First on CNN: Trump’s Cabinet pick invested in company, then introduced a bill to help it
By Manu Raju, Senior Political Reporter
Updated
11:04 AM EST, Tue January 17, 2017
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.
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.
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.”
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.
Photos: In transition: President-elect Trump
President-elect Donald Trump shakes hands with Martin Luther King III after they met at Trump Tower in New York on Monday, January 16. Afterward, King said the meeting was "constructive" and that the two discussed the importance of voting accessibility. Trump didn't speak to the media about the meeting.
PHOTO:
DOMINICK REUTER/AFP/Getty Images
Photos: In transition: President-elect Trump
Trump speaks at Trump Tower in New York on Wednesday, January 11. In his first news conference since winning the election, a combative Trump made clear he will not mute his style when he is inaugurated on January 20. He lashed out at media and political foes alike.
PHOTO:
Spencer Platt/Getty Images
Photos: In transition: President-elect Trump
US Sen. Jeff Sessions, Trump's nominee for attorney general, is sworn in during his confirmation hearing in Washington on Tuesday, January 10. Trump and his transition team are in the process of filling high-level positions for the new administration.
PHOTO:
Chip Somodevilla/Getty Images
Photos: In transition: President-elect Trump
Jared Kushner, Trump's son-in-law, arrives on Capitol Hill for a meeting with House Speaker Paul Ryan on Monday, January 9. Kushner, a 35-year-old businessman-turned-political strategist, will be senior adviser to the president, a senior transition official told CNN.
PHOTO:
Cliff Owen/AP
Photos: In transition: President-elect Trump
Trump gets on an elevator after speaking with reporters at New York's Trump Tower on January 9.
PHOTO:
Evan Vucci/AP
Photos: In transition: President-elect Trump
Trump stands with Alibaba Executive Chairman Jack Ma, Asia's richest man, as they walk to speak with reporters at Trump Tower on January 9. Ma met with Trump to tease plans for creating "one million" jobs in the United States. Trump praised Ma after the meeting as a "great, great entrepreneur and one of the best in the world."
PHOTO:
Evan Vucci/AP
Photos: In transition: President-elect Trump
Trump stands with legendary boxing promoter Don King after meeting at Trump's Mar-a-Lago resort in Palm Beach, Florida, on Wednesday, December 28. Trump and King met to discuss the relationship between Israel and the United States.
PHOTO:
DON EMMERT/AFP/Getty Images
Photos: In transition: President-elect Trump
Trump attends a meeting with Steve Bannon, chief White House strategist and senior counselor, at his Mar-a-Lago resort on Wednesday, December 21. Trump spent the holidays in Mar-a-Lago.
PHOTO:
Andrew Harnik/AP
Photos: In transition: President-elect Trump
Trump spokeswoman Kellyanne Conway talks to the press in the lobby of Trump Tower in New York on Thursday, December 15. Conway, who was Trump's campaign manager, will work in his administration as "counselor to the president," it was announced on Thursday, December 22.
PHOTO:
Rex Features/AP
Photos: In transition: President-elect Trump
Trump meets with technology executives in New York on Wednesday, December 14. From left are Jeff Bezos, chief executive officer of Amazon; Larry Page, chief executive officer of Google's parent company Alphabet; Sheryl Sandberg, chief operating officer of Facebook; and Vice President-elect Mike Pence. The three main areas discussed were jobs, immigration and China, according to a source briefed on the meeting.
PHOTO:
Drew Angerer/Getty Images
Photos: In transition: President-elect Trump
Three of Trump's children -- from left, Donald Jr., Ivanka and Eric -- attend the meeting with tech leaders on December 14.
PHOTO:
Jabin Botsford/The Washington Post/Getty Images
Photos: In transition: President-elect Trump
Trump, Pence and House Speaker Paul Ryan wave during an event in West Allis, Wisconsin, on Tuesday, December 13. "He's like a fine wine," Trump said of Ryan at the rally, which was part of his "thank you" tour to states that helped him win the election. "Every day that goes by, I get to appreciate his genius more and more."
PHOTO:
Daniel Acker/Bloomberg/Getty Images
Photos: In transition: President-elect Trump
Trump and rapper Kanye West speak to the press after meeting at Trump Tower in New York on December 13. Trump called West a "good man" and told journalists that they have been "friends for a long time." West later tweeted that he met with Trump to discuss "multicultural issues."
PHOTO:
TIMOTHY A. CLARY/AFP/Getty Images
Photos: In transition: President-elect Trump
Trump selected former Texas Gov. Rick Perry, right, to be his nominee for energy secretary, which would make Perry the head of an agency he once suggested he would eliminate.
PHOTO:
Drew Angerer/Getty Images
Photos: In transition: President-elect Trump
Trump has tapped ExxonMobil CEO Rex Tillerson to serve as secretary of state, the transition team announced December 13. Tillerson, seen here at a conference in 2015, has no formal foreign-policy experience, but he has built close relationships with many world leaders by closing massive deals across Eurasia and the Middle East on behalf of the world's largest energy company.
PHOTO:
BEN STANSALL/AFP/Getty Images
Photos: In transition: President-elect Trump
Trump waves during the Army-Navy football game, which was played in Baltimore on Saturday, December 10.
PHOTO:
Andrew Harnik/AP
Photos: In transition: President-elect Trump
Betsy DeVos, Trump's pick for education secretary, speaks during an event in Grand Rapids, Michigan, on Friday, December 9.
PHOTO:
DON EMMERT/AFP/Getty Images
Photos: In transition: President-elect Trump
Trump shakes hands with Iowa Gov. Terry Branstad at an event in Des Moines, Iowa, on Thursday, December 8. Trump re-introduced Branstad as his pick for US ambassador to China.
PHOTO:
Jabin Botsford/The Washington Post/Getty Images
Photos: In transition: President-elect Trump
Trump greets retired Marine Gen. James Mattis at a rally in Fayetteville, North Carolina, on Tuesday, December 6. Trump said he would nominate Mattis as his defense secretary.
PHOTO:
Andrew Harnik/AP
Photos: In transition: President-elect Trump
Trump speaks to members of the media at Trump Tower in New York on December 6.
PHOTO:
Andrew Harnik/AP
Photos: In transition: President-elect Trump
Trump visits the Carrier air-conditioning company in Indianapolis on Thursday, December 1. Carrier announced that it had reached a deal with Trump and Vice President-elect Mike Pence, who is currently governor of Indiana, to keep about 1,000 of 1,400 jobs at its Indianapolis plant rather than move them to Mexico. The Carrier plant had been a theme of Trump's campaign promise to prevent more jobs from being outsourced to other countries.
PHOTO:
TIMOTHY A. CLARY/AFP/Getty Images
Photos: In transition: President-elect Trump
Trump and former Massachusetts Gov. Mitt Romney share a meal in New York on Tuesday, November 29. Romney was reportedly in the running for secretary of state.
PHOTO:
Drew Angerer/Getty Images
Photos: In transition: President-elect Trump
Trump waves to a crowd at The New York Times building after meeting with some of the newspaper's reporters, editors and columnists on Tuesday, November 22. Six takeaways from the meeting
PHOTO:
Mark Lennihan/AP
Photos: In transition: President-elect Trump
Trump is flanked by Pence and Romney after a meeting in Bedminster Township, New Jersey, on Saturday, November 19.
PHOTO:
Drew Angerer/Getty Images
Photos: In transition: President-elect Trump
"60 Minutes" correspondent Lesley Stahl interviews Trump and his family at his New York home on Friday, November 11. It was Trump's first television interview since the election.
PHOTO:
CBS/Getty Images
Photos: In transition: President-elect Trump
House Speaker Paul Ryan shows Trump and his wife, Melania, the Speaker's Balcony at the US Capitol on Thursday, November 10.
PHOTO:
Zach Gibson/Getty Images
Photos: In transition: President-elect Trump
Ryan listens as Trump speaks to the press at the US Capitol on November 10. Trump talked about his eagerness to join forces with Ryan to begin implementing new policies.
PHOTO:
NICHOLAS KAMM/AFP/Getty Images
Photos: In transition: President-elect Trump
Trump walks with his wife and Senate Majority Leader Mitch McConnell after a meeting at the US Capitol on November 10.
PHOTO:
Mark Wilson/Getty Images
Photos: In transition: President-elect Trump
Trump shakes hands with President Barack Obama following a meeting in the Oval Office on November 10. Obama told his successor that he wanted him to succeed and would do everything he could to ensure a smooth transition.
PHOTO:
Win McNamee/Getty Images
Photos: In transition: President-elect Trump
Trump delivers his acceptance speech during his election night event at the New York Hilton Midtown hotel on Wednesday, November 9.
PHOTO:
Chip Somodevilla/Getty Images
Noble, the ethics law expert, said Price’s motivations may have been pure, but the timing of the stock purchase raises eyebrows.
“When you join the government, you are held to a higher standard,” Noble said. “And you are supposed to work for the public and not for yourself.”
Senate Minority Leader Chuck Schumer, responding to the CNN story, called for an ethics investigation into Price.
“This new report makes clear that this isn’t just a couple of questionable trades, but rather a clear and troubling pattern of congressman Price trading stock and using his office to benefit the companies in which he is investing,” Schumer said in a statement. “The Office of Congressional Ethics needs to conduct an immediate and thorough investigation into these potential violations of the STOCK Act before Rep. Price’s nomination moves forward.”