As with so many members of President Trump’s new cabinet, a whiff of corruption already emanates from newly minted health secretary Rep. Tom Price (R-GA).
Now that Price is responsible for the U.S. Department of Health and Human Services and its $1.15 billion budget, it’s worth taking stock of the allegations of conflicts of interest leveled against the Georgia congressman. These are separate to the concerns over Price’s plans to gut important health programs for millions in the country, especially the poorest and most vulnerable.
The claims boil down to two main categories. First, that Price has taken advantage of his position as a member of Congress to enrich himself, in stock deals that have been likened to insider trading.
The second line of criticism charges that Price has elicited campaign contributions from people and companies with vested interests in legislation coming before him.
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Price’s net worth is nearly $14 million, according to the Center for Responsive Politics, earning him only a middling rank among Trump’s billionaire cabinet. He has said that he will sell his stock if he is confirmed; ethics experts have said that his track record casts doubt over his judgment.
While his conflicts of interest pale in comparison to those of the president himself, his appointment only adds to the impression that Trump’s cabinet and his family presents the appearance, and in some cases the reality, of a burgeoning kleptocracy.
Last month the Wall Street Journal published a story detailing how Price proposed a law that would have benefited investments he held in companies based in Puerto Rico.
The companies—Amgen Inc., Bristol Myers Squibb Co., and Eli Lilly and Co.—have extensive factories in Puerto Rico, according to the Journal report. In March last year, Price bought shares valued at between $1,000 to $15,000 in each company. In June, he introduced a bill that would have made permanent what was then a temporary tax provision that allowed companies with operations in Puerto Rico to take the same deductions as companies with presences in the United States.
The extension never passed. Had it become permanent, it would likely have benefited the companies in which Price had invested.
Price’s dealings relating to makers of “durable medical equipment”—a term that includes devices such as wheelchairs, canes, and bed lifts—have also come under scrutiny.
Last year, Price bought up to $15,000 worth of shares of Blackstone, which owns a company called Apria, that makes walkers, hospital beds, and wound therapy devices, according to USA Today.
The purchase came a week after Price had introduced a bill that would have blocked changes to Medicare reimbursements for those kinds of medical devices. Some equipment makers feared that the changes would lead to reduced reimbursements for their goods, threatening their businesses.
More examples abound. The pattern emerging is that Price has pushed for or against bills or regulatory actions which could affect a group of companies, when he either already owns their stock, or goes on to purchase it.
And then there is the curious tale of Price’s investment in a tiny Australian biotech firm, Innate Immunotherapeutics.
The investment has drawn intense interest because it included a “private placement” to “sophisticated U.S. investors” in 2016, according to Australian company filings.
The private placement involved the company selling nearly $1 million of stock at a discounted price to Rep. Price and fellow Republican Congressman, and early Trump supporter, Chris Collins of New York.
Collins’ involvement with the company appears to be much deeper and longer-standing. He is a non-executive director, and together with his family members, is the largest single shareholder in the firm.
But Price bought between $50,000 and $100,000 of stock, according to his disclosures.
The company has only one drug under development: an experimental treatment that targets muscular dystrophy.
Their strategy for raising additional funds and getting to market also has raised eyebrows. Essentially, the company made clear that their goal was to get acquired by a bigger firm, ideally in the United States.
The purpose of the private placement in the United States was, as summarized by the New York Times, “to finance a clinical trial and to gain permission from the FDA (the Food and Drug Administration) to start a process that could lead to applying for approval of the drug in the United States.”
Of course, as Secretary of Health and Human Services, Price would be in charge of the FDA.
Price has said that his broker makes investments on his behalf, an argument that “gives him plenty of deniability,” according to Joe Nocera of Bloomberg View.
Nevertheless, ethics experts have been overwhelming in their condemnation of his conduct, though many are circumspect as to whether he has actually committed insider trading—an area of law fraught with uncertainty.
Soliciting Campaign Contributions in Exchange for Favors
The second category concerns questionable conduct in Price’s campaign fundraising.
In 2010, the Office of Congressional Ethics referred Price for investigation by the Committee on Standards of Official Conduct because of concerns arising from a fundraiser he had held in December 2009.
That fundraiser took place the day before the sweeping financial reform bill known as Dodd-Frank Wall Street Reform and Consumer Protection Act, was up for a vote in the House. Price called the event the “Financial Services Industry Luncheon.” All but three of the 16 attendees were registered lobbyists on the bill, and Price ultimately introduced eight amendments during the markup process.
The Congressional Ethics report summarizes the allegations thus:
There is substantial reason to believe that Representative Thomas Price solicited or accepted contribution in a manner which gave the appearance that special treatment or access was being provided to donors or that contributions were linked to an official act.
Ultimately, the House committee that reviews ethics referrals, declined to take further action on these allegations.
That’s not the only example already uncovered of Price appearing to use his office for the benefit of donors.
ProPublica has reported that an aide to the congressman wrote to the federal Agency for Healthcare Research and Quality at least half a dozen times on behalf of a Georgia-based company, Arbor Pharmaceuticals. The aide attempted to get the agency to remove a study from its site which was viewed as unfavorable to a drug owned by Arbor. The company’s CEO had given the maximum donation of $2,700 to Rep. Price’s campaign, ProPublica found.
The Office of Congressional Ethics is, of course, the body that congressional Republicans attempted to axe even before President Trump was inaugurated—a move they abandoned only after Trump scolded them in one of his first acts of policy-by-tweet.