Exposing Corruption and Preventing Abuse of Power

HHS, Inc.: Big Pharma Ties Draw Pandemic Response Concerns

(Illustration: Leslie Garvey / POGO)

Pharmaceutical and medical industry ties of top political appointees at the Department of Health and Human Services (HHS) are troubling experts and lawmakers, who are concerned that those ties and pressure from the White House could be forcing health and safety to take a back seat to rushing out COVID-19 drugs. A Project On Government Oversight (POGO) and Anti-Corruption Data Collective investigation reveals previously unreported details in the case of a company—with ties to HHS’s second-highest official—that won a pandemic response contract worth up to almost a half billion dollars. When viewed alongside other cases of politically connected companies winning large pandemic-related HHS contracts, questions of favoritism are difficult to avoid.

“Especially during the ongoing pandemic, the safety and wellbeing of our families is of the utmost importance,” wrote Representative Katie Porter (D-CA) earlier this year, calling for an investigation into the HHS’s revolving door, the movement of officials to and from companies and industry groups with business before a federal agency. “We cannot put patients’ lives at risk to boost the profits of large pharmaceutical companies. Their lobbying is no substitute for science-based public health.”

Key Findings

  • There appear to be about as many HHS appointees who were formerly lobbyists in the nearly four years of the Trump administration as during the entire 16 years of the George W. Bush and Barack Obama administrations;
  • HHS’s second-highest official, Eric Hargan, simultaneously worked for medical industry clients and served on Trump’s HHS transition team, when he had access to inside information;
  • One of Hargan’s former clients—Alvogen—won its first-ever HHS contract, worth up to nearly half a billion dollars, from an office run by a direct subordinate of Hargan;
  • Hargan’s subordinate allegedly began pushing to buy the drug sold by Alvogen around the same time lobbyists working for the company began lobbying HHS;
  • An HHS whistleblower says that the contract was for an “inferior” drug; and
  • Weeks after that HHS contract was awarded, a lawsuit was unsealed alleging that HHS had been previously defrauded into buying that same drug from another company. The lawsuit alleges the drug “is more likely to perpetuate an influenza pandemic than to stop one.”

The Revolving Door, Supercharged

While the revolving door of lobbyists-to-appointees is not unique to the Trump administration, it appears to have spiked to much higher levels at President Donald Trump’s HHS compared to the last two administrations.

Nearly 30 of Trump’s political appointees at HHS previously worked as lobbyists, according to an examination of ProPublica’s Trump Town database. Many of them have lobbied and conducted other work for large drug makers or other medical industry players. Some of these appointees have already left the administration and returned to lobbying, including on the coronavirus response.

The number of former lobbyists-to-appointees who have gone through the revolving door at Trump’s HHS in just under four years appears to rival a Congressional Research Service accounting of revolvers in the previous 16 years under Presidents George W. Bush and Barack Obama. The congressional study shows fewer than 30 appointees at HHS during those 16 years were registered lobbyists before becoming appointees.

Companies with ties to Trump appointees have benefited by receiving large HHS contract awards during the current administration.

If anything, the numbers are likely undercounts. Both the Congressional Research Service and ProPublica data are incomplete and there are no truly comprehensive compilations of political appointees. Furthermore, the numbers cited above don’t include appointees who formerly worked for the drug industry or other health care-related organizations, but were not registered lobbyists.

It is typically challenging to establish whether any improper influence due to the revolving door has played a direct role in government decision-making. But what is clear is that companies with ties to Trump appointees have benefited by receiving large HHS contract awards during the current administration to supply the Strategic National Stockpile, a network of federal repositories of medical supplies for public health emergencies.

The “Swamp”

One largely unexamined case of a company with ties to a top Trump appointee winning lucrative HHS contracts involves a former client of Eric Hargan, who was confirmed as deputy secretary at HHS in October 2017 and who had previously served on Trump’s transition team. Hargan also served as HHS’s deputy secretary during the George W. Bush administration, leaving federal service in 2007.

In the intervening decade, he worked as a pharmaceutical industry lawyer and lobbyist, and he touted his insights as a former top HHS appointee. “For health industry companies and investors, his experience as a senior official at the U.S. Department of Health and Human Services, combined with over a decade of experience as a transactional attorney, allow him to provide unique and advantageous insights to his clients,” according to an archived biography, which has since been taken down, from the website of legal services and lobbying firm Greenberg Traurig.

During the Senate confirmation process in 2017, Hargan was asked if he would have any conflicts of interest as HHS’s deputy secretary. “None,” he responded, “except routine representation of clients in the health-care sector.” While he disclosed to the Senate that he “was registered as a lobbyist for Aquadvantage from 2008 to 2010,” he omitted that he was also a registered lobbyist for Genomic Health and Intermountain Healthcare around that same time.

Industry Ties of HHS Deputy Secretary Eric Hargan

POGO relied on ethics disclosures by Hargan to identify his former clients and his sources of income during the year prior to his current government position. Hargan has other former clients for whom he worked prior to 2016, but they are not reflected here as that work is outside the relevant time period for recusal under President Donald Trump’s ethics pledge for political appointees. See the end of this story for more on our methodology.

As second in command in Trump’s HHS, he immediately took up the role of acting secretary until Senate confirmation of his now boss, Alex Azar—another pharma lobbyist and executive—in January 2018.

Earlier, even as he worked on Trump’s HHS transition team, Hargan was simultaneously providing legal services for the drug company Alvogen, according to a federal ethics disclosure listing nearly a hundred of his former clients. The company is owned in turn by a Singapore government-controlled holding company called Temasek and the Luxembourg-based private equity firm CVC Capital Partners. After Hargan left, it would go on to be awarded a lucrative HHS contract, its first HHS contract ever, to supply an antiviral influenza drug for the U.S.’s Strategic National Stockpile.

Hargan was asked if he would have any conflicts of interest as HHS’s deputy secretary. None, he responded, except routine representation of clients in the health-care sector.

Serving on a presidential transition team enables one to gain an inside look at federal operations and potentially provides valuable insights for those with clients who have government business. Hargan was one among many with industry ties working on the transition team, drawing criticism that Trump immediately abandoned his promise to “drain the swamp” once elected.

Lobbying seems to be a family business for the Hargans. This July, Hargan’s wife Emily appeared with him at an event in North Carolina, at the same time she was registered to lobby HHS on behalf of a drug manufacturer, a medical device company, and a nursing home operator. She deleted a tweet about the appearance after being called out in media reports. HHS has said that Hargan’s wife has ceased lobbying and that Hargan had recused himself from matters involving her now-former clients. His ethics agreement states that any involvement by him that benefits his spouse’s financial interests could violate a federal conflict of interest law.

While Eric Hargan held his dual roles as Alvogen legal adviser and Trump transition team member in December 2016, Alvogen announced it would begin selling oseltamivir, the first generic version of the antiviral Tamiflu, calling it “an important milestone for our U.S. business.”

Just weeks after Hargan ceased working for Alvogen, according to his disclosure, the outgoing Obama administration held a pandemic influenza exercise with Trump’s transition team in January 2017. One of the key takeaways from the exercise was that a “medical countermeasure strategy is key to success,” referring in part to antiviral drugs, according to records obtained by Politico.

Alvogen would cash in on that need to stockpile antiviral drugs to counter an influenza pandemic after Hargan became HHS’s number two official. During the Trump administration, Alvogen would obtain its first HHS contract that could ultimately be worth nearly a half billion dollars. It is among the largest first federal contracts going to a former client of a Trump appointee from the appointee’s agency, according to an analysis of contracting and political appointee data the Anti-Corruption Data Collective shared with POGO.

But are the drugs Alvogen is being paid taxpayer dollars to supply actually effective?

An “Inferior” Choice

Oseltamivir has a controversial history.

In 2014, the independent and respected Cochrane network of health experts issued a gold-standard review that stated, “Since 2002, governments around the world have spent billions of dollars stockpiling neuraminidase inhibitors (NIs) such as Tamiflu® (oseltamivir) and Relenza® (zanamivir) in anticipation of an influenza pandemic,” but concluded that “there is little evidence to support any belief that use of NIs reduces hospital admission or the risk of developing confirmed pneumonia.”

The UK-based Cochrane network further wrote that “the evidence also suggests that there are insufficient grounds to support the use of NIs in preventing the person-to-person spread of influenza.” The Cochrane report relied on clinical trial data that the pharma giants Roche and GlaxoSmithKline had fought hard to keep secret, but which was finally disclosed after a four-year campaign by the British Medical Journal and others.

“Along with documenting evidence of harms from use of NIs, the review raises the question of whether global stockpiling of the drugs is still justifiable given the lack of reliable evidence to support the original claims of its benefits,” according to the Cochrane network. The report causedan internationalscandal and led Roche to punch back hard, disputing the Cochrane findings and leading to a string of competing medical reviews.

Despite the controversy over oseltamivir, in late 2018 HHS Assistant Secretary of Preparedness and Response Robert Kadlec, Hargan’s subordinate and another Trump appointee, pushed to stockpile it in the U.S., according to a whistleblower complaint filed this year by Rick Bright, who was, until recently, the head of HHS’s Biomedical Advanced Research and Development Authority. (Disclosure: Bright’s attorney is a member of POGO’s board of directors.) The U.S.’s Strategic National Stockpile had been moved from the control of the Centers for Disease Control and Prevention to Kadlec’s office in October 2018.

Around the same time Bright says Kadlec began to push to buy the influenza antiviral oseltamivir, Alvogen’s lobbyists began advocating for the “development and procurement of influenza antivirals” in communications with HHS and Congress, according to a lobbying disclosure.

In response to Kadlec’s efforts inside HHS, Bright said he and other career scientific experts objected to procuring oseltamivir, calling it an “inferior” choice because it was less effective against the flu than other medicines.

Lending support to Bright’s complaint is a passage in a Trump HHS budget request to Congress that states that growing influenza resistance is a “serious concern for existing small molecule antivirals drugs, such as oseltamivir (Tamiflu).” And a 2013 study found that in 2007 and 2008 an “oseltamivir‐resistant” strain of the flu “emerged in the northern hemisphere and spread rapidly around the world.”

Yet, in January 2019, the HHS secretary’s office put out a solicitation for a five-year contract to supply hundreds of millions of oseltamivir capsules to replenish the Strategic National Stockpile.

The contract received three bids and, in August 2019, was awarded to Alvogen, with a projected total value of up to $470 million.

Around the same time Trump’s HHS was awarding the new contract to buy more oseltamivir, a federal judge unsealed a lawsuit alleging that HHS had been previously defrauded into buying oseltamivir. Just weeks after HHS awarded the contract to Alvogen, a federal court unsealed a whistleblower’s fraud lawsuit regarding oseltamivir on September 10, 2019. On behalf of the federal government and dozens of state governments, one of the Cochrane reviewers, Dr. Thomas Jefferson, alleged in the complaint that pharma giant Roche “executed a successful fraudulent scheme to sell expensive courses of the drug Tamiflu (oseltamivir) by positioning it as a necessary medication to thwart any frightening influenza outbreak, when in reality Tamiflu is more likely to perpetuate an influenza pandemic than to stop one.”

Jefferson alleged that, due to misrepresentations regarding oseltamivir, it “became the government’s preferred antiviral to purchase for the Strategic National Stockpile (SNS) for influenza pandemic use” and thus the federal government and states were defrauded to the tune of over $1.4 billion as of 2014. A month ago, a federal judge dismissed Roche’s attempt to toss the case. The case is ongoing.

Roche has said it “has complete confidence in the safety and efficacy of Tamiflu and the company plans to vigorously defend itself against these allegations.” Roche has also said that the Cochrane study that Jefferson was part of contained fundamental flaws; a 2014 Roche-funded study found use of Tamiflu reduced the incidence of death by 19 percent compared to no treatment.

Win or lose, the case could shed light on whether the government has been adequately vetting the pandemic treatments and other supplies it spends taxpayer money on and how forthcoming its suppliers have been.

“This case is more important than ever as our government responds to the desperate need to stockpile protective equipment and supplies for the Covid-19 pandemic,” said Chris Gadoury of the Lanier Law Firm, one of Jefferson’s attorneys, in an October statement.

“Repeatedly Disparaged and Smeared”

In 2020, things came to a head for Bright. He says Kadlec and HHS Secretary Alex Azar had already been angered by the concerns he raised about the Alvogen contract and other allegedly questionable deals where companies used the services of a well-connected consultant, named John Clerici, who is a friend of Kadlec. One of those other companies is Partner Therapeutics, which obtained a $55 million no-bid contract for drugs to treat radiation exposure. “Bright became so concerned about the improper role consultants such as Mr. Clerici played in promoting Partner Therapeutics’s drug and their improper influence on Dr. Kadlec and HHS leaders that he requested that the HHS Office of General Counsel (‘OGC’) initiate a procurement integrity violation investigation into the matter,” Bright’s complaint states, “and further that the OGC request an investigation by the Inspector General (‘IG’) into outside influence on this contract.”

His bosses’ anger against him, Bright says, grew as he took actions to improve the government’s coronavirus response in January and February, actions that Bright says his supervisors deemed non-urgent at the time. Their anger grew even more when he blew the whistle on a plan to widely distribute the antimalarial drugs hydroxychloroquine and chloroquine, Bright says. Trump had seized upon those drugs as COVID-19 treatments, relying on thin and highly disputed evidence that they were effective on COVID-19 and despite the findings in most studies that they were ineffective. In fact, some studies even yielded evidence showing the drugs might increase cardiac risks. Bright says he was reassigned to a less important position this spring in retaliation for speaking up.

Bright retired from federal service this month, citing the weeks he was idled without work and the continuing retaliation without redress, including the “involuntary transfer and exclusion amount[ing] to intolerable working conditions.”

“As the Administration continues to censor and sideline its scientists, and this country approaches the darkest winter in our nation’s history, Dr. Bright had no choice but to resign,” Bright’s attorneys wrote.

In a statement, HHS has said it “strongly disagrees with the allegations and characterizations made by Rick Bright.” Regarding the Alvogen contract, HHS said it obtained Alvogen’s drug because it cost far less than the non-generic alternative called baloxavir. Thus, HHS’s statement said, Kadlec’s office “could replenish more expiring anti-virals in the strategic national stockpile (SNS) with oseltamivir. The contract for oseltamivir left the SNS the flexibility to acquire other products.” HHS also stated that “the contract with Partner Therapeutics was awarded lawfully through a contracting officer, in consultation with the Office of the General Counsel, pursuant to a public interest exception.” In a statement, Clerici has said that “I unequivocally deny all of the allegations lodged by Dr. Bright and his lawyers. It’s sad that during this crisis Dr. Bright and his team have chosen to launch politically motivated allegations against me and other people. The record is clear that his allegations are false and will be proven so.”

HHS said Bright played a key role in procuring hydroxychloroquine and chloroquine, although Bright has said in his whistleblower complaint that he strongly resisted widely distributing the drugs as it became clearer that they may not be effective and could create unnecessary health risks.

On May 14, the morning Bright was to testify before a congressional panel on the federal COVID-19 response, Trump tweeted, “I don’t know the so-called Whistleblower Rick Bright, never met him or even heard of him, but to me he is a disgruntled employee, not liked or respected by people I spoke to and who, with his attitude, should no longer be working for our government!”

Bright’s attorneys wrote that the reprisal he faced included being “repeatedly disparaged and smeared by the Administration in the process, including by the President of the United States.”

Regarding Hargan’s connection to Alvogen, in April 2017 he agreed to not “participate in an official capacity in any particular matter that is directly and substantially related to” Alvogen, as well as dozens of other companies, for a period of two years.

HHS did not respond to queries about Hargan’s ties or broader questions raised about industry influence over pandemic preparation.

“Strategically Placed”

Kadlec has been criticized by insiders for prioritizing biodefense and bioterrorism over threats from naturally occurring infectious diseases, leaving the U.S. less prepared for the coronavirus pandemic. Under his watch as assistant secretary for preparedness and response, his former client Emergent BioSolutions, a leading biodefense company, has benefited from contracts directed by his office.

The Washington Post published two in-depth stories on Emergent and Kadlec this year, one that stated that Kadlec omitted his prior consulting work for Emergent on a congressional questionnaire to help assess his nomination for his job. Another detailed how Emergent lobbied to move control of the Strategic National Stockpile to Kadlec’s office.

With a $628 million contract awarded this year to Emergent to manufacture a coronavirus vaccine whenever one is approved, Kadlec’s office has awarded Emergent more contract dollars than any other company, according to the POGO and Anti-Corruption Data Collective analysis of federal contracting data. A $2.8 billion 10-year contract Kadlec’s office struck with Emergent for smallpox vaccine in the event of a bioterrorism attack has U.S. taxpayers paying twice per dose than they had previously, according to the Post.

A $2.8 billion 10-year contract Kadlec’s office struck with Emergent for smallpox vaccine in the event of a bioterrorism attack has U.S. taxpayers paying twice per dose than they had previously.

The reliance on Emergent is in part due to the stranglehold the company has gained on the industry by buying up other companies. The Post obtained a confidential December 2018 report by a consulting firm commissioned by Kadlec’s office. “Consolidation of many important assets into a single or small handful of companies creates substantial risk since it creates the potential for a single-point of failure,” the report stated. “From a pricing perspective, the lack of competition creates a system in which companies have no incentive to keep prices low.”

“It has strategically placed itself to be, let’s just say, the company that can’t fail,” one former senior government official told the Post. Arguably, from Emergent’s perspective, Kadlec is also strategically placed. HHS and Emergent did not respond to a request for comment.

“Warp Speed”

Fears that officials with industry ties might be overly deferential to corporate representations of their products’ effectiveness and safety, with companies standing to make billions if their products are approved, aren’t hypothetical.

A decade ago, a bipartisan Senate Finance Committee report found that GlaxoSmithKline suppressed negative information about its diabetes drug Avandia showing that it could cause heart attacks, keeping the Food and Drug Administration, researchers, and the public in the dark. The impacts were deadly on an enormous scale, said the committee’s then-chairman Senator Max Baucus (D-MT), and then-ranking member Senator Chuck Grassley (R-IA). They cited an FDA estimate “that the drug caused approximately 83,000 excess heart attacks between 1999 and 2007.”

Flash forward to today: The head of Trump’s Operation Warp Speed to develop COVID-19 vaccines is former GlaxoSmithKline head of research, Dr. Moncef Slaoui. As recently detailed in a Daily Beast article by the lead Senate staffer in the Avandia investigation, Slaoui was involved in GlaxoSmithKline’s efforts to rebut a 2007 study published in the New England Journal of Medicinecritical of Avandia. That study led the FDA to issue a safety alert, and GlaxoSmithKline’s multifaceted campaign to discredit and rebut the study was the focus of the Senate investigation. (That former Senate staffer, Paul Thacker, formerly worked at POGO.)

Among the internal GlaxoSmithKline records obtained by the Senate, Slaoui emailed his colleagues as they brainstormed how to respond, saying “The FDA criticizes the fact that we excluded cases of sudden cardiac death.”

GlaxoSmithKline says it “acted appropriately and responsibly in its management of Avandia.” GlaxoSmithKline also disputed the Senate Finance Committee report when it was released and has maintained that Avandia is safe.

Slaoui has been classified as a volunteer contractor by the administration, allowing him to avoid having to comply with conflict of interest rules that would require he divest from drug industry investments, such as the nearly $10 million in GlaxoSmithKline stock he held as of the spring. Public Citizen, a non-profit, says Slaoui should—as the chief scientist in charge of Operation Warp Speed based largely out of HHS—be made a special government employee subject to certain ethics rules, if not a regular employee.

GlaxoSmithKline is among many companies racing to develop a coronavirus vaccine and it and another pharma giant, Sanofi, are working with HHS and the Pentagon, jointly winning more than $2 billion from Operation Warp Speed. “The U.S. government will provide up to $2.1 billion, more than half of which is to support further development of the vaccine, including clinical trials, with the remainder used for manufacturing scale up and delivery of an initial 100 million doses of the vaccine,” according to a GlaxoSmithKline press release.

The American people deserve to know that COVID-19 vaccine decisions are based on science, and not on personal greed.

Senator Elizabeth Warren (D-MA)

According to the New York Times, Slaoui has “said that if the value of GlaxoSmithKline accrues higher than that of the pharmaceutical sector of the S&P 500 Index by the time he leaves the job, and if GSK has received any investment from the government for the Covid-19 program, he will donate the difference in his stock value to the National Institutes of Health, for research.”

Senator Elizabeth Warren (D-MA) says that’s not enough. “Dr. Slaoui should not get to play by a different set of rules,” she said in a press statement issued by her office.

“The American people deserve to know that COVID-19 vaccine decisions are based on science, and not on personal greed,” she said during a Senate hearing last month. HHS did not respond to a request for comment.

“I’ve Spoken to the Companies”

At HHS, potential corporate influence also intersects with political pressure from the White House—such as from Trump regarding hydroxychloroquine and developing a COVID-19 vaccine. There are now widespread worries that there could be and may have already been politically driven approvals of coronavirus drugs and treatments that are not effective or that can pose significant risks themselves.

Trump has explicitly said he disagrees with his own HHS officials on the timeline for developing a vaccine, including Slaoui and Trump’s appointee running the Centers for Disease Control and Prevention. During the recent presidential debate, Trump said, “I’ve spoken to the companies and we can have it a lot sooner.” Turning to his rival, former Vice President Joe Biden, Trump asked, “you don’t trust Johnson & Johnson, Pfizer?

Following Trump’s remarks, Pfizer’s chief executive, Alberta Bourla, sent a letter to his company’s employees stating that the company “would never succumb to political pressure” and would move at “the speed of science” in developing a COVID-19 vaccine. This month, Johnson & Johnson paused a clinical trial of its vaccine when a participant came down with an “unexplained illness.” Another trial by AstraZeneca was put on hold last month when a volunteer came down with severe neurological symptoms. Such delays in late-stage clinical trials are common, but few face the kind of pressure that these coronavirus vaccine candidates are under.

Days after the debate, it became public that Trump tested positive for coronavirus. Upon a drop in his oxygen saturation levels and after being placed on supplemental oxygen, he was flown to Walter Reed National Military Medical Center where he began a battery of treatment, including taking steroids usually used in severe COVID-19 cases and an experimental drug. Returning to the White House days later, he issued a video. “The vaccines are coming momentarily,” Trump said.

After a number of media accounts detailed the unusual intervention by the president’s chief of staff, Mark Meadows, and others where the White House held up FDA guidelines on approval of a COVID-19 vaccine for two weeks, the White House relented on October 6. The White House cleared the guidelines, which require drug makers to turn over comprehensive safety data before the FDA will approve their vaccines. That decision makes it unlikely any vaccines will be approved before the election while increasing the likelihood of ensuring their safety.

Still, industry-connected political appointees throughout HHS will be involved. Even if they resist the president’s pressure, they will have to contend with lobbying from the industry they once drew a paycheck from and where some of its current lobbyists were, until recently, HHS appointees themselves.

How POGO Built the Network Map

The Project On Government Oversight relied on disclosures by Department of Health and Human Service (HHS) Deputy Secretary Eric Hargan to identify his former clients and his sources of income during the year prior to his current government position. Hargan has other former clients for whom he worked prior to 2016, but they are not reflected here as that work is outside the relevant time period for recusal under President Donald Trump’s ethics pledge for political appointees.

In accordance with that pledge, Hargan’s 2017 ethics agreement with HHS states that he will not “participate in an official capacity in any particular matter that is directly and substantially related to” most of the former clients or employers listed in the document for two years after his appointment, a period that ended in 2019. Four former sources of income above $5,000—the threshold for disclosure—were listed in his 2017 financial disclosure, but were not listed in his 2017 ethics agreement: AHG Group, LLC; Forest Health Services, Inc.; Lifestyle Lift, Inc.; and OSF Healthcare Systems. HHS told POGO that this is due to “the difference in the reporting periods and the recusal periods.”

In addition, Hargan’s wife Emily lobbied HHS on behalf of clients during Hargan’s current government tenure. Most of her employment and lobbying activity is disclosed in federal filings except for her current employer, for whom she began working this year and so falls outside the required reporting time frame.