should focus on price impacts closer to the patient. In Maine, BIO was represented by Director of State Government Affairs in the Eastern Region Angela Gochenaur.

The Association for Accessible Medicines spent $33,600 in Maine in 2019 and 2020 in Maine and expressed a message, among many other points it made in its lengthy testimony, consistent with its message in Washington state. In Maine, the association argued that abrupt swings in generic drug pricing make it difficult to provide the legislation’s required notice of drug price increases. Echoing its messaging in Washington, the Association for Accessible Medicines compared the generics market to a commodities market. “Unlike brand drugs, generic manufacturers have a less regular pricing scheme. The generics market is based on price and ability to meet demand,” the association’s testimony reads, “Manufacturers have large portfolios of low costs medicines, and the ability to rebalance a portfolio is essential. The generics market operates more like a commodities market.”

The money spent on lobbying in each state varies dramatically. In the three states examined above from 2019 to 2020, spending totaled $139 million in Washington, $80 million in Oregon and $6.6 million in Maine.

The pharmaceutical industry was among the largest relative sources of lobbying spending within each of these states, placing fourth in Washington with over almost $4.4 million, first in Oregon with about $3 million and third in Maine with more than $296,000. Within the pharmaceuticals industry, PhRMA topped lobbying spending in all three states.

While the pharmaceutical industry pours millions of dollars into state-level lobbying, state figures pale in comparison to the industry’s federal spending. Pharmaceutical interests spent more than $300 million each year in 2019 and 2020 at the federal level, with PhRMA alone accounting for $55 million during that two year span.

In each case above, pharmaceutical manufacturers presented similar or identical messages across jurisdictional boundaries, regardless of the lobbyist representing them, even if the lobbyist was hired locally. This demonstrates the cross-jurisdictional nature of lobbying and policymaking, and the importance of further data development and research around federal and state combined lobbying efforts.

Takeaways

• OpenSecrets has documented $3.5 billion spent on lobbying in state capitals during the two-year period from 2019 to 2020, though state lobbying disclosure requirements vary significantly from state to state.
• Many of the same sectors are top spenders on lobbying at the federal level and the state level. Both levels are led by health interests, with interests in the financial, general business and energy sectors also among the top sources of spending. However, communications companies tend to lobby more at the federal level, while government agencies tend to lobby heavily in the states.
• Lobbying at the state level is done predominantly through firms that focus on state-level work, often within a state where they have close relationships. The pharmaceutical industry fits this mold.
• Even when they use different lobbyists, a client’s messaging may be similar across jurisdictional lines, suggesting that large national organizations may be feeding messages to their local lobbyists. This was true with PhRMA and BIO lobbying to oppose legislation that enhanced transparency around pharmaceutical manufacturers’ prices but not around pricing in other parts of the supply chain.
• OpenSecrets examined state pharmaceutical manufacturing bills that passed but found there were many more bills that were introduced and assigned to a committee yet did not further advance. An examination of bills that passed was used to ensure testimony was heard, in an effort to illustrate how the same companies appear in each instance and use similar messaging in testimony. Pharmaceutical list pricing transparency is an example of this, but it applies many other issues across jurisdictional lines as well.
• A broader measure of industry spending correlations with industry win/loss rates would help demonstrate how valuable lobbying spending is. A measure of win/loss rates for lobbying firms could also help shine light on whether and to what extent the approach of using state-specific firms may be beneficial.
• National organizations often take advantage of local expertise and relationships when possible. This highlights a need for widespread revolving door analysis of state lobbying and governance.

This report is part of a series examining the intersection of state and federal lobbying spending funded in part by Omidyar Network.