TERRE HAUTE — While politicians and the news media focus on the fate of President Obama’s version of health care reform, a fascinating (and oh-so-revealing) historical element of the proposal begs for attention:
A veiled and very expensive negotiation process led to some extraordinary agreements between the White House and the pharmaceutical industry that were included in the final congressional versions of the overhaul.
The saga of how those agreements were reached is expertly laid out online by investigative reporter Paul Blumenthal of the Sunlight Foundation (sunlightfoundation.com). It ought to be mandatory reading for every American over the age of 16 who wants to know how national politics really gets done, no matter which party is in charge.
Blumenthal’s account of the cozy affair between the Obama administration and Big Pharma already has caught the attention of government transparency geeks – and it should force the left and right fringes to abandon any notions that Obama is an enemy of capitalism.
On Monday, as the president released his $950 billion health care reform proposal, Blumenthal recapped behind-the-scenes details of the affair for “Fresh Air” host Terry Gross on National Public Radio.
Blumenthal’s report begins with the 2009 inauguration of Barack Obama, who had promised as a candidate to reform the prescription drug industry and wrest Washington from the grubby mitts of multibillion-dollar lobbyists.
But as White House and congressional documents and a plethora of published reports by other journalists revealed to Blumenthal: “Over the following months, pharmaceutical industry lobbyists and executives met with top White House aides dozens of times to hammer out a deal that would secure industry support for the administration’s health care reform agenda in exchange for the White House abandoning key elements of the president’s promises to reform the pharmaceutical industry. They flooded Congress with campaign contributions, and hired dozens of former Capitol Hill insiders to push their case.”
“They” were led by Billy Tauzin, CEO of the nation’s most powerful lobbying organization for the drug industry, the Pharmaceutical Research and Manufacturers of America, or PhRMA.
Tauzin of Louisiana is a 25-year veteran of Congress and a one-man monument to the insignificance of party affiliation for success in Washington, D.C. He spent 15 years as a conservative House Democrat, then hopped over the aisle in mid-1995 to become a Republican.
He remained there until January 2005, using his position as chairman of the House Energy and Commerce Committee to shepherd the Medicare prescription drug bill to completion – and to the delight of the pharmaceutical industry.
With that bill, Americans not only got stuck with a substantial “donut hole” in drug benefits coverage, but they also lost the opportunity for Medicare to negotiate lower drug prices with the industry, for consumers to buy cheaper medicines from non-U.S. manufacturers, and for a shorter wait for expensive, brand-name drugs to become affordable generics.
Tauzin’s very next job? Head lobbyist for the grateful pharmaceutical industry, with a reported salary of $2 million a year.
According to Blumenthal’s research, Tauzin was a frequent but quiet visitor last year to the White House and to the office of its declared go-to health care guy in Congress, Sen. Max Baucus. So, too, were a small army of drug industry executives and other lobbyists.
“Over the course of 2009, the drug industry trade group spent over $28 million on in-house and hired lobbyists,” Blumenthal wrote. “Aside from PhRMA’s massive in-house lobbying operation, the trade group hired 48 outside lobbying firms. The total number of lobbyists working for PhRMA in 2009 reached 165.”
The truly stunning capper: “Some 137 of those 165 lobbyists representing PhRMA were former employees of either the legislative or executive branches.”
Not surprising, as Blumenthal reported, “Drug makers contributed huge sums to congressional campaign committees during the same period – from January to the end of October (fourth-quarter numbers are still being totaled), industry political action committees, employees and their family members flooded lawmakers with over $8 million.”
Really not surprising, “Those contributions tilted heavily to Democrats over Republicans by a 57 to 42 percent margin — the first time in any election cycle going back to 1990 …”
Blumenthal reproduces the many guest lists for the White House talks or those with Baucus or his staff. He provides context for the uncharacteristic public enthusiasm displayed by PhRMA for the administration’s drive for health care reform; Tauzin called it a once-in-a-lifetime opportunity for his industry and government to “make this hope for a better tomorrow a reality today.”
As Blumenthal observed: “This ‘once-in-a-lifetime’ opportunity also extended to the pharmaceutical industry’s ability to blunt the long-term Democratic agenda of lowering prescription drug prices through Medicare negotiations, re-importation [of foreign-made drugs] and quicker release of generics onto the market.”
Those agenda sacrifices are exactly what the drug industry received for alleged cost-cutting concessions of $80 billion.
One of the most distasteful elements of the insider maneuverings, however, falls directly on the Obama administration. After a meeting with White House and Baucus staff members, representatives of PhRMA, other health care groups and labor created a pair of pro-reform nonprofits that were bankrolled primarily by PhRMA.
Blumenthal reported: “The two groups spent $24 million on their advertising campaigns; the contract to produce and place ads went to White House Senior Advisor David Axelrod’s former firm, AKPD, which owed Axelrod $2 million.”
The irony, of course, is all that pharmaceutical industry money – more than $100 million on TV advertising, alone – bought little. Sweeping health care reform is, effectively, dead. The White House has crafted a hybrid version of the Senate and House bills and tossed it out to what most experts predict will be a futile, bipartisan health care summit Thursday.
Missing in Obama’s plan are some key previous agreements – the drug industry’s reprieve from being forced to shrink the donut hole and from Federal Trade Commission involvement in the slow, murky process of converting name-brand drugs into generics.
It would be fun to contemplate the karmic backfire from this unholy alliance of White House and Big Pharma if not for one overriding reality. The biggest losers in this story are not the makers of pharmaceuticals or the Obama administration; they are, once again, the U.S. health care consumer and a democracy free of the poison of Washington lobbyists.
Stephanie Salter can be reached at (812) 231-4229 or stephanie.salter@tribstar.com.
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