The billionaire couple is quietly trying to reshape our schools, our criminal justice system and our health-care sector, and like other secretive billionaires, they cloak their influence in an elaborate web of grants to institutes, universities and other politically motivated charities. Think of the Koch brothers or George Soros before the world had heard of either.
But unlike Charles and David Koch, John Arnold didn’t make his money by building a major conglomerate that employs tens of thousands of people. No, like Soros, he made his fortune by betting other people’s money. Arnold is a former trader with Enron, the disgraced energy company that nearly crippled California’s electrical grid before its own spectacular collapse in 2001.
The quiet trading whiz made $750 million for Enron the year before its downfall by taking advantage of other investors. He amassed a sizeable fortune trading oil and gas futures during a turbulent stretch for energy markets, cracking the Forbes 400 back in 2007 as the country’s youngest billionaire. He made money being smarter than everyone else, not by creating jobs. He once made millions betting gas prices would spike after Hurricane Katrina.
Now, he and his Harvard- and Yale-educated wife, Laura, are applying that same arrogant, smarter-than-everyone-else attitude to their political activism, which they ridiculously cast as “philanthropy.” The Houston couple has given north of $830 million to hundreds of groups, according to page on the Laura and John Arnold Foundation website. Much of the money funds biased research that is eventually used to shape public-policy debates.
This week, the U.S. Senate Committee on Health, Education, Labor & Pensions will hold a hearing sponsored by the Arnolds to examine drug prices. Their sponsorship of the hearing has not been disclosed, of course. But a little sleuthing reveals they financed the report on which the session will focus, and the Arnold Foundation funds all three groups that provided witnesses – Patients for Affordable Drugs, a special section of the National Academies of Sciences that investigates drug costs and the Manhattan Institute for Policy Research.
Disclosures on the Arnold Foundation website show the group gave $3.8 million to the National Academies of Science, including more than $750,000 to study patients’ access to affordable medicine, and another $3.5 million to Bioethics International, a group that financed some of this research. The Arnolds also gave $500,000 to Patients for Affordable Drugs, an activist organization running a smear campaign against a number of prominent biopharmaceutical companies that have developed groundbreaking treatments to a range of serious health issues.
The paper includes a number of recommendations, most of which would risk patients’ access to the medicine they need. It’s a catch-all of bad ideas to stifle the market for innovation in favor of the kind of price caps and anti-competitive policies they could choke off the pipeline of new and existing medicine. Some of the academics behind the study list the Arnolds as their financial benefactors. But, if course, none of this is disclosed at the hearing. Can you imagine the outcry, if drug companies had stacked the deck so aggressively in their favor?
This hearing is just the tip of the iceberg. The Arnolds finance countless efforts to undermine the pharmaceutical industry. The couple has given nearly $20 million to the Institute for Clinical and Economic Review, otherwise known as ICER. The Boston-based “Institute” casts itself as an industry watchdog, but really just peddles misleading “reports” about drug companies. A number of well-regarded patient groups have questioned ICER assessments over the years. The Arnolds finance multiple crusades against the pharmaceutical industry, including one by Peter Bach who regularly writes biased screeds posing as objective news.
In fact, that might be the most troubling aspect of the Arnolds work to undercut drug companies – they most often finance projects, universities or groups that lend their bias an air of objectivity. Just consider the big checks they write to Kaiser Health News, an outlet that pretends to be objective. The Arnold Foundation gave Kaiser Health News more than $1.2 million from 2016 through 2018. That breaks down to about $400,000 a year, or roughly 8 percent of the KHN’s entire budget, according to tax filings by the Kaiser Foundation.
The donations raise doubts about the credibility of Kaiser Health News, given the Arnolds’ activism. Jay Hancock, a reporter for Kaiser Health News, wrote a piece in October with the headline, “Do Pharma’s Claims on Drug Prices Pass the Smell Test? We Found 5 Stinkers.” The “article,” if you can call it that, is undisguised advocacy, with plenty of its own howlers. I doubt many readers scrolled to the bottom of the piece to read the disclaimer: “KHN’s coverage of prescription drug development, costs and pricing is supported in part by the Laura and John Arnold Foundation.” And fewer still would know what that means.
The Arnolds don’t limit their clandestine advocacy to the health-care sector. They have spent hundreds of millions of dollars over the years trying to discredit teachers’ unions and unravel public pension programs. They have also tried to discredit science itself, funding a collection of rogue scholars devoted to dumping on their peers. They financed one project to criticize the U.S. Dietary Guidelines that was thoroughly discredited by other nutrition experts and an outspoken member of Congress.
Most of the projects the Arnolds finance aims to undermine others’ work. A quick review of the foundation website doesn’t turn up a lot of contributions to groups that want to eradicate crippling diseases or pull people out of poverty, but they are spending plenty of money on research or advocacy to undercut that work. John and Laura Arnold must have a real axe to bear to fund so much negativity. All this activity begs a simple question: Why would a billionaire who got his start with one of the most disreputable companies on the globe spend so much time and money discrediting the work of others?
The better question is: Why should we listen?