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February 24, 2020

10 Things to Know About the Pharmaceutical Research and Manufacturers of America (PhRMA)

by Anne Paddock

When people talk about “Big PhRMA,” they are referring to the Pharmaceutical Research and Manufacturers of America (PhRMA) organization – a non-profit, tax-exempt 501 (c) (6). In short, PhRMA is a trade association that represents the big pharmaceutical companies (34 according to the list of members on the PhRMA website) in the United States.

The amount of information publicly available on PhRMA is overwhelming in both the amount and complexity so the purpose of this post is to summarize key information that reflects the organization’s purpose, mission, and power, which is generally regarded as formidable.

1. PhRMA raises hundreds of millions in revenue annually, primarily through memberships dues. In 2017, PhRMA raised about $450 million annually, spent it all (the organization generally spends what it raises and often a few million more), and has about $23 million in net assets or fund balances (think endowment). It is important to note the year before (2016) PhRMA raised $270 million (and spent $280 million). Clearly, the organization is upping their game as more and more criticism of drug prices in the United States has become a bigger part of public conversation.

2.  PhRMA claims its mission is “winning advocacy for public policies that encourage the discovery of life-saving and life-enhancing new medicines for patients by pharmaceutical/biotechnology research companies.” In reality, PhRMA is a professional business association whose members (34 pharmaceutical companies) pay membership dues (about $400 million in 2017) which are primarily used for four purposes:

  • $128 million (28% of revenue):  Lobbying
  • $ 82 million (18% of revenue):  Consultants
  • $ 70 million (15% of revenue):  Compensation
  • $ 69 million (15% of revenue):  Advertising

The discovery of life-saving and life-enhancing new medicines is usually associated with research and grants, two expenses that PRMA spent significantly smaller amounts of revenue on ($17 million on research and $31 million on grants) in 2017.

3.  PhRMA is based in Washington, DC but has 12 offices worldwide including 10 in the United States, one in Tokyo and one in Dubai.

4.   PhRMA has 271 employees who were compensated $70 million in 2017, which equates to an average compensation of nearly $260,000.

5.   PhRMA paid $20 million in compensation to 21 employees in 2017. The most highly compensated employees received between $387,697 to a former key employee to $3,054,122 to the President, CEO (Stephen Ubl).     .

6.  PhRMA paid for first class travel, companion travel, tax indemnificaiton and gross up payments, residence for personal use, and health or social club dues or initiation fees.

7.  PhRMA made $31 million in grants in 2017 (less than 7% of total revenue); $30 million to domestic organizations and $1 million to foreign entities. For grants made within the US, PhRMA made 227 grants greater than $5,000 to other 501 (c) (3)’s or government entities and 107 grants to other organizations. The largest domestic grants were:

  • $3,875,000:  Addiction Policy Forum in Washington, DC (non-profit focused on ending addiction)
  • $2,500,000:  America First Policies, Inc in Washington, DC (non-profit that promotes Trump’s policies)
  • $2,190,000:  Addiction Policy Leadership Action Network in Washington, DC  (non-profit sharing address with Addiction Policy Forum)
  • $1,749,900:  Healthcare Leadership Council of Washington, DC (a coalition of executives in healthcare)
  • $1,500,000:  American Action Network, Inc. of Washington, DC (conservative issue advocacy group)
  • $1,191,000:  Center Forward of Washington, DC (a PAC)
  • $1,000,000:  National Republican Redistricting Trust of Arlington, VA

8. PhRMA made 675 political contributions in 2017, mostly to political candidates of both parties. The largest political contributions were to:

  • $529,699:  PhRMA Independent Expenditure Committee (a related organization)
  • $455,000:  Healthy Nevada PAC
  • $350,000:  Republican State Leadership Committee
  • $325,000:  Republican Governors Association
  • $305,000:  Democratic Governors Association
  • $180,000:  PhRMA Colorado Action Fund (a related organization)
  • $158,973:  PhRMA Better Government Committee (a related organization)
  • $150,000:  Republican Attorneys General Association
  • $150,000:  Democratic Legislative Campaign Committee
  • $131,400:  PhRMA PAC (a related organization)
  • $ 95,000:  GOPAC
  • $ 86,000:  Senate Majority Campaign Committee

9. PhRMA is the direct controlling entity of 7 other tax exempt organizations:

  • PhRMA Independent Expenditure Committee
  • PhRMA Colorado Action Fund
  • PhRMA Better Government Committee
  • PhRMA California Initiative Fund
  • Healthy Nevada PAC

10. Each member of PhRMA is entitled to appoint one director to the Board. In 2017, there were 33 directors.

To read the IRS Form 990 (2017), click here.

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