Exhibits - Anthony Principi, Former Secretary of Veterans Affairs

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    EXHIBIT 1

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    Anthony PrincipiSecretary of Veterans Affairs, 2001-2005 www.va.gov

    Anthony J. Principi was nominated to be Secretary of Veterans Affairs by President George W.Bush on December 29, 2000, was confirmed by the Senate on January 23, 2001 and served onthe President's Cabinet until January 2005.

    As Secretary, Mr. Principi directed the federal government's second largest department,responsible for a nationwide system of health care services, benefits programs, and nationalcemeteries for America's veterans and dependents. With a budget of more than $51 billion, VAemployed approximately 219,000 people at hundreds of VA medical centers, clinics, benefits

    offices, and national cemeteries throughout the country.

    Prior to his nomination, Mr. Principi was president of QTC Medical Services, Inc., a group of professional servicecompanies providing independent medical examinations and administration. During the past decade, he wassenior vice president at Lockheed Martin IMS, and a partner in the San Diego law firm of Luce, Forward, Hamilton& Scripps.

    A combat-decorated Vietnam veteran, Mr. Principi has worked on national policy issues and has held severalexecutive-level positions in federal government throughout his career. He chaired the Federal Quality Institute in1991 and was chairman of the Commission on Servicemembers and Veterans Transition Assistance establishedby Congress in 1996.

    Mr. Principi served as Deputy Secretary of Veterans Affairs, VA's second-highest executive position, from March17, 1989, to September 26, 1992, when he was named Acting Secretary of Veterans Affairs by President GeorgeBush. He served in that position until January 1993. Following that appointment, he served as Republican chiefcounsel and staff director of the Senate Committee on Armed Services.

    From 1984 to 1988, he served as Republican chief counsel and staff director of the Senate Committee onVeterans' Affairs. He was the Veterans Administration's assistant deputy administrator for congressional andpublic affairs from 1983 to 1984, following three years as counsel to the chairman of the Senate Armed ServicesCommittee.

    Mr. Principi is a 1967 graduate of the U.S. Naval Academy at Annapolis, Md., and first saw active duty aboard thedestroyer USS Joseph P. Kennedy. He later commanded a River Patrol Unit in Vietnam's Mekong Delta.

    Mr. Principi earned his law degree from Seton Hall University in 1975 and was assigned to the Navy's JudgeAdvocate General Corps in San Diego, Calif. In 1980, he was transferred to Washington as a legislative counselfor the Department of the Navy.

    Home > Government

    Page 1 of 1Anthony Principi, Secretary of Veterans Affairs, 2001-2005

    6/9/2008http://www.whitehouse.gov/government/principi-bio.html

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    EXHIBIT 2

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    News.com - Principi Resigns as Pfizer VP - Politics | Republican Pa... http://www.foxnews.com/story/0,2933,15667

    10/2/2008

    E-Mail Print

    Principi Resigns as Pfizer VP

    Monday, May 16, 2005

    WASHINGTON Anthony Principi (search), chairman of the commission that will

    review the newly released list of military base closings, has resigned hisexecutive post with the drug manufacturer Pfizer (search) Corp.

    Principi, a former Veterans Affairs (search) secretary, told the company Friday thathe was stepping down in order to fully carry out his responsibilities as chairman ofthe Base Realignment and Closure Commission. He cited the time demands of thecommission job.

    Word of Principi's resignation came Monday as the commission was openinghearings on Defense Secretary Donald H. Rumsfeld's proposal to close 33 majorfacilities and realign hundreds of others to save billions of dollars.

    Principi joined Pfizer as a vice president in March, to run the company'sWashington, D.C. office. He is from California, a state that was hard hit in theprevious four base closing rounds. And Pfizer has a large research facility inConnecticut, a state hurt the most in the Pentagon's base closing recommendationsreleased Friday.

    "We're very sorry to be losing Mr. Principi, but we respect his commitment to the

    commission and to the president and to the Congress in service of our country," saidthe Pfizer spokesman, Paul Fitzhenry.

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    See Next Story in PoliticsE-Mail Print

    STORIESRumsfeld Defends Base ClosingList

    Pentagon Wants 33 Major MilitaryBases Closed

    Lawmakers to Fight Base Closures

    Fast Facts: Base Breakdown

    Plan Would Close Walter ReedArmy Hospital

    Fast Facts: Pentagon's Proposal

    Timeline of Base-Closure Process

    Objections Readied Against BaseClosings

    Panel to Recommend SlowingBase Closings

    Rumsfeld: Fewer Base ClosuresExpected

    VA Chief: Base Closings Will HurtCommunities

    Pentagon Plan to Pull TroopsLaced With Uncertainty

    Asia, Europe Brace for U.S. TroopRealignment

    VIDEODOD Base Closing Announcement

    LINKSClosures and Realignments byState

    RELATED Principi, a decorated Vietnam War veteran, onceserved as a chief counsel for the Senate ArmedServices Committee and Senate Veterans AffairsCommittee. He also has been a top official withdefense contractor Lockheed Martin.

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    EXHIBIT 3

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    21 of 107 DOCUMENTS

    The Day

    Distributed by Knight/Ridder Tribune News Service

    March 25, 2006 Saturday

    Principi returns to Pfizer

    BYLINE: Anthony Cronin, The Day, New London, Conn.

    SECTION: BUSINESS AND FINANCIAL NEWS

    LENGTH: 377 words

    Mar. 25--Pfizer Inc. has named Anthony Principi, the former head of the federal base closure commission, as its

    senior vice president for government relations, heading its Washington, D.C., office.

    Principi was the chairman of the federal Defense Base Closure and Realignment Commission, which was the

    independent federal agency charged with reviewing the Pentagon's 2005 base closings and consolidation process.

    The Pentagon proposed last May that the Naval Submarine Base in Groton be shuttered as part of its nationwide

    round of base closings and consolidations. But after an intensive fight that involved local, regional and state officials, as

    well as those in the state's congressional delegation, Principi's commission voted in late August to keep the base open --

    averting a possible economic shock wave across eastern Connecticut.

    The base is one of the region's largest employers, with about 9,000 active-duty personnel and more than a thousand

    contractors who work at the Groton base.

    Principi had been with Pfizer from March through May of 2005, but left his post to devote his time to the massive

    job of reviewing the Pentagon's base closing and consolidation list.

    Principi has broad experience in both private industry and public service. He served as secretary of the U.S.

    Department of Veterans Affairs, the federal government's second-largest agency with an annual budget of about $51

    billion and more than 200,000 employees. He also served as a deputy secretary within that agency.

    Principi, a graduate of the U.S. Naval Academy at Annapolis, is a Navy veteran who served in Vietnam.

    He spent about a decade in the private sector, including serving as an executive with a division of Lockheed Martin

    and as the president of a medical services company.

    Principi graduated from Seton Hall University's law school and served as a partner with Luce, Forward, Hamilton

    and Scripps, a San Diego-based law firm.

    To see more of The Day, or to subscribe to the newspaper, go to http://www.theday.com. Copyright (c) 2006, The

    Day, New London, Conn. Distributed by Knight Ridder/Tribune Business News. For information on republishing this

    content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail

    [email protected].

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    LOAD-DATE: March 25, 2006

    LANGUAGE: ENGLISH

    ACC-NO: 20060325-NL-PFIZER-HEAD-20060325

    PUBLICATION-TYPE: Newspaper

    JOURNAL-CODE: NL

    Copyright 2006 The Day

    Page 2Principi returns to Pfizer The Day March 25, 2006 Saturday

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    EXHIBIT 4

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    Clerk of the House of Representatives

    Legislative Resource Center

    B-106 Cannon Building

    Washington, DC 20515

    Secretary of the Senate

    Office of Public Records

    232 Hart Building

    Washington, DC 20510

    LOBBYING REPORT

    Lobbying Disclosure Act of 1995 (Section 5) - All Filers Are Required to Complete This Page

    1. Registrant Name Organization/Lobbying Firm Self Employed Individual

    2. Address Check if different than previously reported

    Address1 Address2

    City State Zip Code - Country

    3. Principal place of business (if different than line 2)

    City State Zip Code - Country

    4a. Contact Name b. Telephone NumberInternational Number

    c. E-mail 5. Senate ID#

    6. House ID#7. Client Name Self Check if client is a state or local government or instrumentality

    TYPE OF REPORT 8. Year Q1 (1/1 - 3/31) Q2 (4/1 - 6/30) Q3 (7/1-9/30) Q4 (10/1 - 12/31)

    9. Check if this filing amends a previously filed version of this report

    10. Check if this is a Termination Report Termination Date 11. No Lobbying Issue Activity

    INCOME OR EXPENSES - YOU MUST complete either Line 12 or Line 13

    12. Lobbying 13. Organizations

    INCOME EXPENSErelating to lobbying activities for this reporting periodwas: were:

    Less than $5,000

    $5,000 or more $

    relating to lobbying activities for this reporting peri

    Less than $5,000

    $5,000 or more $

    Provide a good faith estimate, rounded to the nearest $10,000,

    of all lobbying related income from the client (including all

    payments to the registrant by any other entity for lobbying

    activities on behalf of the client).

    14. REPORTINGaccounting method. See instructions for description of options.

    Check box to indicate expense

    Method A.

    Method B.

    Method C.

    Reporting amounts using LDA definitions only

    Reporting amounts under section 6033(b)(8) of the

    Internal Revenue CodeReporting amounts under section 162(e) of the Internal

    Revenue Code

    Signature Date

    Printed Name and Title

    v6.0.1f

    http://lobbyingdisclosure.house.gov http://www.senate.gov/lobby

    Page ______ of ___1 20

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    Registrant Client Name

    LOBBYING ACTIVITY. Select as many codes as necessary to reflect the general issue areas in which the registrant

    engaged in lobbying on behalf of the client during the reporting period. Using a separate page for each code, provide

    information as requested. Add additional page(s) as needed.

    15. General issue area code (one per page)16. Specific lobbying issues

    17. House(s) of Congress and Federal agencies Check if None

    18. Name of each individual who acted as a lobbyist in this issue area

    Covered Off icial Posit ion ( if applicable) NewFirst Name Last Name Suffix

    19. Interest of each foreign entity in the specific issues listed on line 16 above Check if None

    Printed Name and Title

    v6.0.1f

    Page ______ of ______2 20

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    ADDENDUM for General Lobbying Issue Area:

    Printed Name and Title

    v6.0.1f

    Page ______ of _____3 20

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    Registrant Client Name

    LOBBYING ACTIVITY. Select as many codes as necessary to reflect the general issue areas in which the registrant

    engaged in lobbying on behalf of the client during the reporting period. Using a separate page for each code, provide

    information as requested. Add additional page(s) as needed.

    15. General issue area code (one per page)16. Specific lobbying issues

    17. House(s) of Congress and Federal agencies Check if None

    18. Name of each individual who acted as a lobbyist in this issue area

    Covered Off icial Posit ion ( if applicable) NewFirst Name Last Name Suffix

    19. Interest of each foreign entity in the specific issues listed on line 16 above Check if None

    Printed Name and Title

    v6.0.1f

    Page ______ of ______4 20

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    Registrant Client Name

    ADDENDUM for General Lobbying Issue

    Name Covered Official Position (if applicable) New

    First Last Suffix

    Printed Name and Title

    v6.0.1f

    PFIZER, INC PFIZER, INC

    HCR - HEALTH ISSUES

    Ron Roberts

    Anthony J. Principi

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    Registrant Client Name

    LOBBYING ACTIVITY. Select as many codes as necessary to reflect the general issue areas in which the registrant

    engaged in lobbying on behalf of the client during the reporting period. Using a separate page for each code, provide

    information as requested. Add additional page(s) as needed.

    15. General issue area code (one per page)16. Specific lobbying issues

    17. House(s) of Congress and Federal agencies Check if None

    18. Name of each individual who acted as a lobbyist in this issue area

    Covered Off icial Posit ion ( if applicable) NewFirst Name Last Name Suffix

    19. Interest of each foreign entity in the specific issues listed on line 16 above Check if None

    Printed Name and Title

    v6.0.1f

    Page ______ of ______7 20

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    Registrant Client Name

    LOBBYING ACTIVITY. Select as many codes as necessary to reflect the general issue areas in which the registrant

    engaged in lobbying on behalf of the client during the reporting period. Using a separate page for each code, provide

    information as requested. Add additional page(s) as needed.

    15. General issue area code (one per page)16. Specific lobbying issues

    17. House(s) of Congress and Federal agencies Check if None

    18. Name of each individual who acted as a lobbyist in this issue area

    Covered Off icial Posit ion ( if applicable) NewFirst Name Last Name Suffix

    19. Interest of each foreign entity in the specific issues listed on line 16 above Check if None

    Printed Name and Title

    v6.0.1f

    Page ______ of ______8 20

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    ADDENDUM for General Lobbying Issue Area:

    Printed Name and Title

    v6.0.1f

    Page ______ of _____9 20

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    Registrant Client Name

    LOBBYING ACTIVITY. Select as many codes as necessary to reflect the general issue areas in which the registrant

    engaged in lobbying on behalf of the client during the reporting period. Using a separate page for each code, provide

    information as requested. Add additional page(s) as needed.

    15. General issue area code (one per page)16. Specific lobbying issues

    17. House(s) of Congress and Federal agencies Check if None

    18. Name of each individual who acted as a lobbyist in this issue area

    Covered Off icial Posit ion ( if applicable) NewFirst Name Last Name Suffix

    19. Interest of each foreign entity in the specific issues listed on line 16 above Check if None

    Printed Name and Title

    v6.0.1f

    Page ______ of ______10 20

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    ADDENDUM for General Lobbying Issue Area:

    Printed Name and Title

    v6.0.1f

    Page ______ of _____11 20

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    Registrant Client Name

    LOBBYING ACTIVITY. Select as many codes as necessary to reflect the general issue areas in which the registrant

    engaged in lobbying on behalf of the client during the reporting period. Using a separate page for each code, provide

    information as requested. Add additional page(s) as needed.

    15. General issue area code (one per page)16. Specific lobbying issues

    17. House(s) of Congress and Federal agencies Check if None

    18. Name of each individual who acted as a lobbyist in this issue area

    Covered Off icial Posit ion ( if applicable) NewFirst Name Last Name Suffix

    19. Interest of each foreign entity in the specific issues listed on line 16 above Check if None

    Printed Name and Title

    v6.0.1f

    Page ______ of ______12 20

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    ADDENDUM for General Lobbying Issue Area:

    Printed Name and Title

    v6.0.1f

    Page ______ of _____13 20

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    Registrant Client Name

    LOBBYING ACTIVITY. Select as many codes as necessary to reflect the general issue areas in which the registrant

    engaged in lobbying on behalf of the client during the reporting period. Using a separate page for each code, provide

    information as requested. Add additional page(s) as needed.

    15. General issue area code (one per page)16. Specific lobbying issues

    17. House(s) of Congress and Federal agencies Check if None

    18. Name of each individual who acted as a lobbyist in this issue area

    Covered Off icial Posit ion ( if applicable) NewFirst Name Last Name Suffix

    19. Interest of each foreign entity in the specific issues listed on line 16 above Check if None

    Printed Name and Title

    v6.0.1f

    Page ______ of ______14 20

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    ADDENDUM for General Lobbying Issue Area:

    Printed Name and Title

    v6.0.1f

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    Registrant Client Name

    LOBBYING ACTIVITY. Select as many codes as necessary to reflect the general issue areas in which the registrant

    engaged in lobbying on behalf of the client during the reporting period. Using a separate page for each code, provide

    information as requested. Add additional page(s) as needed.

    15. General issue area code (one per page)16. Specific lobbying issues

    17. House(s) of Congress and Federal agencies Check if None

    18. Name of each individual who acted as a lobbyist in this issue area

    Covered Off icial Posit ion ( if applicable) NewFirst Name Last Name Suffix

    19. Interest of each foreign entity in the specific issues listed on line 16 above Check if None

    Printed Name and Title

    v6.0.1f

    Page ______ of ______16 20

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    ADDENDUM for General Lobbying Issue Area:

    Printed Name and Title

    v6.0.1f

    Page ______ of _____18 20

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    Registrant Client Name

    LOBBYING ACTIVITY. Select as many codes as necessary to reflect the general issue areas in which the registrant

    engaged in lobbying on behalf of the client during the reporting period. Using a separate page for each code, provide

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    15. General issue area code (one per page)16. Specific lobbying issues

    17. House(s) of Congress and Federal agencies Check if None

    18. Name of each individual who acted as a lobbyist in this issue area

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    engaged in lobbying on behalf of the client during the reporting period. Using a separate page for each code, provide

    information as requested. Add additional page(s) as needed.

    15. General issue area code (one per page)16. Specific lobbying issues

    17. House(s) of Congress and Federal agencies Check if None

    18. Name of each individual who acted as a lobbyist in this issue area

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    Sets forth special rules for positron emission tomography drugs, including subjectingan applicant in an approved human drug application for a positron emissiontomography drug to one-sixth of the annual prescription drug establishment fee.

    Establishes the amount of revenue that fees are to generate for FY2008-FY2012.Requires that such fees be derived equally from fees related to human drug

    applications and supplements, prescription drug establishments, and prescription drugproducts. Sets forth provisions regarding adjustments to such fees.

    Authorizes appropriations for FY2008-FY2012.

    Exempts approved prescription drugs or licensed biological products designated for arare disease or condition (orphan drugs) from product and facility fees if certainrequirements are met, including having U.S. drug sales that fall below a certainamount.

    (Sec. 104) Requires the Secretary to assess and collect fees for advisory review ofproposed direct-to-consumer television advertisements of prescription drug products.Sets forth procedures for such review.

    Subjects each person that is assessed an advisory review fee to an operating reservefee. Establishes the amount of revenue that may be generated from such fees.Requires the Secretary to annually set the advisory review fee. Sets forth fee limits.

    Terminates the advisory review program if revenue falls below a certain threshold.

    Authorizes appropriations for FY2008-FY2012.

    (Sec. 105) Requires the Secretary to report on the progress of the Food and DrugAdministration (FDA) toward achieving goals related to expediting the drugdevelopment process and the process for the review of human drug applications.

    (Sec. 106) Terminates provisions related to prescription drug users fees and advisoryreview fees on October 1, 2012.

    Title II : Medical Device User Fee Amendments of 2007 - (Sec. 201) MedicalDevice User Fee Amendments of 2007 -Subtitle A: Fees Related to MedicalDevices - (Sec. 211) Defines terms relating to fees for medical devices, includingdefining "30-day notice" as a supplement to an approved premarket application orpremarket report that is limited to a request to make modifications to manufacturingprocedures or methods affecting the safety and effectiveness of the device.

    (Sec. 212) Makes changes to medical device fees, including establishing a fee for: (1)a 30-day notice; (2) a request for classification information; and (3) periodic reporting

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    for a class III device.

    Subjects each medical device establishment to a fee for each initial or annualregistration beginning with its registration for FY2008, except for establishmentsoperated by a state or federal governmental entity or an Indian tribe.

    Establishes the amount of revenue that may be generated from medical device fees.

    Makes changes to provisions related to qualifications for fee waivers for smallbusinesses.

    Authorizes appropriations for FY2008-FY2012.

    (Sec. 213) Sets forth reporting requirements, including requiring the Secretary toreport to the relevant congressional committees on the FDA's progress in achievingmedical device review goals.

    (Sec. 214) Requires the Secretary to consult with the relevant organizations,individuals, and industry in developing recommendations for meeting goals for theprocess for the review of medical devices applications for fiscal years after FY2012 andfor the reauthorization of provisions relating to device fees.

    (Sec. 215) Authorizes additional appropriations for FY2008-FY2012 to collect, developreview, and evaluate postmarket safety information on medical devices.

    (Sec. 216) Makes amendments made by this title effective on the date of enactment o

    this title, except that fees shall be assessed for all premarket applications, premarketreports, supplements, and premarket notifications submissions received on or afterOctober 1, 2007, regardless of such enactment date.

    (Sec. 217) Terminates amendments made by this title on October 1, 2012.

    Subtitle B: Amendments Regarding Regulation of Medical Devices - (Sec. 221)Extends the authority of accredited persons to review premarket reports for devicesand make recommendations to the Secretary regarding the initial classification ofdevices.

    (Sec. 222) Requires any establishment within a foreign country engaged in themanufacturing, propagation, compounding, or processing of a drug or device that isimported or offered for import into the United States to annually register with theSecretary.

    (Sec. 223) Requires registered device producers to annually report to the Secretarywith a list of new devices introduced by the registrant for commercial distribution,devices discontinued, a notice of resumption of processing of a device, and any

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    material change in information previously submitted.

    (Sec. 224) Requires registrations and listings to be submitted to the Secretaryelectronically unless the Secretary grants a waiver of such requirement.

    (Sec. 225) Directs the Comptroller General to study the appropriate use of the processrequiring registrants to report to the Secretary before introduction of a device into

    interstate commerce on the classification of the device.

    (Sec. 226) Requires the Secretary to promulgate regulations establishing a uniqueidentification system for medical devices.

    (Sec. 227) Makes changes to reporting requirements for devices that havemalfunctioned and would be likely to cause or contribute to a death or serious injury ifthe malfunction were to recur.

    (Sec. 228) Requires a person accredited to conduct inspections of device

    establishments to notify the Secretary within 30 days of any withdrawal, suspension,restriction, or expiration of certificate of conformance with the quality systems for anyinspected establishment. Sets forth conditions that a device establishment must meetto be eligible for inspections by accredited persons.

    (Sec. 229) Directs the Comptroller General to study and report on nosocomialinfections attributed to new and reused medical devices and the causes of suchinfections.

    Title II I: Pediatric Medical Device Safety and Improvement Act of 2007- (Sec.301) Pediatric Medical Device Safety and Improvement Act of 2007 - (Sec. 302)Requires applications for a humanitarian device exemption, an application forpremarket approval of a medical device, or a product development protocol for amedical device to include, if readily available: (1) a description of any pediatricsubpopulations that suffer from the disease or condition that the device is intended totreat, diagnose, or cure; and (2) the number of affected pediatric patients.

    Requires the Secretary to submit to the relevant congressional committees an annualreport that includes: (1) the number of devices approved in the preceding year for

    which there is a pediatric subpopulation that suffers from the disease; (2) the numberof approved devices labeled for use in pediatric patients; (3) the number of fee-exempt devices approved; and (4) the review time for each approved device.

    Authorizes the Secretary to conclude that adult data on medical devices may be usedto support a determination of a reasonable assurance of effectiveness in pediatricpopulations if the course of the disease or condition and the effects of the device aresufficiently similar in adults and pediatric patients.

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    (Sec. 303) Excludes a person granted a humanitarian device exemption from theprohibition against selling such a medical device for an amount that exceeds itsresearch and development, fabrication, and distribution costs if: (1) the device isintended to treat or diagnose a disease or condition that occurs in pediatric patients;(2) the device was not approved for pediatric patients prior to enactment of this Act;(3) the number of devices distributed does not exceed an annual distribution numberspecified by the Secretary; and (4) the request for exemption is submitted on orbefore October 1, 2013.

    Requires the Secretary to: (1) refer any adverse event report related to a device tothe Office of Pediatric Therapeutics for review; and (2) provide for an annual review bythe Pediatric Advisory Committee of all devices subject to the humanitarian deviceexemption to ensure that such exemption remains appropriate for the pediatricpopulation for which it is granted.

    Directs the Comptroller General to report on the impact of allowing persons granted ahumanitarian device exemption to profit from such a device.

    (Sec. 304) Requires the Director of National Institutes of Health (NIH) to designate acontact point to help innovators and physicians access funding for pediatric medicaldevice development.

    Requires the Commissioner of Food and Drugs to report to the relevant congressionalcommittees a plan for expanding pediatric medical device research and development.

    (Sec. 305) Requires the Secretary to award grants or contracts for demonstrationprojects to promote pediatric device development.

    Authorizes appropriations for FY2008-FY2012.

    (Sec. 306) Includes as a duty of the Office of Pediatric Therapeutics increasingpediatric access to medical devices.

    Expands the duties of the advisory committee on pediatric therapeutics to includeproviding advice and recommendations on matters relating to medical devices.

    (Sec. 307) Allows the Secretary to require: (1) postmarket surveillance as a conditionto approval or clearance of certain medical devices; (2) postmarket surveillance onclass II or class III medical devices that are indicated for, or have significant use in,pediatric populations; and (3) a prospective surveillance period of more than 36months for a device that is expected to have significant use in pediatric populations.

    Title IV: Pediatric Research Equity Act of 2007 - (Sec. 401) Pediatric ResearchEquity Act of 2007 - (Sec. 402) Requires an applicant seeking to defer submission ofsome or all pediatric assessments of the safety and effectiveness of a new drug or

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    biological product to submit to the Secretary a timeline for the completion of pediatricstudies. Sets forth annual reporting requirements for an applicant following theapproval of such a deferral.

    Requires an applicant seeking a full or partial waiver of pediatric assessmentsubmission requirements to submit to the Secretary documentation detailing why apediatric formulation cannot be developed.

    Authorizes the Secretary to require submission of a pediatric assessment if theSecretary finds that: (1) adequate pediatric labeling could confer a benefit on pediatricpatients; or (2) the absence of adequate pediatric labeling could pose a risk (currentlysignificant risk) to pediatric patients.

    Directs the Secretary to utilize an internal committee to consult with reviewingdivisions on: (1) all pediatric plans and assessments prior to approval of an applicationor supplement for which a pediatric assessment is required; and (2) all deferral andwaiver requests granted.

    Requires the Secretary to track and make publicly available information related topediatric assessments, including: (1) the number of assessments conducted; (2) thespecific drugs and biological products and uses assessed; (3) the number of deferralsrequested and granted; and (4) the labeling changes made as a result of suchassessments.

    Considers a supplement to any new drug or biological license application proposing alabeling change as a result of any pediatric assessments to be a priority application orsupplement. Sets forth dispute resolution procedures if the Commissioner and the

    sponsor are unable to reach agreement on appropriate labeling changes for such drug

    Requires the Secretary to: (1) order the label of a product to include information abouthe results of the assessment and a statement that a pediatric assessment does ordoes not demonstrate that the drug is safe and effective in pediatric populations; (2)make publicly available the pharmacology reviews of pediatric assessments; (3)require the sponsors of the assessments that result in labeling changes to distributesuch information to physicians and other heath care providers; and (4) ensure that alladverse event reports that have been received for a drug are referred to the Office ofPediatric Therapeutic for review.

    Requires the Secretary to contract with the Institute of Medicine to study and report toCongress regarding the pediatric studies and the labeling changes made as a result ofsuch studies.

    (Sec. 403) Requires the Comptroller General to submit a report to Congress thataddresses the effectiveness of FFDCA pediatric research provisions in ensuring thatmedicines used by children are tested and properly labeled.

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    Title V: Best Pharmaceuticals for Children Act of 2007 - (Sec. 501) BestPharmaceuticals for Children Act of 2007 - (Sec. 502) Amends the Federal Food, Drugand Cosmetic Act to revise provisions regarding market exclusivity for pediatric drugstudies on new or already approved drugs, including to: (1) change the definition of"pediatric studies" to authorize the Secretary to include preclinical studies; (2) requirethat the studies are completed using appropriate formulations for each age group forwhich such a study is requested; (3) require that appropriate labeling changes aremade within a time frame requested by the Secretary; and (4) prohibit the Secretary

    from extending the period of market exclusivity later than one year prior to theexpiration of the period.

    Requires an applicant or holder that does not agree to the request for a pediatric studto submit to the Secretary the reasons such pediatric formulations cannot bedeveloped. Requires an applicant or holder that agrees to such a request to providethe Secretary with all postmarket adverse event reports regarding the drug.

    Extends to 180 days (currently, 90 days) the period the Secretary has to accept orreject reports on pediatric studies and notify the sponsor or holder.

    Directs the Secretary to: (1) publish a notice identifying any drug for which a pediatricformulation was developed, studied, and found to be safe and effective in the pediatricpopulation if the pediatric formulation is not introduced onto the market within oneyear after the determination regarding market exclusivity; (2) establish an internalcommittee to review all written requests for pediatric studies issued; (3) track andmake publicly available information on the pediatric studies conducted; (4) order thelabeling of a product to include information about the results of the study and astatement that a pediatric study does or does not demonstrate that the drug is safe

    and effective in pediatric populations; and (5) ensure that all adverse event reportsthat have been received for a drug are referred to the Office of Pediatric Therapeutics.

    Sets forth actions for the Secretary to take if pediatric studies have not beencompleted and there is a continuing need for information relating to the use of thedrug in the pediatric population.

    Requires the Secretary to contract with the Institute of Medicine to study and report toCongress regarding written requests for pediatric studies made and the studiesconducted.

    Requires the Secretary, acting through the Director of NIH, to: (1) develop and publisa priority list of needs in pediatric therapeutics, including drugs or indications thatneed study; and (2) study and report to Congress on the feasibility of establishing acompilation of information on pediatric drug use.

    Authorizes appropriations.

    Includes activities relating to the support of studies of drugs on pediatric populations

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    within the process for the review of human drug applications.

    Authorizes the Foundation for the National Institutes of Health to solicit and acceptgifts, grants, and other donations, establish accounts, and invest and expend funds insupport of activities relating to studies on the Secretary's priority list of needs inpediatric therapeutics.

    Amends the Best Pharmaceuticals for Children Act to require the advisory committeeon pediatric therapeutics to continue to operate for five years after enactment of thisAct. Requires the Pediatric Subcommittee of the Oncologic Drugs Advisory Committeeto: (1) provide recommendations to the internal committee that reviews pediatricresearch requests with respect to the treatment of pediatric cancer; and (2) continueto operate for five years after enactment of this Act. Sets forth reporting requirements

    Directs that the proposed rule issued by the Commissioner entitled "Toll-Free Numberfor Reporting Adverse Events on Labeling for Human Drug Products" take effect onJanuary 1, 2008, unless the final rule is issued before such date.

    Title VI: Reagan-Udall Foundation - (Sec. 601) Establishes the Reagan-UdallFoundation for the Food and Drug Administration as a nonprofit corporation to advancthe mission of the FDA to modernize medical, veterinary, food, food ingredient, andcosmetic product development, accelerate innovation, and enhance product safety.Requires the Foundation to: (1) identify unmet needs in the development,manufacture, and evaluation of the safety and effectiveness of such products; (2)establish goals and priorities; (3) identify federal research and development programsand minimize duplication; (4) award grants to scientists and entities to efficiently andeffectively advance such goals and priorities; and (5) provide objective clinical and

    scientific information to the FDA and other federal agencies.

    (Sec. 602) Requires the Secretary to establish an Office of the Chief Scientist to: (1)oversee, coordinate, and ensure quality and regulatory focus of FDA intramuralresearch programs; (2) track and coordinate intramural research awards made byeach FDA center or science-based office; (3) develop and advocate for a budget tosupport intramural research; (4) develop a peer review process by which intramuralresearch can be evaluated; and (5) identify and solicit intramural research proposalsfrom across the FDA.

    (Sec. 603) Requires the Secretary, acting through the Commissioner, to enter intoCritical Path Public-Private Partnerships with eligible entities to implement the CriticalPath Initiative of FDA by developing research, education, and outreach projects tofoster medical product innovation, accelerate medical product development, andenhance medical product safety.

    Authorizes appropriations for FY2008-FY2012.

    Title VII : Conflicts of Interest - (Sec. 701) Directs the Secretary, through the Offic

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    risk evaluation and mitigation strategy and a postmarket study or clinical trial shouldbe required.

    Requires a person to submit a risk evaluation and mitigation strategy as part of theapplication if determined necessary to ensure that the benefits of the drug involvedoutweigh the risks. Sets forth factors the Secretary must consider in making such adetermination.

    Requires a proposed risk evaluation and management strategy to include a timetablefor assessment of the strategy. Allows the Secretary to require such a strategy toinclude additional elements, including: (1) distribution to each patient of a MedicationGuide and a patient package insert; (2) a communication plan to health careproviders; and (3) restrictions on distribution.

    Requires the elements of a risk evaluation and mitigation strategy to becommensurate with a specific serious risk listed in the labeling of the drug.

    Establishes the Drug Safety Oversight Board.

    Authorizes the Secretary to: (1) require the submission of any televisionadvertisement for a drug for review before dissemination; (2) recommend but notrequire changes in such advertisements; and (3) require inclusion in advertisements ocertain disclosures about a serious risk listed in the labeling of the drug.

    Requires the Secretary to establish a permanent advisory committee to advise theSecretary on a report to Congress on direct-to-consumer advertising and its ability tocommunicate to subsets of the general population.

    (Sec. 902) Deems to be misbranded a drug: (1) subject to an approved risk evaluatioand mitigation strategy if the responsible person fails to comply with the strategy'srequirements; or (2) if the responsible person is in violation of a requirement relatingto postmarket studies and clinical trials or labeling.

    (Sec. 903) Authorizes the Secretary to withdraw or suspend the approval of a newdrug application without first ordering the applicant to submit an assessment of theapproved risk evaluation and mitigation strategy.

    (Sec. 904) Directs the Commissioner to report to Congress on how best tocommunicate to the public the risks and benefits of new drugs and the role of the riskevaluation and mitigation strategy in assessing such risks and benefits.

    (Sec. 905) Requires the Secretary to establish public-private partnerships to developtools and methods to enable the Secretary and others to use available electronicdatabases to create a robust surveillance system that will support active surveillanceon important drug safety questions.

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    Authorizes appropriations for FY2008-FY2012.

    Requires the Comptroller General to evaluate data confidentiality and security issuesrelating to collection, transmission, and maintenance of data for the surveillancesystem under this Act and make recommendations to relevant congressionalcommittees regarding the need for any additional legislative or regulatory actions toensure confidentiality and security.

    (Sec. 907) Deems a drug or device to be misbranded if a direct-to-consumeradvertisement does not include a specified statement related to reporting adverseeffects.

    (Sec. 908) Requires the Secretary, acting through the Commissioner, to issueguidance for the conduct of clinical trials with respect to antibiotic drugs.

    (Sec. 909) Prohibits the introduction into interstate commerce of any food to which

    has been added an approved drug, a licensed biological product, or certain other drugor biological products unless: (1) such drug or biological product was marketed in foodprior to approval, licensure, or clinical investigation; or (2) the Secretary has issued aregulation approving the addition of such drug or biological product to food.

    (Sec. 910) Requires the Secretary to: (1) develop standards to secure the prescriptiondrug distribution system against counterfeit, diverted, subpotent, substandard,adulterated, misbranded, or expired drugs; (2) prioritize and develop standards for theidentification, validation, authentication, and tracking of prescription drugs; and (3)expand the Office of Regulatory Affairs of the FDA to protect the prescription drug

    distribution system.

    (Sec. 911) Directs the Commissioner to convene a public meeting regarding whichserious and life threatening infectious diseases potentially qualify for available grantsand contracts under the Orphan Drug Act or other incentives for development.

    Amends the Orphan Drug Act to reauthorize appropriations for grants and contracts todefray the costs of: (1) qualified testing expenses incurred in connection with thedevelopment of drugs for rare diseases and conditions, (2) developing medical devicesfor rare diseases or conditions, and (3) developing medical foods for rare diseases or

    conditions.

    Authorizes appropriations for FY2008-FY2012 for grants under the Orphan Drug Act.

    (Sec. 912) Prohibits the Secretary from delaying approval of an application on thebasis of a citizen petition unless the Secretary determines that a delay is necessary toprotect the public health and provides the applicant with a written explanation of thereasons for the delay.

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    (Sec. 913) Authorizes additional appropriations for FY2008-FY2012 for carrying outthis title.

    (Sec. 914) Makes this title effective 180 days after enactment. Deems alreadyapproved drugs to have an approved risk evaluation and mitigation strategy ifspecified restrictions on distribution or use are in effect, but requires the holder ofsuch an approved drug application to submit a proposed risk evaluation and mitigationstrategy within 180 days.

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    EXHIBIT 6

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    More than $6.8 million of the $14.4 million the pharmaceutical and health product industry gave in contributions went tomembers of three committees that regulate the industry: the House Committee on Energy and Commerce, House Committeeon Ways and Means, and Senate Committee on Health, Education, and Labor.

    As in previous years, the trade group PhRMA led the drug industry in lobbying, spending close to $23 million in 2007, a 26percent jump over 2006. Among drug companies, Amgen Inc., a biomedical firm based in Thousand Oaks, California, led byspending more than $16.2 million, and Pfizer, the world's largest pharmaceutical company, notched second with $13.8 million.Other big spenders last year included Roche Holding AG ($9 million), Sanofi-Aventis ($8.4 million), GlaxoSmithKline ($8.2million), Johnson & Johnson Inc. ($7.7 million) and the trade group Biotechnology Industry Organization ($7.2 million).

    The Industry Agenda

    Lobbying disclosure reports f iled with Congress reveal that pharmaceutical interests lobbied on an array of issues. Among theindustry's top achievements:

    blocking the importation of inexpensive drugs from other countries;protecting pharmaceutical patents both within the United States and abroad; andensuring greater market access for pharmaceutical companies in international free trade agreements.

    Apart from these subjects, which have become "bread and butter" issues for the industry in recent years, lobbyists focused ona handful of legislation. One such law they pushed forcefully was the reauthorization and expansion of the State Children'sHealth Insurance Program, or SCHIP, a federal plan that provides insurance to children. "They lobbied very hard for SCHIP,"says analyst Loss. "More children insured means using more drugs." The industry had pressed to reauthorize the program forfive years and expand it to cover an additional 4 million children at a cost of $35 billion in new funding. In a rare defeat for the

    industry, the measures were vetoed by President Bush, who in December extended the current program for 18 months.

    The industry had better luck with two other laws it lobbied robustly to extend, the Prescription Drug User Fee Act and the BestPharmaceuticals for Children Act. Both were reauthorized in the Food and Drug Administration Amendment Act of 2007, whichbecame law last September. The User Fee Act was enacted in 1992 in response to complaints from drug companies andpatients rights advocates about long lags in drug approval. It allows the FDA to collect funds so-called "user fees" fromthe industry to employ additional drug reviewers and bring medicines faster to the market.

    The law's supporters point out that, since it was enacted, the average drug review time has considerably shortened. "In myopinion, that law has worked very well," says Washington Analysis's Loss. A September 2002 study by the U.S. GeneralAccounting Office (now the Government Accountability Office) stated that "the median approval time for new drug applicationsfor standard drugs dropped from 27 months to 14 months" from 1993 to 2001.

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    But critics contend that the emphasis on fasterapproval time has resulted in a watering down ofsafety issues. The same GAO study also foundthat "a higher percentage of drugs has beenwithdrawn from the market for safety-relatedreasons since PDUFA's enactment than prior tothe law's enactment." The FDA disagreed with thatconclusion, but critics argue that the User Fee Actcreates a built-in conflict-of-interest by making theFDA dependent on the industry it regulates forbudgetary resources. "The FDA should be"completely funded by the taxpayers," saysMelody Petersen, author of the book Our Daily

    Meds. "With the user fee, the FDA has two

    customers us and the drug industry."

    This much is clear: The FDA's reliance on userfees has increased markedly over the years, rising17-fold since 1993. According to the 2009 budgetrequest, the agency is slated to collect $628million in user fees, an increase of $79 millionfrom this year and more than a quarter of theagency's overall budget of $2.4 billion.

    Another lobbying target was extension of the BestPharmaceuticals for Children Act, a law designedto give the industry incentive for testing medicinesin children by granting additional patent protectionfor six months. According to the agency's website,labels of 148 drugs have been changed to includethe findings of pediatric tests. First enacted in1997, the law has allowed companies to reap

    windfall prof its while delaying the entry of low-cost generic drugs. A joint investigation by the Center and HDNet's Dan Rather

    Reportslast year found that half of the top 20 blockbuster drugs in 2006 were given six month extensions under this law.

    Included were drugs not usually associated with children's health, among them two top-selling anti-cholesterol drugs, Pf izer'sLipitor and Merck's Zocor, and Sanofi-Aventis's popular sleep inducer Ambien.

    Last year, some lawmakers tried to trim the windfall. Three Senate bills would have capped the additional time given to protect acompany's patent, depending on how lucrative the drug was. Drugs projected to earn more than $1 billion per year would getthree months not six of market exclusivity. The Senate passed one of these bills, but the House took no action on it. Whenanother bill did clear both houses, the industry managed to get the exclusivity provision reauthorized without significant changes,just as it had with the User Fee legislation.

    Drug companies also fought to keep Congress from limiting advertising aimed directly at the public. Consumers are hit with adaily barrage of ads for prescription drugs, targeting every condition from depression to erectile dysfunction. Industry spendingon these so-called direct-to-consumer ads has jumped more than 20-fold in the past decade, helping push prescription drugsales to a record $286.5 billion last year, according to IMS Health, a consulting firm. Consumer groups have long complainedthat the ads have led to widespread over-prescribing of drugs.

    Last June, Representative Pete Stark, an industry critic, tried to reign in the direct ads, but ran into the pharmaceutical industry'spowerful lobby. The law he introduced, the Fair Balance Prescription Drug Advertisement Act of 2007, never came out ofcommittee. The industry argued that the ads help inform patients of potential diseases and encourage people to seek treatmentat an early stage. But critics were not appeased. "All you have to do is watch the ads," says author Petersen. "I t is not abouteducating the public. It is about selling drugs."

    Michael Pel l, Tuan Le and Mary Beth Lombardo contributed to the story.

    Funding for this report was provided by the Nathan Cummings Foundation.

    http://projects.publicintegrity.org/rx/report.aspx?

    11/13/2008

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    Salon.com

    November 20, 2007 Tuesday

    Corporate profiteering against Iraq vets?

    BYLINE: Mark Benjamin

    SECTION: FEATURE

    LENGTH: 1496 words

    HIGHLIGHT: Bush's nominee to head the Department of Veterans Affairs is the second to come from a private

    company that rakes in millions from VA contracts.

    President Bush late last month nominated retired Lt. Gen. James Peake to be the next secretary of the Department

    of Veterans Affairs. It is not an inconsequential wartime post: The department is the second-largest government agency

    after the Defense Department. And the VA faces the awesome responsibility of caring for several generations of

    veterans, including the crush of American service members back from Iraq and Afghanistan.

    On paper, Peake seems qualified. Wounded twice in Vietnam, he retired in 2004 from his post as Army surgeon

    general, the Army's top medical officer, with 40 years of experience in the field of military medicine.

    But Bush plucked Peake directly from a private company that has raked in hundreds of millions of dollars from

    contracts with the VA -- and Peake himself helped develop proposals for the company to contract with the VA. That has

    raised questions about conflict of interest, potentially pitting veterans' care against corporate profits. Moreover, if he is

    confirmed, Peake will be the second head of the VA under the Bush administration to come from that same private

    contractor, QTC Management Inc.

    Observers say QTC Management has performed high-quality work, and its former president, who also headed the

    VA under Bush, withstood past scrutiny by congressional investigators. But ever since Dick Cheney left Halliburton to

    become vice president, Bush administration critics have sounded the alarm about war profiteering seeping into the heart

    of the U.S. government. The changing leadership at the VA represents a little-known turn of the revolving door between

    contractors and the Bush administration. Veterans' advocates also worry that Peake's nomination suggests the White

    House may be interested in privatizing veterans' healthcare to an unhealthy degree.

    The Veterans Affairs Department runs more than a thousand hospitals and outpatient clinics to care for veterans,

    including the influx of hundreds of thousands of veterans who served in Iraq and Afghanistan and are now out of the

    military and want to see a VA doctor.

    Those veterans also seek disability checks as remuneration for their service-related ills. Every year the VA hands

    out over $40 billion in checks to veterans as compensation for everything from missing limbs to post-traumatic stress

    disorder.

    Page 1

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    When a veteran first applies for that compensation, a doctor conducts a physical to help determine how much

    money he or she deserves. Historically, VA doctors do most of those examinations. But increasingly they are being

    performed by QTC Management, the for-profit contractor that employed Peake as its chief operating officer from 2006

    until now.

    The company has a virtual lock on the expanding business of performing the physicals on veterans, which helpdetermine how much they should get in disability checks from the VA. The company first started conducting the

    examinations in the late 1990s, part of a smaller effort to help the department alleviate a backlog of veterans awaiting

    benefits. This year the VA will farm out 100,000 to 150,000 of these examinations to QTC Management, according to

    the company's chairman. A 2005 report from the VA's inspector general says the company charges around $590 for

    each exam, making the contracts worth at least $88 million this year alone.

    The first VA chief selected by Bush to come directly from QTC Management was Anthony Principi, then

    president of the company, who served as VA secretary from 2001 until 2005. During those years, the company

    reportedly hauled in hundreds of millions of dollars conducting examinations for the VA.

    And now Principi is back at QTC Management again, serving as chairman of the board. (Before returning to

    QTC Management after serving at the VA, Principi did a stint at pharmaceutical giant Pfizer and was a commissioneron a panel studying the closure of military bases.)

    That the revolving door has come full circle in Principi's case deepens suspicions among veterans' advocates. "It is

    a little bit troublesome that a company may be a farm team for the VA," said Paul Rieckhoff, executive director of Iraq

    and Afghanistan Veterans of America. "I want to know why [Peake] and Principi both came from there," Rieckoff said.

    "I want to know how directly they are involved in VA contracts."

    Rieckoff also wondered: "If you are bringing people from the private sector, is that because you feel they are going

    to bring a greater level of efficiency -- or is it because you want to move toward privatizing care?"

    When a veteran walks in the door to see a doctor, the focus should be on the veteran and not the bottom line, said

    Paul Sullivan, executive director of Veterans for Common Sense, who until March 2006 was a project manager at the

    VA in charge of data on returning veterans. "The veteran absolutely must come first, and with QTC, profits come firstand that is wrong," said Sullivan. "We do not want a Blackwater getting anywhere near our veterans," he said, referring

    to the notorious private security firm that operated with no clear accountability in Iraq.

    In a telephone interview with Salon, Principi, the former VA secretary and current QTC chairman, argued that the

    company is not providing healthcare, since the medical examinations conducted by his company help determine how

    much each veteran should get in disability payments. "I am personally and philosophically opposed to the privatization

    of VA healthcare," he told Salon. "QTC does no treatment," he said. "We do a medical disability evaluation. I

    distinguish that from the treatment and the care that VA provides."

    And Principi said he has gone to great lengths to minimize any perception of a conflict of interest in going from

    the company to the VA and then back again. He said he recused himself from any issues involving QTC Management

    while he was in charge of the VA. And although government ethics rules say he is allowed to contact the VA on

    business one year after leaving the government, Principi said he continues to steer clear. "I try to avoid an appearanceof a conflict of interest. I have not stepped foot inside the VA on business-related matters since I was secretary," he said.

    "I have not engaged in any lobbying phone calls. I have not directly or indirectly tried to be involved in that."

    Principi said Peake, the former Army surgeon general, also did not engage in direct lobbying of the government to

    bring in cash for the company. However, Peake did help the company develop proposals to do work for the VA,

    Principi acknowledged. "Jim would have the team work on the proposal and make sure it was a good proposal and make

    sure all the i's were dotted and the t's were crossed, and that the technical proposal looked good, and it read well, and the

    pricing was good," Principi explained. "He didn't go lobby the VA or anything." (QTC Management may have had

    Page 2Corporate profiteering against Iraq vets? Salon.com November 20, 2007 Tuesday

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    that ground covered without Peake: Disclosure records show QTC Management paid Jefferson Consulting Group, a

    lobbying firm, $20,000 in 2003.)

    Principi's behavior has been above board, according to a 2006 congressional investigation. In April 2006, the Los

    Angeles Times reported that the company collected $246 million from the VA while Principi was secretary, and that the

    company's contracts with the VA could eventually be worth $1 billion. The House Committee on Government Reformsubsequently launched an investigation. California Rep. Henry Waxman, then the committee's ranking member, wrote

    the VA on June 9, 2006, that he was "satisfied that Secretary Principi's actions were proper and ethical."

    And QTC Management has performed well, according to Joseph Violante, national legislative director of Disabled

    American Veterans. "According to our service officers out in the field, they feel that QTC does a much better job than

    VA," he said. "They do more thorough exams and they do them properly."

    But the cross-pollination between the company and the VA still creates the perception of a conflict of interest and

    raises questions about proper government oversight, said Dina Rasor, author of "Betraying Our Troops: The Destructive

    Results of Privatizing War." Rasor said veterans worried about privatizing VA healthcare probably do have something

    to fear, since all of the Blackwater contractors careening around Baghdad in SUVs are a testament to the Bush

    administration's zeal for privatization, even while oversight and accountability are lacking. "This administration, besidesthe cronyism, they have this ideologue thing that government is bad and privatization is good," she explained. "They

    take it to the absurd."

    Rieckhoff, the veterans' advocate, said Congress needs to take a very close look at the Peake nomination. Congress

    should make sure the contracting issues are kosher and that privatization of veterans' healthcare is not looming on the

    horizon. "Those are all legitimate questions," he said. "This is the part of his record that I think really needs to be

    explored during these Senate confirmation hearings."

    LOAD-DATE: November 21, 2007

    LANGUAGE: ENGLISH

    PUBLICATION-TYPE: Web Publication

    Copyright 2007 Salon.com, Inc.

    All Rights Reserved

    Page 3Corporate profiteering against Iraq vets? Salon.com November 20, 2007 Tuesday

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    EXHIBIT 8

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    Return to your last page

    VA was overbilled by firm, audit says

    By Walter F. Roche Jr.

    March 29, 2008

    The California company headed by former Veterans Affairs Secretary Anthony J. Principi overcharged the agency

    some $6 million under a long-term contract to conduct physical evaluations on veterans applying for disability

    benefits, an audit has found.

    The report, released Thursday, also questioned a proposal by the Department of Veterans Affairs to amend the

    contract with the company QTC Management Inc., based in Diamond Bar to charge higher rates than

    currently authorized.

    The contract clearly limits the base rate for these services, the 43-page report by the departments inspector

    generals office states.

    The audit also said the proposed amendment amounts to a major or cardinal change under federal contracting

    laws, which can trigger a requirement for a new bidding process.

    The report also found evidence that the VA may still be paying too much to the company for a variety of services on

    the multiyear contract.

    The audit was triggered by a call to a government hotline. It followed an internal review of QTCs billing practices and

    a review of the contract by a private firm for the VA.

    As a result, QTC already has agreed to repay about $3 million.

    But a company executive said Friday that QTC strongly disagrees with the new audits conclusion that it should

    repay roughly $3 million more.

    We just got the audit, and were still reviewing it, said Senior Vice President Marjie Shahani. Our initial review of

    the report shows that it has numerous errors and inaccuracies, and we strongly disagree with many of

    its conclusions.

    QTC was paid a total of $267 million by the VA from May 1, 2003, through April 30, 2007, the period covered bythe audit.

    The company remains under contract with the agency. And, because of good performance reviews, it is to get an

    additional year tacked on to the current agreement, pushing the end date to April 2009.

    The Times reported in 2006 that Principis firm had benefited from a series of contract awards and revisions to those

    awards by the department he once headed. The article noted that a congressionally mandated review of QTCs

    performance had found that the costs of the contract were much higher than expected and did not produce

    anticipated savings.

    National

    Page 1 of 3VA was overbilled by firm, audit says - Los Angeles Times

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    The VA never performed a follow-up to that study, though one was recommended by the private firm doing

    the review.

    Principi, in response to questions from The Times in 2006, said he took no actions relating to QTC while he served

    as VA secretary.

    Principi was the head of QTC when Bush named him to the top veterans post in 2001. He returned to the company

    four years later after stepping down from the Cabinet post. He now is chairman of the board.

    James B. Peake, a retired Army general who now heads the VA, also worked for QTC as an executive immediately

    prior to being named secretary last year. At his confirmation hearings, Peake said he would recuse himself from any

    matters involving QTC.

    Much of the inspector generals report focused on a discrepancy between the reimbursement rate for certain

    services called for in the contract and what QTC actually received.

    The audit said that contract specifically set the reimbursement at the same rates for those services set by the

    Medicare program in 1998.

    QTC incorrectly updated the Medicare rates to the (programs) current rates each year rather than bill at the 1998

    rates as stipulated in the contract, the audit said. The contract is not ambiguous.

    By not sticking to the 1998 rates, QTC was able to bill the VA an extra $2.6 million, according to the audit.

    The auditors, by reviewing records dating back to when the contract was awarded, concluded that QTC officials were

    fully aware that the payment rates for certain services were supposed to be frozen at 1998 figures.

    Nonetheless, QTC never complied with the terms of the contract, the report said.

    Under a prior contract, QTC had been allowed to raise rates annually.

    Although QTC officials contended that the VA knew about the higher billing rate and effectively approved it, the

    auditors said they did not find that contention credible.

    The reasons QTC offered for continuing to use current Medicare rates are not accurate, the report concluded.

    The audit noted that VA officials disagreed with some of the reports conclusions. Department officials also cited a

    ruling by its general counsel in early 2007 supporting the higher payments to QTC.

    A department spokesman nonetheless issued a written statement saying that the agency agreed with the

    audit findings.

    [email protected]

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    Back To Results Previous Article 9 of 9 Next Save this Article

    Former VA Chief Has Interest in Contract Company

    Los Angeles Times (LATWP News Service) (CA) - April 22, 2006

    Author:Walter F. Roche Jr. ;

    WASHINGTON - A Diamond Bar, Calif., company headed by former VeteransAffairs Secretary Anthony J. Principi could get fees exceeding $1 billion from theVeterans Administration, much of it on contracts approved and amended while he

    ran the government agency, records show.

    Principi was president of the medical services company, QTC Management Inc.,before joining the Bush Cabinet in 2001. He ran the VA for four years, then returnedto the company as chairman of the board.

    During his tenure as VA secretary, Principi 's past and future corporate home inDiamond Bar collected about $246 million in fees, according to VA records. AndCongressional Budget Office projections show the VA contracts could be worth asmuch as $1.2 billion to QTC if fully funded by Congress through 2008.

    Principi said he had no role in awarding, amending or administering VA contractswith QTC.

    "While at the VA, I had no contact with QTC on any business matter and recusedmyself entirely from any issues or business that QTC might have had with the VA,"Principi said in e-mail responses to written questions. He said he fully compliedwith federal ethics statutes barring contact with the VA following his departure fromthe agency.

    Citing the recent combat service of his two sons, Principi also said, "Caring forthese young men and women we send to war is the only thing that motivates mewhether I'm in public service or in any aspect of business, where their interests areat stake."

    Whether or to what extent Principi stands to benefit financially from QTC's successcould not be determined. The former VA secretary said he holds nonvested stock

    options in the company, but he did not specify the numbers of shares.

    As a VA contractor, Principi 's company administers medical exams to veteransapplying for disability assistance. It also examines soldiers before their dischargefrom military service. The results of the QTC exams play a substantial role insubsequent disability benefit determination decisions by the VA.

    While the VA is QTC's biggest customer, the company also does similar exams forother government agencies and private insurers.

    According to its Web site, QTC owns and operates 31 medical evaluation facilitiesaround the country and has produced "more than 2.5 million" medical exams andreports.

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    Principi , who was deputy VA Secretary and acting secretary under formerPresident Bush, also served as Republican chief counsel and staff director of theSenate Armed Services Committee a decade ago.

    Principi , graduated from the U.S. Naval Academy at Annapolis, Md., and is aveteran of the Vietnam War. He was a partner in the San Diego law firm of Luce,Forward, Hamilton and Scripps, according to his White House biography.

    In 1996 he was named chairman of a congressional task force to investigate

    veterans' problems. His panel produced recommendations that included astandardized, comprehensive physica