Rep. Tom Price, the Georgia Republican nominated by President Trump to lead the Department of Health and Human Services, is under increasing scrutiny for a trifecta of financial, campaign and legislative activities that some longtime ethics lawyers describe as “extremely rare” and revealing “an extraordinary lack of good judgment.”
In recent years, Price has repeatedly traded stock in dozens of health-related companies while pushing bills that could have benefited many of them. At the same time, he has been uncommonly reliant on campaign contributions from the health-care industry, accepting more than $700,000from physicians, hospitals, drug companies and insurers during his 2016 run for a seventh congressional term, according to the Center for Responsive Politics.
“I haven’t seen anything like this before, and I’ve been practicing and teaching about securities law for 30 years,” said Richard W. Painter, who was chief White House ethics lawyer for President George W. Bush from 2005 to 2007.
Given that Price has some influence legislatively over the health-care sector, his volume of trades in related companies is unusual, according to a former chief counsel to the House and Senate ethics committees. In the past few years, more lawmakers have moved away from investing in individual stocks, opting instead for mutual funds, Treasury bills or municipal bonds as investments.
“They are allowed to do this type of trading, but I would advise against it,” said Rob Walker, who served in the bipartisan counsel positions from 1999 to 2008. “The level of scrutiny he is facing goes along with the territory of making these kinds of investments.”
Price’s investments and donations coincide with a pattern, dating back to his years as a state senator, of strenuously promoting legislation that advances the interests of the medical profession. An orthopedic surgeon for 20 years before he entered politics and still an active member of the American Medical Association, he has sought as both a Georgia legislator and congressman to make it more difficult for patients to win medical malpractice lawsuits and to limit certain damage awards in such cases.
“Whether it be liability or any policy issues about how health care is delivered, how it is paid for, how it is accessed, it is doctors all day every day,” said longtime critic Mark Taylor, a Democratic lieutenant governor in Georgia during most of Price’s tenure in the state Senate and first years on Capitol Hill.
And while Price speaks often of pursuing a patient-centered health-care system, he rails against what he calls an excessive federal role in health care, voting at one point against an expansion of the Children’s Health Insurance Program. “The desire of those on the left to gradually move every American to Washington-controlled bureaucratic health care is so strong they will stop at nothing,” he said before casting that vote in 2007.
In Congress, he has been one of the most ardent opponents of the Affordable Care Act, sponsoring the only bill to repeal the sprawling health-care law that passed Congress. Then-President Barack Obama vetoed it early last year.
Price’s investment and legislative records are central themes that Democrats plan to pursue in his confirmation hearing Tuesday before the Senate Finance Committee. During a “courtesy” hearing last week before a different Senate panel, he faced sometimes-heated interrogation by Democrats over the timing of stock purchases and the extent of his involvement in them.
The nominee has said he would divest financial interests in any companies that could pose a conflict of interest for him as HHS secretary. But some lawmakers, as well as the advocacy group Public Citizen, are calling for an investigation by the Office of congressional Ethics. They also have filed complaints against Price with the Securities and Exchange Commission.
A congressional probe would cease if he were to become HHS secretary. An SEC investigation would continue.
An HHS spokesman reiterated Monday that Price had no knowledge of any trades in his financial portfolio, with the exception of those in one company. The spokesman declined to provide the name of Price’s broker or to share a copy of his written agreement with the investment firm. Price’s legislative office did not respond to repeated requests for comment over several days.
If confirmed, the 62-year-old congressman, who chairs the House Budget Committee, would run one of the biggest federal agencies and its $1.1 trillion budget. Supporters suggest a doctor best understands what the nation’s health-care system needs, with Sen. Orrin G. Hatch (R-Utah) describing Price as “very upfront and very straightforward, very honest, and somebody who really understands the health-care system of this country.”
Price has largely defended his investment activities by saying his broker made nearly all of the stock purchases without his knowledge. Brokers cannot make securities trades for clients without their expressed permission in writing, and Sens. Patty Murray (D-Wash.) and Ron Wyden (D-Ore.) sent a letter Friday asking Price for such proof. Aides in their offices said Monday that he has not responded.
And regardless, said Painter, now a law professor at the University of Minnesota, “It’s a pretty weak defense since he could have gone online at any time and seen the trades that were being made on his behalf.”
Rep. Louise M. Slaughter (D-N.Y.), the co-author of the 2012 Stop Trading on congressional Knowledge (STOCK) Act, shares that sentiment. The law passed after media reports on the close ties between lawmakers’ stock portfolios and legislative actions. It requires that trades be publicly reported within 45 days instead of annually — the sole reason Price’s stock activity last year has come to light in the midst of his confirmation.
“The weakest link here is this notion that some broker bought all these things without his knowledge,” Slaughter said.
A spokesman for the Trump transition countered on his behalf last week, although Phil Blando addressed only the issue of campaign fundraising. “Any effort to connect campaign contributions to Dr. Price’s policy positions is an increasingly stale and desperate Democratic talking point,” he said.
Of particular concern to Slaughter and her Democratic colleagues is Price’s largest stock buy last year — between $50,000 and $100,000 — in an Australian biomedical firm, Innate Immunotherapeutics. Price acknowledged last week that this purchase, and several smaller ones made in the company in 2015, occurred without a broker’s aid. He told members of the Senate Health, Education, Labor and Pensions Committee that he learned of the company from Rep. Chris Collins (R-N.Y.), who serves on Innate’s board, and then did his own research on it and the multiple sclerosis drug it was developing.
The 2016 investment was done through what’s known as a “private placement offering” made by a company to a select group of potential investors. Price contended that he received no insider information ahead of time.
Price’s denial didn’t satisfy Murray, who also pressed him on the timing of the trades. They coincided with final negotiations on the sweeping 21st Century Cures bill, aimed in part at helping to accelerate clinical trials and approval of drugs like Innate’s.
Simon Wilkinson, Innate’s chief executive, told The Washington Post that about 640 investors purchased stock through the special offer. The company did not directly approach Price, he said.
According to David Blake, an Australian securities analyst, the shares the lawmaker purchased in the special offering are now worth between $337,500 and $675,000 — a 575 percent increase.
Another trade in the spotlight involves Zimmer Biomet, a major manufacturer of orthopedic and dental implant devices.
CNN was the first to report financial disclosure records showing that Price bought between $1,001 and $15,000 worth of Zimmer Biomet shares last March. A week later, he introduced legislation to delay a new payment model that industry analysts said could have serious financial implications for the company.
The HHS regulation carried “tremendous risk and complexity for patients and health-care providers,” Price said when he introduced his bill. “Rushing its implementation would be unreasonable and potentially detrimental to patients and their quality of care.”
Federal Election Commission records show Price received $2,000 in campaign donations from the company’s political action committee in November 2015 and June 2016.
In a statement, Zimmer Biomet spokeswoman Monica Kendrick said it “did not support” Price’s legislation and was unaware of his investment in the company. She said the company had long backed efforts such as the payment model Price sought to block.
Price also purchased stock in three pharmaceutical companies in the months leading up to his introduction last June of a bill that would have provided the businesses with massive tax breaks for their manufacturing and production activities in Puerto Rico, records show. Amgen, Eli Lilly and Bristol-Myers Squibb gave a combined $20,000 to his 2016 reelection campaign, according to filings with the Federal Election Commission.
The bill ultimately did not pass the House. Blando stressed last week that Price had “no say or input into these trades” and that to insinuate a connection “is insulting.”
Overall, Price is far more reliant on donations from health professionals than other lawmakers in comparable positions in the House. Since he was first elected to Congress in 2004 from an affluent, conservative district in northern Atlanta, they have given more than $3.5 million in campaign contributions, more than any other donor sector, according to data from the Center for Responsive Politics.
In contrast, the previous chairman of the House Budget Committee, Speaker Paul D. Ryan (R-Wis.), has received $1.3 million in contributions from health professionals since 1998.
While Price resembles many House Republicans in his zeal for dismantling the ACA, his focus on medical malpractice lawsuits is distinctive.
Starting in 2009, he has four times introduced the Empowering Patients First Act, with the most recent three bills seeking to repeal the ACA. All would have weakened patients’ hand in medical malpractice cases by setting $250,000 caps on noneconomic damages, creating clinical guidelines to protect doctors from liability or both. And he sponsored two separate bills aimed at creating such guidelines for use in malpractice lawsuits.
None got out of House committees.
Julie Tate, Alice Crites and Matea Gold contributed to this report.