​How Money Shapes Medicine:: Lobbying, Donations and Economic Inefficiency
BY AYSHA ABDULLA/ JUNE 15, 2025
DESIGNED BY RIDDHI JAIN
​Healthcare is a basic human need but what usually stands between a common person and universal healthcare is corporate greed standing on the foundation of profit maximisation and unabated lobbying.
n an age where healthcare is considered a fundamental right, access remains deeply unequal. In recent decades, the healthcare and pharmaceutical industries have pumped millions of dollars in the lobbying industry, and its impact on the state of healthcare and insurance is conspicuous. Industry leaders have shaped existing policies with lobbying at their disposal, highlighting the demarcation in society that determines individuals’ ability to afford healthcare, purchase essential medicine, and access life saving treatments.
I
The panning out of the American political history reveals the evolution of lobbying – from a tool that once provided citizens access to their representatives in the government to the current reality, where ordinary individuals find it increasingly difficult to approach these government officials who are instead pursued by professional lobbyists offering not only information and well formulated policy but also substantial financial resources.
Lobbying has played an integral role in decision making, policy formulation and influencing the representatives in the Senate and the Congress. The right to lobbying is enshrined in the First Amendment of the U.S. Constitution. The practice of lobbying persists largely because it is strictly protected by the Bill of Rights and further supported under freedom of speech, freedom of press, freedom of assembly and freedom to petition the government to redress grievances (Gabel & Scott, 2011), it also serves to improve the efficiency of the system in its own way.
Source: Keppler, J. (1889, January 23). The Bosses of the Senate [Illustration]. J. Ottmann Lith. Co.
https://www.senate.gov/art-artifacts/historical-images/political-cartoons-caricatures/38_00392.ht m
Politicians and representatives tend to lack sufficient knowledge on the policies they are meant to formulate, and it is at this crucial point that lobbyists step in with their specialised knowledge in the field of interest (Austen-Smith, 1993). More often than not, this knowledge and information is skewed towards benefitting the more influential stakeholders in the industry who can afford to hire these professional lobbyists, while the interests of consumers and other groups facing negative externalities due to the industry go underrepresented.
This was not always the case. Corporate lobbying has become more prominent, effective and organised only since the 1970s (Waterhouse, 2019). Prior to this, organised trade associations flourished in the lobbying industry, and one of the associations that is of great importance to this article is the American Medical Association (AMA). In 1948, during Harry S. Truman’s unexpected presidency, the AMA began aggressively opposing the National Health Insurance (NHI), a key policy initiative Truman sought to implement, due to concerns about government control over healthcare and the impact on physicians’ autonomy and income. Before World War I, in 1916, the AMA established a committee on Social Insurance to cooperate with the American Association for Labour Legislation (AALL) in efforts to develop state sponsored health insurance. This early engagement highlights a period when the AMA was open to exploring government involvement in healthcare, a stance that shifted significantly in the decades that followed.
Corporate lobbying has become more prominent, effective and organised only since the 1970s (Waterhouse,2019)
​By 1945, the profession had evolved, and so did the leadership at AMA. Specialists in the American healthcare system nearly tripled between 1920 and 1950, rising from 10.6% to 30.1% . These specialists earned significantly more than the general physicians with physicians' pay also witnessing tremendous growth between 1940 and 1945, their incomes increased to around USD 12,000 by 1950. This shift was reflected in AMA leadership as more and more elected association presidents were specialists rather than academically leaning individuals or generalists (Alsan & Neberai, 2024).
​It must be noted that the health insurance landscape was also evolving alongside, Private Health Insurance (PHI) had started gaining a foothold in the American market at the time of the Great Depression in the form of Blue Cross plans at nonprofit hospitals. It allowed consumers to prepay for room and board at local hospitals, but the requirement of special legislation made it difficult for plans to operate across state lines. Shortly thereafter, state medical societies also started providing similar services known as Blue Shield. In 1982, Blue Cross and Blue Shield services merged to become the Blue Cross Blue Shield Association (BCBSA), an association of 33 independent BCBS
Pictured: Illustration by unknown via pinterest
companies providing nationwide health coverage to approximately 115 million members today (Blue Cross Blue Shield Association [BCBSA], n.d.). The AMA’s opposition to NHI was influenced not only by the growth of enrollment in these voluntary insurance plans but also by the shifts in its leadership.
​Building on its opposition to NHI, AMA launched a campaign and hired Whitaker & Baxter (WB) for assistance. The two main components of the campaign were physician outreach and mass communication using newspaper advertising. AMA resorted to indirect lobbying to influence and persuade the American public. Physicians were sent pamphlets, materials, and were instructed to warn their patients about the dangers of “Socialized Medicine”. Whitaker & Baxter’s campaigns linked NHI with socialism while portraying private health insurance (PHI) as synonymous with freedom and the American way of thinking. AMA’s objective for the campaign was to not only oppose compulsory healthcare but also quell public support for it by promoting enrollment in voluntary health insurance systems. Physicians were also urged to make changes to template resolutions against NHI and send copies of the same to the elected officials.
Source: Alsan, M., & Neberai, Y. (2024). Why doesn’t the United States have national health insurance? The role of the American Medical Association. Harvard Kennedy School. https://www.hks.harvard.edu/publications/why-doesnt-united-states-have-national-health-insuran ce-role-american-medical
​In 1950, the AMA, in collaboration with other allied industries, spent approximately USD 19 million in campaigning against NHI, which would be equivalent to around USD 240 million today. Meanwhile, the Committee for the Nation’s Health (CNH) attempted to sway the perception of NHI but was easily out-resourced; of the USD 104,000 that CNH raised, USD 100,000 went towards its operating budget. CNH also distributed pamphlets, but they could not match the reach or persuasive appeal of the Whitaker & Baxter campaign. AMA had pivoted towards direct lobbying by 1952 and had established a separate lobbying entity named National Professional Committee for Eisenhower for President (NPCE), with Whitaker as the Director, Baxter as General Manager, and AMA president Dr. Elmer Henderson as Chairman.
​With Truman’s presidency coming towards an end, the legislative threats had weakened, and the Republican Party had adopted the AMA stance towards NHI. Aligning with the rising Republican opposition to NHI, NPCE raised about USD 1.5 million, in current terms, to support Dwight D. Eisenhower’s presidential campaign. He was elected in 1953.
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Following this, in the subsequent decades the U.S. was not able to adopt NHI prominently due to three reasons: (i) as middle class Americans gained private coverage, the interest towards NHI eroded; (ii) the Whitaker & Baxter ideology persisted and privately owned were signifiers of “free” people who had shunned socialism; and (iii)
prominent people in power who benefitted from the system seeked to maintain the status quo. Blue Cross Blue Shield, the American Medical Association, the American Hospital Association, pharmaceutical companies, and the insurance companies hold top positions in the list of top ten largest direct federal lobbyists (Alsan & Neberai, 2024).
The Doctor shortage
It is projected that within the next decade, the U.S. will face a shortage of 120,000 doctors. This bottleneck in the healthcare industry stems from an artificially created doctor shortage caused by a 1997 congressional spending bill. Concerns over a doctor surplus were rampant in the 1980s, driven by a study conducted by the “GMENAC” (Graduate Medical Education National Advisory Committee), a federal panel that submitted its findings to the Department of Health and Human Services in 1980. At the time, the worry was that a surplus in physicians would lead to physician-induced demand for healthcare, thereby increasing costs. To prevent this the panel called for a 17% cut in medical school enrollment to avoid a surplus of 70,000 physicians. This policy shift contributed to the restrictions on residency positions and ultimately to the current shortage.
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Pictured: Illustration by unknown via pinterest
Future doctors have to complete a three to seven year residency to legally practice medicine in the U.S., and it is Congress that decides how many doctors can be trained annually, effectively barring the remaining students from practising medicine. Since 98% of all residencies are federally funded, this cap effectively restricts the supply of practising physicians. As a result, approximately 10% of the medical school graduates go unmatched. Those not matched with a sponsored medical clinic to complete their residency fail to acquire the medical license, leaving them with no legal pathway to practice medicine.
This cap on medicare funded residency was set in 1997 by the Balanced Budget Act and it remained unchanged, at 98,285 resident positions, since 1997, for the next 25 years. It was only in 2021 that the government added 1,000 more medicare funded residency spots. However, this is still far from sufficient, as the country continues to face the consequences of having created a physician shortage in an attempt to avoid a physician surplus.
​However, this is still far from sufficient, as the country continues to face the consequences of having created a physician shortage in an attempt to avoid a physician surplus.
​Over the past 28 years, the U.S. population has grown by 75 million people. The demographic has shifted, and so have people geographically, while the number and location of residency has remained virtually the same. This cap on the number of residents stunts economic growth and contributes to the poor distribution of the federal funds allocated for the training of future doctors. The growth in the number of doctors is also disproportionate as the medical institutes are usually located in urban regions causing a deficiency of doctors in the rural regions (Williams, 2025).
The modern Big Pharma Lobbying problem
​The study in JAMA Health Forum found that the increase in lobbying expenditure by the American healthcare sector over the last two decades has been driven primarily by the pharmaceutical companies, health product manufacturers, and providers. Subsequently, a small number of firms are responsible for the majority of the lobbying expenditures (Schpero et al., 2022).
​Pharmaceutical Research and Manufacturers of America (PhRMA) is an American trade group, based in Washington, D.C., representing companies in the pharmaceutical industry. The group lobbies for policies in the interest of the pharmaceutical companies. PhRMA has opposed the government price setting of drugs,
Source: Cole, J. (2021, October 30). Big Pharma blocks drug-price reform [Illustration]. The Times Tribune, Scranton, PA. https://cagle.com/cartoonist/john-cole/2021/10/30/256721/big-pharma-blocks-drug-price-reform
arguing that such policies give bureaucrats the power to arbitrarily determine prices in the state, subjecting them to political fluctuations and electoral cycles. It also states that it threatens access to treatment and slows down research and development of new medicines. They contend that patients would have access to fewer new drugs and would experience longer waiting periods to receive them (Pharmaceutical Research and Manufacturers of America [PhRMA], n.d.).
Although the then proposed policy may have had its setbacks, the PhRMA claims are ironic. According to a survey, in 2021 alone, more than 9 million US adults aged 18 to 64 years did not take their prescribed medication due to costs. According to the National Centre for Health​​Statistics, this group makes up 8.2% of the adults in that age range. The same study found that people with disabilities were cutting back on medication much more than people without disabilities. 20% of the disabled adults do not take their prescriptions in comparison to the 7.1% of adults without disabilities. Women were more likely than men to skip medications, as were Black adults and people identifying with more than one race (Harris, 2023). A 2015 U.S. poll indicated that 19% of the respondents avoid filling prescriptions altogether, knowing they could not afford them. Multiple studies show that people who are not able to access prescribed medication are at a greater risk of heart attacks, strokes, and other life-threatening health emergencies (Quigley, 2017).
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Pharmaceutical companies have often driven drug prices to be exorbitantly high due to the exploitation of patent rights in recent years. In 2010, GlaxoSmithKline (GSK) sold the rights of Daraprim, an antiparasitic drug frequently used by patients with a suppressed immune system, to CorePharma, which in turn sold the rights to Turing Pharmaceuticals in 2015. With the sale of rights to Turing, the price of the drugs skyrocketed from USD 17.50 to USD 750 immediately; the decision was backpedalled due to public uproar (Deangelis, 2016).
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​These are not isolated events, for example, the Cleveland Clinic responded to the shortage of the blood vessel surgery drug by formulating its own version and bought exclusive rights to it, which the clinic’s physicians found out about when they attempted to share it with colleagues in other medical facilities. Another example is the steep increase in the cost of insulin lispro, which increased by 325% from 2010 to 2015 (Quigley, 2017). Furthermore, PhRMA has been actively lobbying against the 340B drug discount program, which would require manufacturers to retail their medication to clinics and hospitals in low income areas at steep discounts.
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The industry is also alleged to support policies such as George W. Bush’s Medicare Part D, on the condition that
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Pictured: Illustration by unknown via pinterest
the Medicare and Medicaid services would be prohibited from negotiating lower drug prices, which is unfair to the patients under these government programs (CREW, 2018). In contrast, pharmaceutical companies negotiate prices with Health Maintenance Organisation (HMO) and other private insurers (Deangelis, 2016), which often enables privately insured individuals to purchase essential medications at significantly lower costs.
Source: Cole, J. (2025, May 25). Medicare cuts hurt the poor and sick [Illustration]. The Times Tribune, Scranton, PA. https://cagle.com/cartoonist/john-cole/2025/05/25/296225/medicare-cuts-hurt-the-poor-and-sick
The Insurance Dilemma
It has been noted that with rising prices of drugs, increasing costs that are first covered by private health insurers are gradually passed on to the people. This means that although consumers pay premiums and copayments, the insurer does not begin covering expenses until a deductible threshold is met. A deductible threshold is the minimum amount a patient has to first pay out-of-pocket to file an insurance claim, it is only after this threshold is met that insurance companies start to cover the cost. Over the last decade, while premium obligations have increased by 83%, the deductibles have increased by 255% substantially because of prescription medicine prices. One of the consequences of these rising prices is that medical debt has become one of the largest causes of bankruptcy in the country (Quigley, 2017).
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According to the Commonwealth Fund, U.S. patients spend significantly more than citizens of other comparable countries on healthcare, yet they have the lowest life expectancy among the peer countries. Across age groups, the cause of death among U.S. citizens varies but the life expectancy is mainly driven down by the deaths of young people rather than older. From 1980 until 2021, premature deaths among people in the age group of 15 to 59, have remained closer to the 1980 levels in the U.S. while it has gone down by about 50% in peer countries.
From 1980 until 2021, premature deaths among people in the age group of 15 to 59, have remained closer to the 1980 levels in the U.S. while it has gone down by about 50% in peer countries.
Deaths in this age group result from a range of causes, including chronic diseases, communicable diseases, substance abuse and injuries. Many factors affecting the life expectancy of the younger population have emerged over the decades in the U.S. such as AIDS, gun violence, and the opioid epidemic. Chronic diseases such as cardiovascular, respiratory and kidney diseases nevertheless remain as the most common cause of death across all age groups (Wager et al., 2025).
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After the targeted shooting of UnitedHealthcare CEO Brian Thompson in December of 2024, many individuals brought their grievances with UnitedHealthcare to the forefront. Insurers have been consistently criticised for being profit oriented and frequently denying or delaying claims, creating a life or death situation for the patient. Insurance companies are motivated to earn profits by charging high premiums while simultaneously managing claims to minimise payouts and maintain regulatory compliance. One such method is requiring prior authorisation, where healthcare providers must seek approval from insurers before administering specific treatments. Additionally, comapanies are increasingly relying on AI to review claims, which can lead to inaccurate denials or improper payouts. The use of complicated and technical language in insurance policy confuses patients as to what is covered and what the limitations of their policy are, resulting from the lack of transparancy from the insurer's end (Constantino, 2024).
As reported by KFF, one in four adults say they have skipped or postponed getting healthcare due to the cost, one in five adults refrain from filling prescriptions because of the cost and a similar number opt for over-the-counter medicine instead. About half of insured adults worry if they will be able to pay their monthly insurance premiums, four in ten adults are reported to be in medical debt, and nearly half of the U.S. adult population find it difficult to afford health care (Lopes et al., 2024).
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Insurance companies often fall back on the stance that the government is trying to hurt people’s healthcare whenever
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Pictured: Illustration by Sebastien Thibault via pinterest
regulations and fund cuts are expected. For instance, in 2023, multiple ad campaigns were run by private insurers in response to Centres for Medicare & Medicaid Services (CMS) proposed changes to privately administered Medicare Advantage (not to be confused with federally administered Medicare) to curb fraudulent and systematic overbilling cost the government tens of billions of dollars.
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Better Medicare Alliance, a research and advocacy organisation in support of Medicare Advantage, spent over USD 13.5 million on its ad campaign portraying seniors fretting about Medicare Advantage cuts. Prominent members of the Better Medicare Alliance include Aetna, Humana and UnitedHealth, whose CEO has personally lobbied to lawmakers. On 31st March of the same year, CMS issued its final payment rate rule and instead of implementing the new formula, it was decided that payments would be gradually decreased over three years.The following year Medicare Advantage would also get a 3.3% increase in the reimbursement rates as opposed to the initial 1% proposed by CMS (Dayen, 2023).
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At the same time, lobbying expenditures by major healthcare stakeholders remain extraordinarily high. In 2024, companies in the U.S. spent approximately USD 4.4 billion on lobbying for the federal government alone (OpenSecrets, n.d.) and these lobbying expenditures were led by the pharmaceutical companies and health product manufacturers alone spending USD 293.7 million on lobbying followed by the insurance comapnies at the third spot which spent a total of USD 117.3 million (Statista, 2025).
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Lobbying is not the sole channel of contribution: Political Action Committees (PACs) are set up by companies to directly contribute to political campaigns at multiple levels of the government. Hill et al. (2013) have found that many firms use multiple channels of potential political influence to impact regulatory and policy outcomes. Additionally, the “revolving door” phenomenon, where former senators return to politics as lobbyists creates some of the highest-paid lobbyists. This research also shows that firms engaging more actively in lobbying have a higher possibility of benefiting from favourable policy outcomes.They offer certainty to the firm that hires them while simultaneously benefiting the people currently holding the office as they understand their personal needs and priorities.​
Additionally, the “revolving door” phenomenon, where former senators return to politics as lobbyists creates some of the highest-paid lobbyists.
Lobbying has long been under scrutiny, not least because it wildly reminds everyone of bribery but also because the self-perpetuating cycle of reforms keeps ploughing on in the system. It is a system where prominent stakeholders influence policy, indulge in self-interested behaviour possible because of the influenced policy, which further impacts disadvantaged stakeholders and causes market failures. Calls made for regulatory reforms are responded to by prominent stakeholders who are still disproportionately involved in regulatory reforms (Gabel & Scott, 2011).
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The influence of lobbying on the healthcare and insurance industries has caused great dissatisfaction among people for decades. Constant interventions by the lobbying industry in the lawmaking process undermines the system and makes it increasingly more difficult to introduce impactful policy reforms. The industry benefits from political uncertainty as the funds raised from lobbying activities such as fundraisers and direct contributions from companies in the form of PAC allow politicians to keep contesting for elections, which in turn allows them to deliberately turn the sails in their favour.
Pictured: Illustration by unknown via pinterest
Moreover, social factors such as sex, gender, and race are also disproportionately represented in medical research. Big pharma calls for not reducing drug prices in the name of being the flag bearers of medical research essential for providing better and improved healthcare, all while people are not equally advantaged by said research and improvements. Medicine essential for survival comes with marked up prices, and simultaneously, patent rights delay the availability of over-the-counter (OTC) drugs. Administrative costs drive up hospital bills to coordinate providing healthcare with insurance availability which prematurely shuns uninsured people and low income groups out of healthcare. The long due reforms in the healthcare industry must be acted upon to prevent further deterioration in public health.
Keywords
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Healthcare access, corporate lobbying, pharmaceutical industry, economic inefficiency, universal healthcare, profit maximization, political influence, American Medical Association (AMA), National Health Insurance (NHI), Private Health Insurance (PHI), Blue Cross Blue Shield Association (BCBSA), socialized medicine, campaign funding, doctor shortage, Graduate Medical Education National Advisory Committee (GMENAC), public vs. private healthcare, legislative barriers
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References
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Alsan, M., & Neberai, Y. (2024). Why doesn’t the United States have national health insurance? The role of the American Medical Association. Harvard Kennedy School. https://www.hks.harvard.edu/publications/why-doesnt-united-states-have-national-health insurance-role-american-medical
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Austen-Smith, D. (1993). Information and Influence: lobbying for agendas and votes. American Journal of Political Science, 37(3), 799. https://doi.org/10.2307/2111575
Blue Cross Blue Shield Association. (n.d.). About us – Blue Cross and Blue Shield Health Insurance | Bcbs.com. https://www.bcbs.com/about-us
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Cole, J. (2021, October 30). Big Pharma blocks drug-price reform [Illustration]. The Times Tribune, Scranton, PA.
12 https://cagle.com/cartoonist/john-cole/2021/10/30/256721/big-pharma-blocks-drug-price reform
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Cole, J. (2025, May 25). Medicare cuts hurt the poor and sick [Illustration]. The Times Tribune, Scranton, PA. https://cagle.com/cartoonist/john-cole/2025/05/25/296225/medicare-cuts-hurt-the-poor-a nd-sick
Constantino, A. K. (2024, December 19). Why Americans are outraged over health insurance — and what could change. CNBC.
https://www.cnbc.com/2024/12/18/unitedhealthcare-ceo-killing-why-health-insurance-up sets-americans.html
CREW. (2018). A bitter pill: how big pharma lobbies to keep prescription drug prices high. In CREW | Citizens for Responsibility and Ethics in Washington.
https://www.citizensforethics.org/reports-investigations/crew-reports/a-bitter-pill-how-big -pharma-lobbies-to-keep-prescription-drug-prices-high/
Dayen, D. (2023, April 11). Insurance Lobbyists Force Government to Heel on Medicare Advantage. The American Prospect.
https://prospect.org/health/2023-04-11-insurance-lobbyists-medicare-advantage/
Deangelis, C. D. (2016). Big pharma profits and the public loses. Milbank Quarterly, 94(1), 30–33. https://doi.org/10.1111/1468-0009.12171
Gabel, T. G., & Scott, C. D. (2011). Toward a public policy and marketing understanding of lobbying and its role in the development of public policy in the United States. Journal of Public Policy & Marketing, 30(1), 89–95. https://doi.org/10.1509/jppm.30.1.89
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Harris, E. (2023). Survey: Millions of people in the US forgo medications to reduce costs. JAMA, 330(1), 13. https://doi.org/10.1001/jama.2023.10395
Hill, M. D., Kelly, G. W., Lockhart, G. B., & Van Ness, R. A. (2013). Determinants and effects of corporate lobbying. Financial Management, 42(4), 931–957. https://doi.org/10.1111/fima.12032
Keppler, J. (1889, January 23). The Bosses of the Senate [Illustration]. J. Ottmann Lith. Co.
https://www.senate.gov/art-artifacts/historical-images/political-cartoons-caricatures/38_0 0392.htm
Lopes, L., Montero, A., Presiado, M., & Hamel, L. (2024, May 7). Americans’ Challenges with Health Care Costs. KFF.
https://www.kff.org/health-costs/issue-brief/americans-challenges-with-health-care-costs/
OpenSecrets. (n.d.). Federal and State Lobbying.
https://www.opensecrets.org/federal-lobbying/federal-and-state
PhRMA. (n.d.). Government Price Setting.
https://phrma.org/policy-issues/government-price-setting
Quigley, F. (2017). The United States Has a Drug Problem. In Prescription for the People: An Activistís Guide to Making Medicine Affordable for All (pp. 13–18). Cornell University Press. https://www.jstor.org/stable/10.7591/j.ctt1w0dcw8.6
Schpero, W. L., Wiener, T., Carter, S., & Chatterjee, P. (2022). Lobbying expenditures in the US health care sector, 2000-2020. JAMA Health Forum, 3(10), e223801. https://doi.org/10.1001/jamahealthforum.2022.3801
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Statista. (2025, February 5). U.S. leading lobbying industries in the U.S. 2024. https://www.statista.com/statistics/257364/top-lobbying-industries-in-the-us/
Wager, E., Cotter, L., Panchal, N., & Cox, C. (2025, February 14). What drives differences in life expectancy between the U.S. and comparable countries? Peterson-KFF Health System Tracker.
https://www.healthsystemtracker.org/chart-collection/what-drives-differences-in-life-expe ctancy-between-the-u-s-and-comparable-countries/
Waterhouse, B. C. (2019). Lobbying and business associations. Oxford Research Encyclopedia of American History.
https://doi.org/10.1093/acrefore/9780199329175.013.624
Williams, L. (2025, March 21). How Congress created the doctor shortage. The Daily Economy. https://thedailyeconomy.org/article/how-congress-created-the-doctor-shortage/
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