Robert Reich: White House/Big Pharma Deal Undermines Democracy

First, a little background.

The shocking news that there was a behind the scenes deal between the White House and the Pharmaceutical Industry that would prevent congress from implementing cost saving measure -- such as importing drugs from our neighbors to the North & allowing Medicare to negotiate for the cheapest available price -- was confirmed by New York Times last Thursday:

WASHINGTON — Pressed by industry lobbyists, White House officials on Wednesday assured drug makers that the administration stood by a behind-the-scenes deal to block any Congressional effort to extract cost savings from them beyond an agreed-upon $80 billion.

Drug industry lobbyists reacted with alarm this week to a House health care overhaul measure that would allow the government to negotiate drug prices and demand additional rebates from drug manufacturers.

In response, the industry successfully demanded that the White House explicitly acknowledge for the first time that it had committed to protect drug makers from bearing further costs in the overhaul. The Obama administration had never spelled out the details of the agreement.

“We were assured: ‘We need somebody to come in first. If you come in first, you will have a rock-solid deal,’ ” Billy Tauzin, the former Republican House member from Louisiana who now leads the pharmaceutical trade group, said Wednesday. “Who is ever going to go into a deal with the White House again if they don’t keep their word? You are just going to duke it out instead.”

A deputy White House chief of staff, Jim Messina, confirmed Mr. Tauzin’s account of the deal in an e-mail message on Wednesday night.

“The president encouraged this approach,” Mr. Messina wrote. “He wanted to bring all the parties to the table to discuss health insurance reform.”

The new attention to the agreement could prove embarrassing to the White House, which has sought to keep lobbyists at a distance, including by refusing to hire them to work in the administration.
It was also confirmed by the LA Times:
Reporting from Washington -- As a candidate for president, Barack Obama lambasted drug companies and the influence they wielded in Washington. He even ran a television ad targeting the industry's chief lobbyist, former Louisiana congressman Billy Tauzin, and the role Tauzin played in preventing Medicare from negotiating for lower drug prices.


If a package passes Congress, the pharmaceutical industry has pledged $80 billion in cost savings over 10 years to help pay for it. For his part, Tauzin said he had not only received the White House pledge to forswear Medicare drug price bargaining, but also a separate promise not to pursue another proposal Obama supported during the campaign: importing cheaper drugs from Canada or Europe. Both proposals could cost the industry billions, undermine its ability to develop new cures and, in the case of imports, possibly compromise safety, industry officials contend.

Much of the bargaining took place in July at a meeting in the Roosevelt Room, just off the Oval Office, a person familiar with the discussions said. In attendance were Tauzin, several industry chief executives -- including those from Abbott Laboratories, Merck and Pfizer -- White House Chief of Staff Rahm Emanuel and White House aides.

White House officials acknowledge discussing the importation question with Tauzin but had no comment on whether there was an agreement to block future Medicare price negotiations.
That was despite the fact that several Democratic Senators, Sherrod Brown, Max Baucus, Christopher Dodd, Kent Conrad & Republican Olympia Snowe, all said there wasn't any deal (via Ryan Grim at HuffPo):

Sen. Sherrod Brown (D-Ohio) asked two top White House aides, David Axelrod and deputy White House chief of staff Jim Messina, if the administration had cut such a deal with PhRMA.

"He says there's no deal. I take him at his word," Brown told the Huffington Post.


"Baucus said there was no deal and the White House said there was no deal," said Brown, referring to the reported deal to bar the government from negotiating for lower drug prices.

"It contradicts what Billy Tauzin said [the White House] told the drug makers, but Billy Tauzin has not always been all that straight with the truth," said Brown, referring to PhRMA's president, a former Republican congressman from Louisiana. Tauzin pushed through the original law that barred the government from negotiating for lower prices. Shortly thereafter, he left to lobby for the drug makers.


"It was one of those things that was a well-crafted answer," Sen. Chris Dodd (D-Conn.) told the Huffington Post. "I think they said there was no deal. It was about three paragraphs, at the end of which, [he said] there was no deal. But it took three paragraphs. Maybe there's an answer somewhere in those three paragraphs."


Majority Whip Dick Durbin (D-Ill.) said that a White House representative told the caucus that "as far as he is concerned, there is no deal." Durbin made his comments on Bloomberg TV, but said that Axelrod, not Messina, had been the one to say there was no deal. Both Axelrod and Messina met with the Democratic caucus.

Democrats, said Durbin, were therefore free to craft legislation that allowed the government to negotiate for lower drug prices. "He told us there was no agreement, not in that regard," Durbin said of drug-price negotiations.


Conrad said the Senate was "not necessarily" bound by any deals the White House cuts.


Even Sen. Olympia Snowe of Maine, a Republican member of the Gang of Six, thought the White House was too lenient in the deal outlined in the Times. "I think we could do more, frankly," she said. Asked if she was surprised by the deal's explicitness, she said, "Yes, I was, and secondly there wasn't enough."

And, the fact that House Dems said there wasn't any deal that they were privy, or "bound" too (via Time):

That puts the White House on the other side from House Democrats, who are trying to subject the drug industry to the kind of direct price negotiations with Medicare that Emanuel once championed. The White House also agreed, sources say, not to get behind a provision in the House bill that would eliminate a good deal the industry got from another provision in the Medicare prescription-drug program. The law shifted 6 million eligible beneficiaries from Medicaid — which pays lower prices for drugs — to the Medicare drug plan. In just the first two years of the program, that shift of beneficiaries from one program to the other produced an estimated $3.7 billion windfall for the industry, according to a report last year by the Democratic staff of the House Oversight and Government Reform Committee.

House Democrats are none too pleased by the White House pact with the drug industry. "We were never part of that deal. We are not bound by that deal," says Henry Waxman, chairman of the House Energy and Commerce Committee, one of three panels that wrote the House bill. "It was not particularly a deal I would have made."


Campaign For America's Future isn't pleased (from Sam Stein):

News that the White House may have tied its own hands when it comes to finding measures to pay for reform or generate savings came as an irritant for some in the progressive community.

"The irony about the deal, the thing that is so stunning, was this was the thing that Democrats isolated and criticized about the Bush prescription drug plan. It was the example of selling out to the drug companies," said Bob Borosage, co-director of Campaign For America's Future. "It was a pure lobby effort.... It is just unacceptable. [House Speaker Nancy] Pelosi has fortunately stated that she is not bound by any deals that are cut that were made with the White House. And this will be a test."


Oh, and remember these (h/t HuffPo)?:
Now flash back to April 2008, when the Obama campaign put out this ad, in which Obama held Tauzin up as an example of everything that was wrong with the game-playing in Washington.

Here are Obama's comments during a campaign speech in Newport News, Virginia on October 4, 2008 (skip to 23:00 for his comments):

That's just one campaign ad and one campiagn speech. Check out all the other videos HuffPo has compiled of speeches, debates, etc., where President Obama has taken on the very kinds of tactics used by Drug companies to prevent costs savings, choice and/or reform.

Well, enter Robert Reich, who,
like Frank Rich, is dead on when it comes to the kinds of things President Obama and his administration are doing that is the antithesis of what we elected them to do (via TPM).

I want universal health insurance. And having had a front-row seat in 1994 when Big Pharma and the rest of the health-industry complex went to battle against it, I can tell you first hand how big and effective the onslaught can be. So I appreciate Big Pharma’s support this time around, and I like it that the industry is doing the reverse of what it did last time, and airing ads to persuade the public of the rightness of the White House’s effort.

But I also care about democracy, and the deal between Big Pharma and the White House frankly worries me. It’s bad enough when industry lobbyists extract concessions from members of Congress, which happens all the time. But when an industry gets secret concessions out of the White House in return for a promise to lend the industry’s support to a key piece of legislation, we’re in big trouble. That’s called extortion: An industry is using its capacity to threaten or prevent legislation as a means of altering that legislation for its own benefit. And it’s doing so at the highest reaches of our government, in the office of the President.

When the industry support comes with an industry-sponsored ad campaign in favor of that legislation, the threat to democracy is even greater. Citizens end up paying for advertisements designed to persuade them that the legislation is in their interest. In this case, those payments come in the form of drug prices that will be higher than otherwise, stretching years into the future.

I don’t want to be puritanical about all this. Politics is a rough game in which means and ends often get mixed and melded. Perhaps the White House deal with Big Pharma is a necessary step to get anything resembling universal health insurance. But if that’s the case, our democracy is in terrible shape. How soon until big industries and their Washington lobbyists have become so politically powerful that secret WhiteHouse-industry deals like this are prerequisites to any important legislation? When will it become standard practice that such deals come with hundreds of millions of dollars of industry-sponsored TV advertising designed to persuade the public that the legislation is in the public’s interest? (Any Democrats and progressives who might be reading this should ask themselves how they’ll feel when a Republican White House cuts such deals to advance its own legislative priorities.)

We’re on a precarious road — and wherever it leads, it’s not toward democracy.


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