First on CNN: Trump’s Cabinet pick invested in company, then introduced a bill to help it

Updated 11:04 AM EST, Tue January 17, 2017
WASHINGTON, DC - JANUARY 12:  U.S. House Budget Committee Chairman Rep. Tom Price (R-GA) addresses the second annual Conservative Policy Summit at the Heritage Foundation January 12, 2015 in Washington, DC. The theme for the summit this year is "Opportunity for All, Favoritism to None."  (Photo by Alex Wong/Getty Images)
Alex Wong/Getty Images
WASHINGTON, DC - JANUARY 12: U.S. House Budget Committee Chairman Rep. Tom Price (R-GA) addresses the second annual Conservative Policy Summit at the Heritage Foundation January 12, 2015 in Washington, DC. The theme for the summit this year is "Opportunity for All, Favoritism to None." (Photo by Alex Wong/Getty Images)
Now playing
01:56
Trump pick buys stocks, raises scrutiny
CNN
Now playing
02:36
The truth behind Covid-19 vaccines for sale on the dark web
CNN
Now playing
05:54
SE Cupp: What two politicians and a 'real' housewife have in common
Now playing
01:54
'You think I'm racist': Former Fox News host storms off camera
Korie Robertson and Willie Robertson of the reality series "Duck Dynasty" attend the Capitol File 58th Presidential Inauguration Reception at Fiola Mare on January 19, 2017 in Washington, DC.
Paul Morigi/Getty Images
Korie Robertson and Willie Robertson of the reality series "Duck Dynasty" attend the Capitol File 58th Presidential Inauguration Reception at Fiola Mare on January 19, 2017 in Washington, DC.
Now playing
01:46
'Duck Dynasty' stars discuss raising biracial son on new show
FOX/"The Masked Singer"
Now playing
01:24
Nick Cannon makes big splash in 'Masked Singer' return
The Drew Barrymore Show/YouTube
Now playing
01:26
'Mom' star speaks out about not having kids in real life
Heinz ketchup packets are shown in New York on Monday, August 22, 2005. H.J. Heinz Co., the world's biggest ketchup maker, said first-quarter profit fell 19 percent on expenses to cut jobs and sell businesses.  (Photo by Andrew Harrer/Bloomberg via Getty Images)
Andrew Harrer/Bloomberg/Getty Images
Heinz ketchup packets are shown in New York on Monday, August 22, 2005. H.J. Heinz Co., the world's biggest ketchup maker, said first-quarter profit fell 19 percent on expenses to cut jobs and sell businesses. (Photo by Andrew Harrer/Bloomberg via Getty Images)
Now playing
01:53
Restaurants face a nationwide ketchup packet shortage
Camerota Berman both
CNN
Camerota Berman both
Now playing
02:33
CNN anchor Alisyn Camerota gets surprise tribute from co-anchor
Citigroup Chairman Richard Parsons delivers remarks on the US economy at the New York State Bar Association meetings in New York, January 28, 2009. Troubled US banking giant Citigroup last week named Parsons as its new chairman, the longtime top executive at media giant Time Warner, to steer it through its most challenging period.  AFP PHOTO / Emmanuel Dunand (Photo credit should read EMMANUEL DUNAND/AFP via Getty Images)
EMMANUEL DUNAND/AFP/AFP via Getty Images
Citigroup Chairman Richard Parsons delivers remarks on the US economy at the New York State Bar Association meetings in New York, January 28, 2009. Troubled US banking giant Citigroup last week named Parsons as its new chairman, the longtime top executive at media giant Time Warner, to steer it through its most challenging period. AFP PHOTO / Emmanuel Dunand (Photo credit should read EMMANUEL DUNAND/AFP via Getty Images)
Now playing
02:47
Dick Parsons: Georgia law is a bald-faced attempt to suppress Black vote
Courtesy of Warner Bros. Picture
Now playing
02:54
'Godzilla vs. Kong' is a pandemic box office hit
Now playing
01:30
5 ways to cut your plastic waste
CNN/Getty Images
Now playing
04:40
Stelter: After elevating Gaetz, Fox News barely covering scandal
NASA/Goddard/University of Arizona
Now playing
01:08
See NASA spacecraft successfully land on an asteroid
Now playing
06:51
Alisyn Camerota's kids wish her good luck in new role on CNN
Now playing
05:27
Our video streaming habits impact the planet. Here's how

Story highlights

Trump HHS nominee bought shares in Zimmer Biomet and then introduced bill to help the company

Price has run into ethics problems ahead of his confirmation hearings

(CNN) —  

Rep. Tom Price last year purchased shares in a medical device manufacturer days before introducing legislation that would have directly benefited the company, raising new ethics concerns for President-elect Donald Trump’s nominee for Health and Human Services secretary.

Price bought between $1,001 to $15,000 worth of shares last March in Zimmer Biomet, according to House records reviewed by CNN.

Less than a week after the transaction, the Georgia Republican congressman introduced the HIP Act, legislation that would have delayed until 2018 a Centers for Medicare and Medicaid Services (CMS) regulation that industry analysts warned would significantly hurt Zimmer Biomet financially once fully implemented.

How Trump could use his executive power on Obamacare

Zimmer Biomet, one of the world’s leading manufacturers of knee and hip implants, was one of two companies that would have been hit the hardest by the new CMS regulation that directly impacts the payments for such procedures, according to press reports and congressional sources.

After Price offered his bill to provide Zimmer Biomet and other companies relief from the CMS regulation, the company’s political action committee donated to the congressman’s reelection campaign, records show.

If confirmed, Price will be a key player in Trump’s efforts to repeal the Affordable Care Act. Trump last week said a plan to repeal and replace Obamacare will be submitted “as soon as” Price is confirmed. He will appear before the Senate Health Committee this week, but must also appear before the Senate Finance Committee.

The new revelation is the latest example of Price trading stock in a healthcare firm at the same time as pursuing legislation that could impact a company’s share price. The issue has become a major liability for the congressman after The Wall Street Journal reported last month that he traded roughly $300,000 in shares over the past four years in health companies while pursuing legislation that could impact them.

The purchase of the Zimmer Biomet shares is the latest such example, raising new concerns among ethics experts that Price may have inappropriately used inside information while purchasing shares in a company. Concerns over insider trading on Capitol Hill – where members of Congress allegedly traded stock based on intelligence gleaned from the legislative process – prompted the enactment of the STOCK Act in 2012 aimed at combating the practice.

“It clearly has the appearance of using your influence as a congressman to your financial benefit,” Larry Noble, general counsel at the Campaign Legal Center, a watchdog group, said of Price’s transaction. “If he believed in the bill, he should not have purchased the stock.”

Phil Blando, a Price spokesman, did not initially respond directly to questions about the HHS nominee’s purchase of Zimmer Biomet shares, instead pointing to a broader review of Price’s holdings completed by the US Office of Government Ethics last week.

“Dr. Price takes his obligation to uphold the public trust very seriously,” Blando said. “The Office of Government Ethics has completed an exhaustive review of Dr. Price’s financial holdings and just as Dr. Price was compliant with congressional disclosure rules, Dr. Price will comply fully with the recommendations put forward by the ethics office.”

After CNN’s report published, Blando said: “Any effort to connect the introduction of Dr. Price’s legislation, co-sponsored with Democrats, to a campaign contribution is demonstrably false. Dr. Price is fully complying with the recommendations put forth by the Office of Government Ethics.”

Zimmer Biomet is included in a broker-directed account and that the stock was purchased without his knowledge, a Price aide said after the story published.

But CNN asked Price’s office before the story published if there was a broker involved in the transaction, and a representative for the congressman declined to say.

A Price aide claimed the congressman learned about the stock purchase on April 4, 2016 – a few weeks after the source said the financial adviser made the transaction. Price continued to hold about $2,000 worth of shares in the company, the source said, despite having introduced the bill that would have helped the firm just days earlier.

A spokesperson for Zimmer Biomet did not respond to an inquiry seeking comment.

01:51 - Source: CNN
Trump's HHS pick hates Obamacare

Price to divest

To avoid the appearance of conflicts-of-interest, Price announced last week that he would divest from 43 companies – including Zimmer Biomet – within 90 days of Senate confirmation. He said he will “not participate personally and substantially in any particular matter” on an issue that could affect any of those companies if he has not yet fully divested from them.

But as a congressman, Price did not appear to adhere to such strict limits, including with Zimmer Biomet. As one of the prominent GOP voices on health care, Price sat on an influential Ways and Means subcommittee that directly oversees health care policy.

And over the past year-and-a-half, Price raised objections to the CMS regulation that proposed major changes to how providers and manufacturers are paid and reimbursed for hip and knee implants through Medicare.

But medical device manufacturers, in particular, were poised to be hit the hardest by the new regulation, according to industry officials and congressional sources. And that posed a significant threat to Zimmer Biomet, which bills itself as a worldwide leader in hip and knee replacements. A report from trade publication Fierce Biotech last year said that the company’s hip and knee implants account for 60 percent of its revenue.

In September 2015, Price spearheaded a letter to Andy Slavitt, the acting administrator of CMS, asking that the regulation be delayed because it “represents a significant change to our healthcare delivery system which could have a negative impact on patient choice, access and quality.”

Campaign donation from company

Two days after the letter, Zimmer Biomet’s PAC cut Price’s reelection committee a check worth $1,000, according to campaign finance filings.

When CMS didn’t listen to Price, the congressman unveiled his legislation to delay implementing the regulation until 2018, with the bill coming days after investing in the company, whose shares were worth $103.59 at the time.

Three months after he introduced the bill, the company’s PAC cut Price’s campaign committee another $1,000 check, according to records.