Enmeshed in the opioid epidemic, AmerisourceBergen seeks goodwill through its foundation
Through its foundation, AmerisourceBergen finds goodwill ambassadors in members of congress and in groups combating the opioid epidemic.
Police can easily tick through the tactics that people use to steal painkillers in Gaston County, N.C.: Pick through garbage, target an elderly person's home, or visit a real estate open house, just to find prescription drugs. The county has one of the highest overdose rates in the state.
And like hundreds of other counties and cities across the country – including at least 39 municipalities in Pennsylvania – Gaston filed suit against companies in the opioid supply chain. That was in late January. The next month, officials in the county's town of Stanley got word – from their U.S. congressman – about a grant to help citizens dispose of opioids from their medicine cabinets. The offer was from the charity run by one of the same distributors named in the lawsuit: Chesterbrook-based AmerisourceBergen Corp.
The company that ranks No. 12 on the Fortune 500 established its namesake AmerisourceBergen Foundation as a public charity in 2014. But its initiatives on the opioid epidemic have proliferated this year, as manufacturers and distributors have come under assault by virtually every level of government. The foundation – overseen by senior executives – has made more than $800,000 in grants so far in 2018 aimed at preventing opioid misuse and promoting recovery. And through its "municipal support program," it has given away drug disposal kits in 34 states, Pennsylvania among them.
Recipients, from police officers to nonprofit groups, have welcomed the resources as a benefit to their communities and their programming. At the same time, foundation grants have set the stage for press events, social media posts, and rosy PR material with members of Congress, including those who have received contributions from the company's political action committee, or lobbyists.
AmerisourceBergen's PAC or its employees have made $1.1 million in political donations for the 2018 cycle, according to the Center for Responsive Politics. The company's federal lobbying spend – $1.12 million for the first half of the year – is on track to eclipse the $1.57 million it spent in 2017. And the charitable grants represent, in some ways, another classic strategy for voicing a message: A company in trouble needs to build up goodwill, people confronting the crisis acquire more funding, and politicians can share in the credit.
"Companies who are offering small grant programs now are most often working toward public relations-driven strategies to minimize damages, and not actually trying to solve the very expensive issue at hand," said Greg Williams, the executive vice president of the nonprofit Facing Addiction with NCADD, which was approached by the foundation, and decided not to apply for a grant.
In response to questions about its strategy, AmerisourceBergen spokesman Gabe Weissman said "we are committed to participating responsibly and ethically within the political process" and to being transparent about its political spending. Weissman said it would be "irresponsible" for the foundation not to address the opioid epidemic, and that they are convening a wide range of experts and groups to work on the issue. "We're proud of our efforts and are eager to do more."
The police department in Stanley, N.C., applied for, and received, 1,000 pouches of a drug disposal mixture called Deterra. "Those are things they do to try to improve their image because they're getting so much bad publicity now," said detective Judy Billings, expressing her views, and not those of her department. "Does it benefit me and my municipality? Sure it does."
On April 2, a press event at Stanley's fire department drew U.S. Rep. Patrick McHenry, (R., N.C.), along with AmerisourceBergen executives. On April 16, McHenry touted the company's "collaboration" with local communities in an AmerisourceBergen press release.
That same day, filings show, AmerisourceBergen's PAC donated $2,500 to McHenry, who as chief deputy whip holds the highest-appointed position for House Republicans. That was on top of a $2,500 donation on April 10. Outside lobbyists for AmerisourceBergen donated $9,000 to several McHenry political committees between April and June, according to filings with the Federal Election Commission.
"AmerisourceBergen and their foundation has been a great partner in making this happen," McHenry said at another event in his district, in early May, where his remarks were introduced by an AmerisourceBergen director of government affairs. "They reached out to our office and asked for the best way to work with local officials to get this product in our hands, in the community's hands."
A spokesman for McHenry didn't address the congressman's association with the charity, but said he's met with community leaders and people impacted by the opioid crisis, as well as local law enforcement and first responders "to learn more about what they need to stop it."
In Tega Cay, S.C., a foundation grant to the police department gave way to a similar press conference last month with Rep. Ralph Norman, (R., S.C.) An AmerisourceBergen director of government affairs attended, as well. The company PAC donated $1,000 to Norman last year. Norman told the Inquirer and Daily News that if Congress can "provide funding and if private companies can help provide materials to fight this – then I will support those initiatives."
Here in AmerisourceBergen's home state, the foundation had also been planning on an event on July 30 in Olney with U.S. Rep. Brendan Boyle, a Philadelphia Democrat, to recognize a donation of disposal kits to Public Health Management Corp., a nonprofit. But, the company later said the event was postponed due to "scheduling conflicts."
Boyle's communications director Sean Tobin said: "These types of events are fairly routine and something the congressman would participate in on a regular basis — lifting up policy issues that are important to his constituents."
AmerisourceBergen's PAC or employees have donated $5,000 to Boyle this election cycle, and gave $4,500 in 2016, according to the Center for Responsive Politics. Tobin said campaign donations "wouldn't be something to influence the congressman's decision" about attending the event.
In May, the foundation donated $50,000 to sponsor a one-day symposium at Thomas Jefferson University, featuring the top public health officials from the city and state. AmerisourceBergen Foundation president Gina Clark was featured on one of the panels, about corporate philanthropy. Clark is the company's chief communications and administration officer who oversees marketing and government affairs.
"The symposium allowed thought leaders to come together to further a constructive conversation about how to address the multifaceted problem," said Brian Swift, Jefferson's chief pharmacy officer. He said funds from the foundation "made this event possible, but they had no influence on the topics of conversation and the content presented."
The opioid epidemic is a monumental public health problem – one that was initially fueled by prescription painkillers, and now, street drugs like heroin and illicit fentanyl. According to the CDC, more than 42,000 people died from an opioid-related overdose in 2016. Last year, just in Philadelphia, 1,217 people died from a drug overdose, and the city found opioids present in 88 percent of those deaths.
Beyond those stunning numbers, cities and counties and state attorneys general have itemized costs they say they've incurred – for medical treatment, for coroners – in lawsuits against companies that manufacture and distribute the painkillers.
A federal judge in Cleveland, Ohio, has consolidated more than 1,000 suits from municipal governments, Native American tribes, and other entities, which could lead to a Big Tobacco-like settlement. More than 800 complaints are lodged in local courts. Meanwhile, some state attorneys general have filed their own lawsuits against Big Pharma, and a group of 41 state attorneys general, among them Pennsylvania's Josh Shapiro, announced a joint investigation last year. In recent financial filings, the company disclosed that its legal bills for opioid-related lawsuits and investigations grew by $39 million last quarter, jumping to $49.5 million for the previous three quarters combined.
For the distributors – who buy medications from manufacturers, and sell them to pharmacies – the scrutiny largely centers on the companies' obligations to report "suspicious orders" to the DEA – and accusations that they didn't do enough of that as pills coursed into drugstores and towns. The Charleston Gazette-Mail uncovered that AmerisourceBergen's oxycodone shipments shot up from 292,000 pills to 1.2 million a year in just one West Virginia county.
Last year, AmerisourceBergen reached a $16 million settlement with West Virginia over claims that the company profited from sending excessive amounts of painkillers into the state and failed to report suspicious orders. AmerisourceBergen denied the allegations and any wrongdoing. Earlier this month, the company disclosed a host of new subpoenas it has received from federal prosecutors and DEA related to opioids and the company's systems for keeping tabs on controlled substances.
"You can think of the manufacturers as having lit the fire," said Andrew Kolodny, co-director of the Opioid Policy Research Collaborative at Brandeis University. "The distributors really poured fuel on the fire. And then I would say the manufacturers and distributors together prevented the fire department from putting out the fire."
He believes the foundation's grants are linked to the litigation. "They're engaged in these activities because they want a jury to be able to hear this," he said. "Or they want a judge to see that they're stepping up to the plate."
The firm is fighting the suits and says it is committed to doing its part to stop the epidemic. CEO Steve Collis has defended the company's system for monitoring suspect orders as "robust." He impressed upon members of Congress that the DEA needs to be more "collaborative" and provide more guidance on what constitutes a "suspicious order" – a sore point for distributors who say current regulations are too vague.
More broadly, Collis and other distributors maintain their companies didn't contribute to the opioid epidemic. Four current or former chairmen and CEOs, including Collis, told a House subcommittee as much on May 8. The industry has argued they're not the ones prescribing the medication. Nor are they in charge of setting the quotas for how many opioids can be produced each year – a job that belongs to the DEA.
Rather, the industry holds out that it occupies one facet of a highly regulated supply chain. It is a lucrative one at that. AmerisourceBergen constitutes one of the "Big Three" wholesale distributors – along with McKesson and Cardinal Health – that control the vast majority of the market. Under Collis, who took over as CEO in 2011, the company's annual revenue has nearly doubled, from $80.2 billion to $153.1 billion last year.
Opioid-based products make up less than two percent of its sales, the company says. As both a businessman and a patient himself, Collis has stressed that the company owes a responsibility to people who need those medications for pain. "I've got a back problem that just keeps on occurring," he said on an earnings call in May, "and sometimes opioids are the only things that will help." He has written on LinkedIn that it would be "amoral" for a corporation to stop distributing an FDA-approved therapy.
All three members of the Big Three have trained philanthropy dollars on the opioid epidemic – initiatives they highlighted for Congress back in May. For AmerisourceBergen, its foundation has expanded its reach during Collis' tenure. The first year it made donations, in 2015, it reported handing out $634,325 – and more than a third of that money went to Project Home, Philadelphia's well known anti-poverty nonprofit. The next year, the foundation's grant-making nearly doubled, to $1.13 million, and last year that figure rose to $1.4 million. The charity has nearly $15.9 million in assets, its most recent IRS filing shows.
Former Pennsylvania congressman Jason Altmire, a Democrat from western Pennsylvania, worked as a health-care industry lobbyist for the Pittsburgh-based health-care giant UPMC. Now he is serving on an advisory committee to the AmerisourceBergen Foundation. He said the organization is providing "immediate help to communities."
"I don't see a problem with using your resources now that everyone understands the gravity of the situation – using your resources to help communities address a very serious problem," he said.
Greg Williams heard about another one of the foundation's grant programs recently – when the charity invited him to consider applying. Williams has spent the past 17 years in recovery from addiction. "I got hooked on OxyContin when I was 17, and it took me down very fast," he said. He produced a documentary – The Anonymous People – about others recovering from addiction, too.
This past spring, his group joined with the Fed Up! Coalition to start an advocacy campaign called "Billions Not Millions." It argues that any settlement to the opioid litigation should be big enough to pay for long-term treatment, public health services, and other remedies. About 75 supporters rallied in front of the Cleveland courthouse, now home to so many of the lawsuits, on a cold morning in May.
Williams' solicitation from the AmerisourceBergen Foundation – addressed "Dear Facing Addiction" – showed up in his inbox on June 25. The email commended his group's work, and outlined a program for grants up to $100,000, to work on "innovative and constructive solutions to the opioid epidemic."
For Williams, though, the source of the funding – linked to an opioid distributor that's being sued by communities nationwide – made it a nonstarter. "Some of these resources might even help people and save lives," Williams said. "I don't want to dismiss the intent. What we would like to say is, no matter how much corporate citizenship they try to do at this point, if it's not tens of billions of dollars, it's not enough."