Welch had stake in firms backing drug bill
Welch was one of the three Democratic co-sponsors of the measure, which became the Ensuring Patient Access and Effective Drug Enforcement Act when it was signed into law.
The law was the subject of a biting investigation by the Washington Post and "60 Minutes" investigation last year that found the measure curtailed the ability of federal authorities to stem channels through which prescription drugs could be diverted to the black market.
The Post quoted from a forthcoming article in the Marquette Law Review by DEA Administrative Law Judge John Mulrooney, who has been documenting the impact of the law. "If it had been the intent of Congress to completely eliminate the DEA's ability to ever impose an immediate suspension on distributors or manufacturers, it would be difficult to conceive of a more effective vehicle for achieving that goal," he wrote.
The law deeply divided the DEA, with some agents arguing they were stripped of key agency tools to punish drug manufacturers and distributors. Welch contends that the law simply clarified federal opioid-handling guidelines and did not hamper the agency's ability to halt the work of dubious drug distributors, a position held by other top-ranking DEA officials.
At a House Energy and Commerce Committee hearing last November, Neil Doherty, a deputy official at the DEA, told Welch that it was "too early to tell" what the law's specific impacts have been.
Last week, the Post published a follow-up story that reported Welch had received $79,000 in campaign contributions from companies that backed the measure. He also had bought and sold between $215,000 and $550,000 in Rite Aid stock as the legislation moved through Congress. According to federal lobbying disclosures, Rite Aid invested significant lobbying resources in support of the measure between 2014 and 2016.
Investments in pharmaceuticals
A VTDigger analysis of Welch's investment activity over the period the legislation was under consideration found additional investments in pharmaceutical companies, including ones that were actively working to influence the bill. During this time Welch also held stock in FedEx and UPS, companies that have publicly voiced frustration over the DEA's approach to regulating the distribution of controlled substances and lobbied on the act.
Welch's 2015 stock portfolio included investments in diversified, biotech, pharmaceutical and health care funds whose holdings include AbbVie Inc., the manufacturer of Vicodin whose lobbyists sought to influence the controversial legislation.
In this period, Welch also held investments in funds composed of pharmaceutical companies that manufacture opioids but that did not lobby on the law, including Johnson & Johnson, Pfizer, Merck, Novartis, and AstraZeneca. Welch's health care related assets over this period were between $22,000 and $140,000, according to a tallying of federal financial disclosure reports.
Dan Freilich, a doctor at the Veterans Administration hospital in White River Junction who is challenging Welch in this year's House Democratic primary, called Welch's health care investments "shocking."
"It's kind of incredible that a Vermont Democrat would be doing this," said Freilich, whose campaign is centered around refusing to accept corporate money. Freilich said he had roughly $300,000 in investments, mostly in socially responsible funds. If elected, he pledged to either sell off his investments or transfer them into Treasury bonds.
"I don't think it's right for a congressman to have stocks in private companies," Freilich said. "It's emblematic of a dysfunctional democracy. Republicans and establishment Democrats do this, and people are sick and tired of it."
`I'm for good medicine'
In an interview, Welch maintained that his investments have no bearing on his congressional work. He said he and his investment manager take a conservative approach to his portfolio, with the goal of increasing its value.
The six-term congressman pointed out that while he had some direct investments in health care companies, most of his stake was in diversified funds consisting of many different firms. While Welch expressed a desire to crack down on shoddy business practices by large pharmaceutical companies, he said he is invested in that sector because he supports the critical work done by drug companies in developing innovative treatments and medications.
"I'm against price gouging, I'm against pill pushing, I'm against overprescribing," Welch said. "But I'm not against the pharmaceutical industry doing what it should be doing, and that's creating life-saving drugs. I'm for good medicine."
Welch said he has been a vocal adversary of the pharmaceutical industry for years, and that reducing prescription drug pricing is one of his top priorities. Members of Welch's staff pointed to a list of 11 bills introduced by Welch that have faced opposition from the pharmaceutical industry.
"If my legislation was successful, some of these pharmaceutical stocks would go down," Welch said. "So it's hard to see how I'm helping Big Pharma."
Welch initially signed on as a co-sponsor of the Ensuring Patient Access and Effective Drug Enforcement Act in May 2014. That year, the bill passed the House but died at the end of the congressional session. The measure was reintroduced in February 2015 before passing both chambers of Congress unanimously. President Barack Obama then signed it into law on April 19, 2016.
State firm urged passage of bill
Welch said he supported the legislation at the urging of Burlington Drug Co., a Milton-based firm that specializes in storing medications and distributing them to pharmacies around Vermont.
Specifically, Welch said the company's compliance officer explained that the bill would clarify the DEA's guidelines for the processing of prescription opioids.
The company was family owned for nearly a century, but was sold in late 2016 to JM Smith Corp., a drug distributor based in South Carolina. Before co-sponsoring the bill, Welch said he consulted with an array of stakeholders, including Burlington Drug staffers and officials at the Vermont Department of Public Safety.
The lawmaker also met with a representative of the Healthcare Distribution Alliance, a consortium of drug distribution companies that lobbied on the bill. Maria Burns, the former vice president at Burlington Drugs, is listed online as an HDA board member, and has contributed $14,500 to the HDA political action committee.
The HDA PAC has donated $11,500 to Welch, according to Federal Election Commission records. Margaret Glazier, the former owner of Burlington Drug Co., has contributed $2,350 to the Vermont congressman.
In 2014, after the bill was voted out of the House Energy and Commerce Subcommittee on Health, HDA released a laudatory statement noting that "the addition of Democratic co-sponsors Reps. Welch and [Judy] Chu [D-Calif.] highlights that this public health crisis requires a bipartisan effort."
The HDA statement further pledged that organization staffers would "continue to work" with the bill's supporters, including Welch. HDA has also delved into Vermont politics, including when it opposed the state's recent efforts at drug importation from Canada.
Welch contends that his interaction with HDA did not influence his thoughts on the bill.
Changes in law now sought
Since the Washington Post/"60 Minutes" report, Welch has been working to change the law with DEA and Justice Department officials. In late February, Justice sent a letter to committee chairmen advising the law be tweaked, not repealed. In March, Welch introduced a bill aimed at fixing the law, which incorporated guidance made in the February letter.
Welch said he did not support a ban on congressional stock trading, arguing that public disclosure of trades was sufficient. He further pointed out his support of the 2012 Stock Act, which formally banned insider trading in Congress. A 2012 Wall Street Journal report on the law's supporters said Welch had gains in the tens of thousands of dollars on various stocks over the previous years.
"[Welch] reported that he generated a profit of between $5,000 and $15,000 on seven large trades in J.P. Morgan Chase & Co. shares in 2010," the Journal reported. "Some of the trades were made as Congress debated new regulations for Wall Street firms."
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