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Drug Lobby Gave $9.4 Million to Nonprofits that Spent Big on 2010 Election
Tuesday, February 28, 2012

PhRMA gives largest chunk of $4.5 million to conservative group, American Action Network

The drug lobby's trade association was a multimillion-dollar donor to nonprofit groups that were actively working to elect federal candidates during the 2010 election, an iWatch News analysis of documents filed with the Internal Revenue Service reveals.

The Pharmaceutical Research and Manufacturers of America, better known as PhRMA, doled out $9.4 million to 501(c)(4) “social welfare” nonprofit groups, some of which paid for ads that influenced races in the 2010 midterm election, records show.

In 2010, PhRMA gave about $20 million in “grants and other assistance” to more than 200 nonprofit organizations, including five politically active 501(c)(4) nonprofits, both liberal and conservative, which together received nearly half of the funds.

The groups were: the American Action Network, the American Future Fund, Americans for Tax Reform, America’s Families First, Inc. and the Citizens for Strength and Security Action Fund.

PhRMA's largest gift in 2010 was a $4.5 million contribution to the American Action Network, a conservative 501(c)(4) that spent big money on a half-dozen high-profile U.S. Senate races and more than two dozen U.S. House races.

In 2010, American Action reported spending more than $26 million on ads to the Federal Election Commission. That was more than any other politically active nonprofit group, with the exception of the U.S. Chamber of Commerce, according to the Center for Responsive Politics.

Overall, the American Action Network reportedly raised more than $30 million in 2010, meaning PhRMA alone was responsible for close to 15 percent of the group's funds.

Unlike the notorious “super PACs” that have had a major impact on the 2012 presidential election, the nonprofits are not required to reveal their donors. Spending by these groups on political advertisements skyrocketed in the wake of the 2010 U.S. Supreme Court’s Citizens United v. Federal Election Commission decision.

They do file annual returns, however, to the Internal Revenue Service. The 990 filing covering calendar year 2010 for PhRMA, which is organized under section 501(c)(6) of the U.S. tax code as a trade association, was received by the IRS in mid-November. Many of the contributions to politically active groups detailed in that filing have never been previously reported.

During 2010, PhRMA spent $22 million on federal lobbying. A top priority was the massive health care reform bill championed by congressional Democrats and President Barack Obama.

PhRMA’s PAC donated $195,300 directly to federal candidates and political action committees, with about 63 percent of that money flowing to Democrats, according to iWatch News’ analysis of records filed with the FEC.

Matthew Bennett, PhRMA’s senior vice president, told iWatch News that his group often makes contributions to other organizations that support its mission, and as such PhRMA gave money to a “variety of organizations” in 2010.

Officials at the politically active nonprofits that received money from PhRMA did not immediately respond to requests for comment.

The American Action Network was launched in February 2010 by top Republicans including former Sen. Norm Coleman (R-Minn.) and Rob Collins, a former chief of staff to House Majority Leader Eric Cantor (R-Va.).

Coleman, who currently serves as chairman of the board of the group, was brought on as a “senior government advisor” last April at the law firm and lobby shop Hogan Lovells, one of the three dozen lobbying firms retained by PhRMA.

Maria Cino, President George W. Bush’s deputy secretary of transportation who became a lobbyist for drug-maker Pfizer in 2009, also sits on the board of the American Action Network.

Other conservative-supporting 501(c)(4) nonprofit groups that reaped rewards from PhRMA included Grover Norquist’s Americans for Tax Reform, which received $75,000, and the American Future Fund, which received $300,000.

For its part, the American Future Fund spent nearly $9.6 million on ads during the 2010 election, including one against Rep. Bruce Braley (D-Iowa) that linked him with the proposed mosque in New York City near Ground Zero, as iWatch News previously reported. The New York Times called the American Future Fund the most successful outside spending group during the 2010 midterms.

Meanwhile, Americans for Tax Reform spent more than $4.1 million on more than a dozen House and Senate races.

Two liberal groups received seven-figure donations from PhRMA in 2010: the Citizens for Strength and Security Action Fund, which collected $2.5 million, and America’s Families First, Inc., which received $2 million.

The Citizens for Strength and Security Action Fund, also called the CSS Action Fund, spent nearly $1.4 million during the 2010 election cycle on so-called “electioneering communications,” or issue ads that mention candidates but don’t explicitly tell viewers to vote for or against them.

The nonprofit reported activity in four races: the Washington Senate race in support of Sen. Patty Murray (D-Wash.), the Colorado Senate race in support of Sen. Michael Bennet (D-Colo.), the West Virginia Senate race in support of Democrat Joe Manchin and the U.S. House race in New York’s 20th Congressional District in support of Rep. Scott Murphy (D-N.Y.).

Meanwhile, America’s Families First, Inc. didn’t directly spend money on any advertisements ahead of the 2010 midterms. However, the group did form a super PAC and transfer $1 million from its 501(c)(4) arm into the new super PAC.

America’s Families First’s super PAC spent nearly $5.9 million during the 2010 elections in more than 20 U.S. House races.

Notably, PhRMA also made a contribution of $356,075 for general support to the American Legislative Exchange Council’s “Scholarship Fund,” a 501(c)(3) nonprofit that received intense media scrutiny last year for creating corporate-backed “model legislation” for ALEC’s state lawmaker- members to introduce in statehouses.

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