Industry to Government to Industry

The Revolving Door

As we approach the holidays and the post-sugar “flu”season, it reminded me of an article I previously posted called The Scam of Tamiflu. You can read it here. Among the many problems with the drug included its marginal effectiveness (it decreases flu symptoms by less than 2 days), viral resistance, and possibly the creation of aggressive “mutant” viruses—one would think there would be little interest in Tamiflu, which is still prescribed in 2024. But despite the apparent lack of value to most individuals, the drug has an interesting history.

Enter Donald Rumsfeld

Roche made colossal gains when Tamiflu was first approved in 1999. In fact, between March 2003 and December 2005, Roche’s stock rose from $78 per share to a whopping $208 per share. However, behind the apparent profits to the manufacturer is a paper trail that led directly back to the US government. One government official, in particular, was poised to personally gain from the billion-dollar purchases of Tamiflu stockpiled for the government and for the military.

Developed and patented by the California biotech firm Gilead Sciences, the world marketing rights to manufacture and distribute Tamiflu were signed over to Hoffmann-LaRoche (located in Switzerland) for a 10 percent royalty on every dose sold. That wasn’t such big news, but the fact that Donald Rumsfeld was the former Chairman of the Board of Gilead Sciences (1997 to 2001) was huge news. Rumsfeld was the Secretary of Defense under President Gerald Ford during the 1976 Swine flu epidemic and was Sec. Def. again from 2001 to 2006 under President George W. Bush and during the Bird Flu 2005 fiasco. Tamiflu was just what the government needed to “protect” the troops.

When Rumsfeld left Gilead’s board to become Secretary of Defense, the company’s stock price was around $7 per share. Beginning in March 2003, Gilead’s stock went from $35 to around $57 per share by the end of 2005 and continued to rise, partly due to the government’s purchase of $58 million worth of Tamiflu. An increase of $43 per share translated into tens of millions for Rumsfeld, as the owner of a Gilead stock and options – a hefty 720 percent profit windfall. Morningstar, Inc. reported that when bird flu rose to prominence during the summer of 2005, Rumsfeld considered selling all of his Gilead stock, but on the advice of his private securities lawyer, who refused to be identified, Rumsfeld was advised to keep the stock and make known to the public his “recusal” from avian flu decisions “to avoid being accused of a sale based on insider information.”

That was such a great spin, and it sounded like it came from a top New York PR firm. Curiously, the Secretary waited until October 26, 2005, before issuing an official press statement about his Gilead holdings, especially since this wasn’t the first time that Rummy (as his friends called him) had been on the inside track and made millions from drug company and defense deals as a government insider.

Donald Rumsfeld’s Pertinent Career Chronology

• 1954 - Graduated from Princeton University

• 1954 to 1957 - Navy pilot

• 1963 to 1969 - US Congressman for the state of Illinois

• 1973 to 1974 - US Representative to NATO

• 1975 to 1977 - Sec. of Defense under Pres. Gerald Ford (Swine flu) 

• 1977 to 1985 - Pres., CEO, then Chairman of Searle & Company. Navigated aspartame into foods; Negotiated Searle’s acquisition by Monsanto in 1985. 

• 1981 to 1989 - multiple positions on the Reagan Administration

• 1990 to 1993 - CEO of General Instrument - pioneered the development of the first all-digital high-definition television (HDTV) technology.

• 1997 to 2001- CEO and Chairman of Gilead Sciences, Tamiflu  

• 2001 to 2006 - Sec. of Defense under Pres. G.W. Bush (Bird flu, 9/11, and the war in Afghanistan)

• 2011 - published his memoir, Known and Unknown, detailing his career and his controversial role in the Iraq War.

• 2021 - Died, age 88, multiple myeloma

The Revolving Door

Reviewing his career chronology reveals that this story is a small part of Donald Rumsfeld’s life path, but his career exemplifies the story of hundreds of government appointees who gain insight while “severing” the government and then leave to capitalize on what they learned and who they shared meals while in Washington DC.

Here’s a short list of prominent individuals who moved from government roles to high-paying, prominent positions in industries they previously regulated, a practice often referred to as the "Revolving Door."

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Health and Pharmaceuticals:

Former FDA Commissioners

• Scott Gottlieb - joined the board of Pfizer and Illumina. He is a prominent consultant and advisor in the pharmaceutical and biotechnology sectors.

• Stephen Hahn - joined Flagship Pioneering, a biotech venture capital firm. Also became a professor at MD Anderson Cancer Center. He is also involved in biotechnology and pharmaceutical consulting.

• Robert Cardiff - senior advisor at Verily Life Sciences (Alphabet's health technology subsidiary) and Google Health.

• Janet Woodstock - oversaw various initiatives, including the FDA’s drug and vaccine regulatory work​. She has long-standing ties with the pharmaceutical industry, mainly through her role in drug approval and regulatory processes.

Former Health and Human Services (HHS) Directors

• Alex Azar - became Executive Vice President at drug company Eli Lilly

• Tom Price - involved in healthcare consulting and on boards for several health-related companies​

• Kathleen Sebelius - worked as an advisor to health-related companies and non-profits​

Former CDC Directors

• Julie Gerberding - became president of Merck Vaccines International.

• Tom Friedman - became the President and CEO of Resolve to Save Lives, an organization focused on preventing cardiovascular diseases and epidemics

• Robert Redfield - became involved with several healthcare-related boards and advisory roles and professor at the University of Maryland School of Medicine

Former U.S. Treasury Secretaries

• Henry Paulson - previously CEO of Goldman Sachs.

• Robert Rubin - later served as an executive at Citigroup.

• Timothy Geithner - became President of Warburg Pincus, a private equity firm.

• Larry Summers - consulted for major financial firms like Citigroup.

• Jack Lew - joined the private equity firm Lindsay Goldberg.

• Neel Kashkari - Former Treasury official involved in the TARP bailout; became President of the Minneapolis Federal Reserve and worked at PIMCO, a major investment firm.

Former U.S. Secretaries of Defense

• Dick Cheney - later CEO of Halliburton, a major defense contractor.

• William Perry - later involved with several defense-related companies.

• Mark Esper - previously a Raytheon lobbyist.

• James Mattis - joined the board of General Dynamics

• Robert Gates - later worked with several defense contractors as an advisor or board member.

Former U.S. Secretaries of Energy

• Rick Perry - joined the board of Energy Transfer Partners, a pipeline company and with various energy-related initiatives and advisory boards

• Gale Norton - Former Secretary of the Interior; later worked for Shell Oil.

Various positions at the EPA and what they did for Industry

• Andrew Wheeler - previously a coal industry lobbyist, focused on deregulation and rollbacks of environmental protections.

• Scott Pruitt - implemented significant regulatory rollbacks favoring the fossil fuel industry. Pruitt’s tenure prioritized deregulation and industry support over environmental protection and public health. He is now a consultant for energy companies.

• David Bernhardt - Former Secretary of the Interior; a lobbyist for oil and gas interests

• Nancy Beck - Leader of the Chemical Safety and Pollution Prevention Office at the EPA. Former a chemical industry lobbyist. Her tenure saw regulatory rollbacks on toxic chemicals under the Toxic Substances Control Act (TSCA), which critics argue weakened public safety standards​.

• David Dunlap - EPA's Deputy Assistant Administrator for Research and Development. Previously employed by Koch Industries, he was involved in decisions concerning chemical substances like PFAS linked to health hazards.​

• Jeffrey Sands - Senior agricultural adviser. He was granted ethics waivers because as a former lobbyist for Syngenta, a pesticide manufacturer.

• Dennis Lee Forsgren - Deputy Assistant Administrator in the EPA's water office, was an attorney for fossil fuel lobbying firm HBW Resources. Received waivers due to his previous work.

Former FCC Chairs and Commissioners

• Ajit Pai - worked for Verizon and later joined a private equity firm that invested in telecommunications.

• Meredith Attwell Baker - became a Comcast Executive after advocating for the Comcast-NBC merger.

• Tom Wheeler - continues to lead industry trade groups for cable and wireless companies.

• Julius Genachowski - later joined private equity firms focused on telecom investments.

Former Secretaries of Agriculture and Food Commissioners

• Ann Veneman - later served on the board of Nestlé.

• Tom Vilsack - later led the U.S. Dairy Export Council.

• Sonny Perdue - founded Perdue Partners LLC, a consulting firm focusing on agricultural business ventures.

• Mike Johanns - later joined a bank focused on agribusiness investments.

• Michael Taylor - later worked as a lawyer for Monsanto.

Lobbying and General Industry

• Billy Tauzin - Former congressman who helped shape Medicare Part D; became CEO of PhRMA, the pharmaceutical industry's trade group.

• Eric Cantor - Former House Majority Leader; joined Moelis & Co., an investment bank.

• Mick Mulvaney - Former OMB Director; after leaving government, founded a lobbying firm.

• John Boehner - Former Speaker of the House; became a lobbyist and board member for the cannabis industry.

In all these cases, their transition from public office back to industry roles they once regulated demonstrates how government officials move between the private and public sectors, maintaining significant influence over the industries they once managed. This movement often demonstrates conflicts of interest, as individuals may have insider knowledge or connections that give them an advantage in private industry. This phenomenon, often referred to as The Revolving Door, raises questions about conflicts of interest and regulatory capture.