Tuesday, February 23, 2010

NPR: More Details on the Obama-PhRMA Back Room Deal

A while back we noted the possible connection between Billy Tauzin's departure as president of PhRMA and the deal the lobbying organization made with the Obama White House over health reform legislation:

Anyone wanting more details about this deal should check out the NPR Fresh Air story:

(Note: The NPR link has additional links to source materials)

Paul Blumenthal, a writer for a nonprofit open-government group, documented a series of meetings between Tauzin and major drug company CEOs, on one side, and Obama chief of staff Rahm Emanuel and his deputy Jim Messina on the other. They cut a deal with the following features:
  • PhRMA would pay for $150 million in ads favoring health reform (the ads appeared as sponsored by a coalition of organizations and PhRMA funding was not clearly labeled).
  • PhRMA would agree to back Obama's efforts overall, and also to forgo $80B in potential profits over the next decade to support reform.
  • Obama would eliminate from any final bill the cost-cutting measures PhRMA most feared-- allowing reimportations of cheaper drugs from canada, and using government mass purchasing power to negituiate lower prices.
  • The deal would be made around the draft bill being prepared by Max Baucus's Senate Finance Committee; the House committees and other Senate committees working on reform legislation were cut out.

The deal became public knowledge in the late summer when Tauzin started to fear that Obama might be pulling back, and leaked the deal to the press. That led the White House to admit the deal two days later. Blumenthal reconstructed who came to the meetings from the White House visitors log which the Obama administration, for the first time, has made public.

Blumenthal offered as his take on Tauzin's resignation that PhRMA was upset because it spent the $150M on ads and has no bill to show for it. He added that at present, PhRMA stands to make out like bandits if some type of health reform similar to the Senate bill becomes law. Millions more Americans will be insured and able to afford to buy their products, and to pay top dollar for the privilege. As we noted in a previous post, the drug firms have already jacked up their prices of brand-name drugs to the tune of a $100B increase over the next decade, effectively cancelling out the promised $80B price savings.

Bottom line-- if you're a political cynic and expect health reform to be done according to the age-old Washington formula, you're not surprised to see this particular brand of sausage being made. You can defend your cynicism by noting that at this point, health reform has come closer to passage under Obama's watch than it has in the past century, so he must be doing something right. If you were hoping that Obama would, as promised, change the way Washington does business, you have to be somewhat disappointed.

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