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The Nonprofit Grifters Who Want a Cut of the Coronavirus Bailout

After years of undermining health policy to aid their Big Pharma patrons, patient advocacy groups are making claims to federal pandemic relief.

Kerem Yucel/Getty Images

On April 14, a mask-wearing mother sat in the near-empty gallery of the Minnesota Legislature and prayed. Nicole Smith-Holt was there to advocate for the Alec Smith Emergency Insulin Act, named in honor of her son, who died three years ago at the age of 26 as a result of having to ration the costly medication he needed to live. The bill—which establishes safety nets for low-income diabetics at the expense of manufacturers—passed, punctuating a long and grueling battle for Smith-Holt and other volunteers who devoted hundreds of hours to the cause. While these activists had the public support of the global nonprofit T1International, they complained that they had received scant support from the diabetes organizations with the most muscle: the American Diabetes Association and the Juvenile Diabetes Research Foundation. “We did this without them,” Smith-Holt told The New Republic. “It was really frustrating to see, after years of service to the ADA,” added her colleague Quinn Nystrom.  

As Kaiser Health News has reported, the ADA takes in millions of dollars of funding from insulin manufacturers. Both the ADA and the JDRF, which also partners with pharmaceutical companies, have been criticized for their lackluster response to the insulin crisis and, in JDRF’s case, for prioritizing technological research at a time when one in four diabetics have admitted to cost-related skipping or underdosing.

For most Americans, large nonprofit patient advocacy organizations occupy a benign space in the health care universe, the hosts of celebrity benefits and races “for the cure.” But underneath the familiar public face of such groups, these kinds of conflicts and controversies are par for the course. In recent years, such groups have raked in more in donations from drugmakers than lobbyists have earned representing the industry, all while touting controversial treatments and stifling efforts to reform the drug industry. Moreover, according to a study conducted by the New England Journal of Medicine, conflicts of interest abound in this world: Of the 104 patient advocacy organizations the NEJM surveyed, “37 reported at least one current drug, device, or biotechnology company executive on [their] governing board.” Many have further blurred the line between charity and profit by adopting the moneymaking tactics of venture capitalists

Yet, as “nonprofits,” these groups pay no taxes. While their CEOs earn seven figures, many of their constituents struggle to afford basic treatments. It’s long been important for the public to understand the extent to which these groups have harmed the interests of patients, their families, and wider society. That mission seems all the more imperative now, as these organizations join the long line of suitors seeking a coronavirus bailout from the federal government. 

On May 4, the CEOs of five major patient organizations (the ADA, American Heart Association, Alzheimer’s Association, American Cancer Society, and American Lung Association) co-published an editorial in The Hill, in which they darkly warned about the widespread deaths of sick and disabled Americans nationwide if Congress refused to expand the CARES Act to provide their organizations with loan forgiveness and other benefits. Citing a significant decline in fundraising and other income, these executives claimed that the pandemic had compromised their ability to continue providing vital knowledge and resources to their constituents with the kind of preexisting medical conditions that put patients at an increased risk of developing serious or fatal complications from Covid-19.

In case dangling the lives of chronically ill Americans wasn’t persuasive enough, the authors went on to pin the entire nation’s welfare on their ability to get a turn sucking at the fiscal spigots: “How effectively the nation continues to combat Covid-19, and how quickly we recover from this unprecedented health and economic crisis, will depend on the ability of charitable organizations to provide critical services and support in communities nationwide.”

There are plenty of people who know better than to think these organizations will be the ones uplifting communities, and who oppose the notion that they deserve a share of limited coronavirus bailout funds. One reader of The Hill piece, a former lobbyist, dismissed the groups as “bleeding hearts,” so named for their superb “grifting” skills. Lauren Flanigan, a 39-year-old Marylander with stage 4 metastatic breast cancer, also scoffed at these groups’ claims. In an interview with The New Republic, Flanigan discussed how the American Cancer Society and the far more famous Susan G. Komen Foundation have done little more than “pimp narratives and images of sick individuals” for financial and political gain. She’d consider a bailout, she said, if she knew that those funds would be directed to help meet the basic needs of immune-compromised people hit hardest by the pandemic: the poor and unemployed, people of color, and undocumented workers. But these individuals, she notes, have never been the priority for organizations founded by white, middle-class advocates, which- are now largely driven by corporate interests.

Laura Marston, a 38-year-old Type 1 diabetic, does not want to see the ADA get a dime of bailout boodle. In response to the organization co-signing the piece in The Hill, the insulin activist from Washington, DC, tweeted, “How about ADA runs a GoFundMe? If they don’t make enough, they cease to exist. That’s the fate they lobby for American diabetics.” Marston was making an arch reference to the case of Shane Patrick Boyle, who died in 2017 after falling $50 short of crowdsourcing the money he needed to procure insulin. “What’s good for the goose is good for the gander,” Marston wrote.

In conversation with The New Republic, Marston privately elaborated that the organization tends to promote “red herring” and “Band-Aid” measures, which derail more effective reforms. As it happens, the ADA supports congressional bills to expand insurance coverage (as do drugmakers, of course) but not bills like HR-3, which would cap the price of insulin and other essential medications to the median in other leading nations. In response to headlines about dying diabetics, Marston noted that the group has repeatedly touted an older, cheaper version of insulin—one that hundreds of patients have died using and that was the subject of three attempted class-action suits, due to the harms experienced by those who used it.

Some wonder why this controversial insulin varietal is still on the market. The answer has much to do with the ADA, whose efforts to defend the product on behalf of manufacturers paved the way for today’s pricing crisis. The whole sordid saga only underscores the fact that the insulin hellscape that’s now claiming lives isn’t just one that patient advocacy organizations have refused to reform—it’s one they helped to create. And as they turn to venture philanthropy, nonprofits in other disease communities are similarly putting profits above people, with catastrophic consequences for the latter.

In the 1980s, the Indianapolis-based Eli Lilly introduced biosynthetic “human” insulin with the primary goal of gaining a global market. (As the Food and Drug Administration noted, human insulin offered no clinical benefit over existing, animal-sourced products; it was simply easier to mass-produce.) Thousands reported side effects ranging from irritability to loss of consciousness; some pursued legal action as a result. The ADA went out of its way to undermine these plaintiffs, deriding them as “emotional” and defending its benefactor’s flawed product. The organization failed to call upon the FDA to monitor adverse effects, even as children were being found dead in their beds. Eli Lilly went on to withdraw animal insulin from the market and wipe out many domestic producers around the globe, creating a market in which smaller manufacturers couldn’t compete and larger ones could price-gouge diabetics to the point of blindness, amputation, heart disease, kidney disease, nerve damage, or death. Several of these conditions have been identified as markers of mortality from Covid-19.

Today, patient groups routinely go to bat for costly and controversial treatments in order to protect their own investments, in addition to their donors’ financial interests. Adopting a business model devised by John D. Rockefeller III in the 1970s, groups invest in therapies for which they expect to receive a return in the form of royalties. The Cystic Fibrosis Foundation was the first to trot out this scheme. It invested $150 million in the development of a drug, Kalydeco, that debuted in 2012 at around $300,000 per year—an “unconscionable” price, according to disease experts. Some doctors questioned if Kalydeco even improved upon existing therapies, but the CFF recommended it without reservation. Two years later, CFF sold the rights to the drug to a venture capital firm for around $3 billion. This did not sit well with some cystic fibrosis patients who’d given a lot of time and money to the organization over the years, nor with Medicaid patients who couldn’t access the treatment.

Other advocacy groups who have become known for these strings-attached investment arrangements include the Michael J. Fox Foundation, the Multiple Myeloma Research Foundation, the National Multiple Sclerosis Society, and the previously mentioned JDRF, which went so far as to name a technology entrepreneur as its CEO in 2010 to oversee the organization’s “rebranding.” Founded to cure Type 1 diabetes, JDRF now primarily collaborates with the industry to develop expensive gadgets that only some diabetics can afford, while others are forced to ration, cross borders for medication, or go online to beg friends and strangers for their lives.

Many patients and their family members don’t know about these organizations’ vast conflicts of interest, as organizations go to great lengths to conceal them. Some patients, as a result, are blind to the malfeasance. Others, who find that they don’t necessarily have to worry about the expense of new therapies that benefit themselves or their families, are willing to look the other way. (For these, disease is, in the words of one critic, “the only form of oppression they’ve ever faced.”) Many more are easily entranced by these organizations’ narratives of overcoming obstacles, reflected in the activities—walking, biking, running, and extreme sports—that form their slim repertoire of fundraising ideas. There are also scores of patients desperate to believe in the just-around-the-corner cure that these organizations constantly promise to deliver.

Since their beginning, nonprofits have traded on the future, tapping into fantasies of life without disease. While they have helped some to edge closer to this life, they have held others back in profound ways, both by neglecting their needs and obstructing the efforts of those trying to improve disease experience for all. For this reason, large patient groups do not deserve a bailout, here in the teeth of a public health crisis which they, in many ways, have undermined our ability to fight. These organizations need to move to the back of the bailout line and let true do-gooders, who are embedded in communities canvassing for progressive ballot measures and collaborating with local and state legislators to improve access to life-saving treatments, get their share.

Members of Congress could best serve the public health needs of the nation by recognizing large nonprofits for the vultures that they often are and directing coronavirus aid to organizations that are not responsible for harming so much of the population. The federal government bears a special responsibility for divesting these big patient advocacy organizations of their power because it helped to create these monsters in the first place. In the 1980s, during the Reagan administration, Congress slashed funding for charitable organizations, trusting that corporations would pick up the slack. It was only a matter of time before patient advocacy groups became as profit-oriented as their new funders, ushering in the era of cause-related marketing—think pink ribbons—and venture-based advocacy.

As others have noted, the pandemic presents opportunities to rethink and rebuild our public health systems, even as it lays bare the gargantuan failures of the status quo. Universal health care and paid sick leave appear to be more imperative than ever, as does a culture of patient advocacy that puts people over profit. Now is not the time to be bailing out the organizations who spent decades grifting their way to tidy fortunes while serving as a drag on real, more widely shared progress.

[Disclosure: The author volunteers for T1International. She receives research assistance from Colleen Fuller, research associate with the Canadian Centre for Policy Alternatives.]