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Lobbyists stall law on volume discounts for local governments

May 23, 1997

WASHINGTON (AP) _ A lobbying barrage by the pharmaceutical industry and small businesses has delayed regulations that could save local governments millions of dollars on purchases of everything from drugs to fire trucks.

But a late counteroffensive by AIDS advocacy groups and high-tech firms kept the business interests from their real goal _ a permanent repeal of the law designed to force volume discounts on their products.

At issue is a law Congress enacted in 1994 that would allow state and local governments to tap into the federal government’s massive buying network and take advantage of its volume discounts _ a process known as cooperative purchasing.

The idea grew out of Vice President Al Gore’s ``reinventing government″ project; it was seen as a common-sense way to save money for county hospitals, fire departments and local taxpayers, and was whisked into law by a Democratic Congress with little debate.

But before the law could be implemented, some business interests had second thoughts. The drug industry, in particular, feared that extending the deep federal discounts to state and local health-care programs would eat into their profits. Local auto dealers worried that police departments would buy directly from Detroit, cutting them out of business.

``Once the business community heard about it, they went bonkers,″ said Paul Cooksey, a senior aide at the Senate Small Business Committee. Drug companies have been ``extremely active and out front on this,″ he added.

After Republicans assumed control of Congress in 1995, business lobbyists got Congress to place a moratorium on the law while auditors studied how to implement it. The moratorium expires in August.

Early this month, business interests saw a chance to solve their problem permanently when Congress began drafting an urgent disaster relief bill. They approached an ally, Sen. Christopher Bond, R-Mo., chairman of the Senate Small Business Committee, and asked him to try to get the purchasing law repealed.

Bond went to Sen. Ted Stevens, R-Alaska, chairman of the Senate Appropriations Committee, who agreed to include a repeal of the cooperative purchasing law in the $8.4 billion disaster bill.

Drug companies provided lobbying know-how and money for the coalition, and auto and equipment dealers provided a sympathetic face and a nationwide network, said congressional officials who were lobbied.

``We were completely blindsided,″ said Bill von Oehsen, a lobbyist for more than 100 big-city public hospitals that stand to save millions if the federal discounts are allowed to take effect.

Opponents began to mobilize. It was too late to do anything in the Senate, which by then had approved the repeal, von Oehsen said, so they focused on the House.

They harnessed the grassroots power of a national coalition of AIDS groups, which say cooperative purchasing could save as much as 40 percent on the price of some expensive drugs used to treat HIV patients. They also enlisted high-tech companies that believe cooperative purchasing will boost computer sales.

Arizona State University Hospital made a presentation in early May to Rep. Jim Kolbe, R-Ariz., chairman of a key Appropriations subcommittee. The hospital’s lobbyists explained how it would benefit from the federal government’s purchasing power.

Opponents also approached Rep. Tom Davis, R-Va., a former county official who has many high-tech suppliers in his suburban Washington district. They also went to Rep. Steve Horn, R-Calif., chairman of a subcommittee that deals with government purchasing.

The opponents, allied with the Clinton administration, proposed a compromise that would have allowed cut-rate purchasing to go forward for AIDS drugs, computers and software _ a strategy that splintered Republicans and put the brakes on the repeal effort.

``When you pit state and local governments against small business, it really creates a division for Republicans,″ said one senior GOP aide.

The final outcome was nearly a draw. House and Senate negotiators on the disaster bill decided to extend the moratorium on the purchasing law until the end of this year, giving Congress a chance to hold hearings and take another look at the controversy.

The overall disaster bill has been stalled by unrelated issues, and is expected to win passage after Congress returns from a week-long recess.

Public hospitals and local governments declared victory, but criticized the additional delay.

``The clock is ticking... for AIDS patients and other vulnerable populations that are forced to wait as special interests continue to delay this tax-saving program,″ von Oehsen said.

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