Lobbyists, Interest Groups Begin Costly Health Care Battle : Legislation: Price tag for influencing Congress may top $100 million, the most expensive contest in history. One junket comes at an opportune time.

Over the upcoming Memorial Day weekend, 20 or 30 congressional staff members and their spouses will be entertained at Connecticut’s quaint Mystic Seaport as guests of Pfizer Inc., a major pharmaceutical company.

The free getaway offers meetings with scientists and tours of Pfizer’s nearby research center, according to the invitation. But it won’t be all work. There will be a lobster dinner, food and drinks in a hospitality suite at the Mystic Hilton Hotel and side trips to the harbor and aquarium. Of course, there will be informal chats with company officials too.

“This is not lobbying,” insisted Ken Bowler, one of two Pfizer lobbyists organizing the event. “My spin on this is that it is very informative. People can see what we are doing. There’s time to actually talk to scientists.”

Even though it is indeed deemed educational and violates no ethics rules, the junket could not come at a more opportune moment for the company.

As an internal memo from an industry coalition noted, President Clinton has identified pharmaceutical manufacturers as “public enemy No. 1” in his fight for health care reform. Some form of restraint on drug prices may be part of Clinton’s plan.

Price controls, like the rest of Clinton’s package, will require congressional approval. As a result, congressional staff members are expected to play an important role in influencing their bosses on the complex legislation.

Even in a city where lobbying is pervasive, the battle over health care reform is shaping up as the most bruising and expensive contest in history. As the Administration’s plan moves toward completion, interest groups of all types are moving into the fray, and the price tag is expected to top $100 million.

In the end, the outcome will determine whether the President can transform one of his major campaign promises into reality when pitted against Washington’s entrenched army of lobbyists.

“I don’t know what has come along that touches such a big piece of the economy and so directly affects so many individuals,” said Jody Powell, the former Jimmy Carter Administration press secretary whose Washington firm is running a $2-million public relations campaign for six large pharmaceutical companies.

Drug companies already are mobilizing to fight price controls. Other potential losers, such as health insurance companies and insurance agents, are also developing strategies to counter proposals that could cost them business and jobs.

With opinion polls showing heavy public support for reform, lobbyists are sensitive to the risks they may run in challenging Clinton on the issue.

None talk publicly about derailing health care reform. So far, they prefer to discuss ways they can work with the Administration in hopes of crafting modifications to the anticipated proposal. Yet privately, some describe strategies for blocking the President’s plan in Congress.

Few industries have more at stake in the outcome of this battle than drug companies, and the massive scale of their lobbying effort matches the stakes.

So far, the industry’s response has been divided. Some companies, such as Merck & Co., hope to head off mandatory price controls by promising voluntary restraints. Others oppose any attempt to control prices.

Pfizer’s upcoming trip for congressional staffers is intended partly to convey the message that drug prices seem high only because they must finance the expensive development of new medicines.

“The focus is on the research itself,” said Bowler, the Pfizer lobbyist and himself a former Democratic staff member of the House Ways and Means Committee.

Consumer organizations complain that they lack the resources to pay for a resort weekend to get their message across to congressional staffers.

“It’s clearly something that those of us who are on the public-interest side can’t compete with,” said Cathy Hurwit, chief lobbyist for Citizen Action, a consumer organization that favors comprehensive national health insurance.

Overall, the drug industry’s lobbying is coordinated by its Washington-based trade group, the Pharmaceutical Manufacturers Assn. But insiders say some companies feel that the PMA has been too slow to respond.

G. D. Searle and five other manufacturers have combined efforts in a $2-million national campaign to counter the black eye given to them by the Administration. They named themselves Rx Partners and hired Powell’s public relations firm, Powell Tate.

Insights into their strategy are contained in a paper prepared by Powell Tate. Rx Partners plans a grass-roots campaign of letters and phone calls to the White House and key members of Congress, as well as approaches to journalists and local news outlets.

The theme will be that controls on drug prices threaten vital research and development. But the underlying goals are to persuade legislators that the public interest is represented by the drug companies, not the Administration, and to poke holes in the Clinton plan.

The health insurance industry appears willing to make some concessions in hopes of avoiding bigger losses. After years of being accused of refusing to insure people with a history of medical problems, the industry now supports universal, cradle-to-grave coverage with no exclusions--one of the Administration’s concepts.

Central to the Clinton plan is likely to be a series of government-mandated health insurance purchasing cooperatives. The organizations will buy health insurance and manage programs for large groups of employers and individuals.

Major insurance companies would probably manage some of the cooperatives, and universal coverage would create new customers who are likely to be snapped up by the big companies. But the scenario leaves smaller and medium-sized companies scrambling for business.

Last month, the insurers opened a $4-million ad campaign designed to highlight the risks to personal choices posed by some likely aspects of the Clinton plan. It is a potent argument with large numbers of Americans afraid of what they might lose in a restructured health system, according to polls.

“Our sense is that the public cares a great deal not only about a choice of doctors or hospitals, but about health insurance,” said Bill Gradison, a Republican who resigned from Congress last year and became president of the industry trade organization, the Health Insurance Assn. of America.

The prospect of purchasing cooperatives is even more ominous to the people who sell health insurance for a living and who could effectively be replaced by them.

“Are you prepared to lose your job?” begins a letter sent to 12,000 insurance agents by their Washington trade group, the National Assn. of Health Underwriters.

The letter describes the fight against the Administration as a “life-or-death battle” and appeals for $1.2 million in contributions to an emergency “war chest.”

For the first time, the organization has hired outside lobbyists--the law firm of Patton, Boggs & Blow and the former top aides to Sens. Orrin G. Hatch (R-Utah) and Mitch McConnell (R-Ky.).

“We’re not looking for magic bullets,” said E. Neil Trautwein, director of government affairs for the insurance group. “What we are looking for is accurate intelligence and political advice.”

The most effective lobbyists are often not lobbyists at all. One of Washington’s most feared lobbying powers is the Independent Insurance Agents of America, which relies heavily on the political savvy of its 280,000 members.

For years, the organization has fought off attempts by banks to enter the insurance business. Part of the reason for their success is a membership that does not hesitate to make its views known to its representatives in Congress.

Paul A. Equale, the group’s top lobbyist, can flood the House and Senate with telegrams, phone calls and agents at a moment’s notice.

Health insurance represents about 20% of the independent agents’ business. It is also their fastest-growing product. So the organization was already concerned that the purchasing cooperatives would cut deeply into their livelihood.

Concern grew into alarm on the weekend of May 8 when First Lady Hillary Rodham Clinton, head of the Administration’s health care task force, threatened two other big products. She told a business conference that changes in workers’ compensation and the medical portion of auto insurance will be folded into the reforms.

Equale was at the White House by the following Monday, expressing his anxieties to a senior staff member of Hillary Clinton’s task force. But his group may unleash a more potent weapon, someone with access to a higher level.

George Frazier is a past president of the insurance agents’ group. He also is from Hope, Ark., where years ago he befriended a fatherless boy named Bill Clinton. The two remain close friends and Frazier recently visited the Clintons at the White House. He said health care was not discussed.

“We’re very close friends,” said Frazier. “It would be a little premature to bring up the subject.”

Clinton knew at least some of what he would face. In announcing the health care task force headed by his wife on Jan. 25, the President spoke of the “powerful forces” arrayed against the effort.

According to a presidential adviser, the remark was a direct reference to lobbyists--both a recognition of their influence and a warning to them not to abuse it. If lobbying threatens to derail health care reform, officials say Clinton will retaliate by portraying lobbyists as hired guns paid to work against the public interest.

Also, surveys show that Americans want the health care system changed and are willing to pay higher taxes to do it. A recent poll for the Democratic leadership in Congress showed that 62% of the voters supported the President’s intention.

This creates a powerful incentive for members of Congress to back some version of change, particularly since the vote is not likely until 1994--an election year.