Lilly's Shadow Government

Senior Republican staff in Washington are beginning to look for good, safe places to go until the political winds change. One top Health & Human Services official has found that haven in Indianapolis where a number of Republicans have gone previously for respites during a period of Democratic control.

Eli Lilly’s recruitment of the former Deputy HHS secretary Alex Azar continues a long tradition at the firm of offering shadow government posts to well-placed Republican figures.

Azar: Indiana jonesin'

Going back to George H. W. Bush, Lilly has served as a temporary home and launching pad for loyal Republicans. The former President served a three-year tenure on the Lilly board after leaving his final Ford Administration post as CIA director.

Azar, who played a major role in putting his stamp on HHS policy from two subcabinet level positions (first as general counsel and then as deputy secretary) will be senior VP-corporate affairs and communications.

The senior VP corporate affairs position is the very job held for nine years during the 1990’s by the current Indiana Governor and former OMB director, Mitch Daniels. Prior to joining Lilly, Daniels was the political director for the Reagan White House.

All big pharma companies obviously play an active game of political influence and are on the lookout for knowledgeable and experienced Washington insiders, but Lilly’s approach is unique in its focus on an ideological fit. The company appears to be less pragmatic and more idealistic in its choices. Azar, who reportedly marked his departure from HHS with a poignant note about praying for advice on his future choice of careers, fits the mold of idealistic conservative that Lilly likes to groom for higher positions. And, with a president and OMB director to its credit already, the company has not done too badly.

For a company that publicly espouses disdain for government-controlled functions, Lilly has done well with government business. Its antipsychotic Zyprexa always appears among the top products purchased by the government; it was also one of the first products to benefit dramatically from the shift from Medicaid to Medicare in 2006. Medicaid programs were getting more effective at forcing down the price and purchases of the product.

Lilly also has had great access to Washington from Hoosier politicians that it has backed aggressively. During the Reagan Administration, for example, Otis Bowen, a former Indianan governor, headed HHS for three years. During the presidency of George H. W., the firm basked in an Executive Branch headed by a former board member and a former Indiana senator, Vice President Dan Quayle.

Lilly likes to point out that Azar has broad knowledge of a number of key government constituencies: the “agencies under his direction included, among others, the Food and Drug Administration, the Centers for Medicare and Medicaid Services, the National Institutes of Health, and the Centers for Disease Control and Prevention.” Perhaps, more importantly, Azar planted a series of aggressive general counsels throughout HHS. At FDA, for example, Azar worked with Dan Troy, a former colleague from private practice at Wiley, Rein & Fielding.

Bringing a political pro into the corporate structure can raise some practical issues. Lilly tried to move Daniels into a line operating position in charge of the US pharmaceutical business but quickly found that he was more valuable in government relations and policy. He could run the government budget and the state of Indiana but did not satisfy Lilly’s demands for running a drug company.

The Azar appointment, announced on May 4 three months after his departure from HHS, comes soon after one Lilly connection to Washington went sour. Former Lilly Chairman Randall Tobias recently resigned from an assistant secretary at the State Department in charge of US foreign assistance and USAID following inquiries about his participation in the Washington escort service scandal.