Obama's Secret Deal With The Drugmakers
Shrewd politics--or cynical ones? In today's NYT, David Kirkpatrick shines a light on the secret deal that the Obama White House made with the pharmaceutical industry to keep it at the table in health reform negotiations. It turns out that even as they were applauding their deal to find $80 billion in savings, they weren't telling us that there was a second arrangement:
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.”
Why is this significant? Because even as the apparent strategy has been to let Congress write a health reform bill, the White House deal limits the flexibility of lawmakers to wring savings from the drug industry. And that is something that Congress is not going to be happy about. Many there believe that drug costs cannot be brought under control unless the government is given the ability to negotiate prices, or import cheaper pharmaceuticals from Canada.:
The pressure from Mr. Tauzin to affirm the deal offers a window on the secretive and potentially risky game the Obama administration has played as it tries to line up support from industry groups typically hostile to government health care initiatives, even as their lobbyists pushed to influence the health measure for their benefit.
In an interview on Wednesday, Representative Raul M. Grijalva, the Arizona Democrat who is co-chairman of the House progressive caucus, called Mr. Tauzin's comments “disturbing.”
“We have all been focused on the debate in Congress, but perhaps the deal has already been cut,” Mr. Grijalva said. “That would put us in the untenable position of trying to scuttle it.”
He added: “It is a pivotal issue not just about health care. Are industry groups going to be the ones at the table who get the first big piece of the pie and we just fight over the crust?”
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1
Any means to get reform accomplished are acceptable...
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1.1
Really? ANY means?
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2
Shrewd politics can also be cynical - I imagine most shrewd politics revolves around cynicism anyway.
I second Matt and this leads to something which I have considered in relation to the stories about the WH not releasing details of the visitors etc. that flamed up about a couple of weeks ago. Perhaps they didn't release those details precisely because they wanted to do deals with the stakeholders (insurance co.s being one such stakeholder) which were necessary to get reform but whose existence would no doubt threaten the very possibility of reform. Basically, Obama and the WH have to keep many balls in the air at any one time until the deal is done.
whether this deal is good or not depends on the final bill that is enacted, if any.
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3
It depends on what your definition of "reform" is. There are many experts who believe that an important element would be negotiating prices with the drug industry. This forecloses that possibility.
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3.1
Greetings from Austin, Karen! It's HOT here.
(And, it's Thursday - No Feeding today.)
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While I'm very interested in the deal that's going to come out of Washington, I'm concerned that stories like Kirkpatrick's look too close into the sausage machine.
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Obama has shown that he can think 5 moves ahead. If there's another double-secret deal that trumps this agreement, then we're getting riled up over nothing.
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If this was a "secret" deal, I'd be more concerned about the motives of the leakers than the agreement itself. -
3.2
My goodness, let me make sure I got this straight. The definition of tricky, underhanded, secret cynicism is making a deal to keep one of your major opponents to reform, with virtually unlimited funds and a history of successfully killing reform in the past, out of the fight in exchange for a 80 billion dollar contribution and keeping the arrangements they already have with the government -- thanks to the GOP Medicare Prescription drug plan.
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My God how horrible, so what do we call, shilling for corporate lobbyists who take industry money to bus in paid rabble rousers to thwart the democratic process. And brag on their website that these corporate sponsored town hells are a display of grass roots anger, when you know full well they are brought to you by a guy whose been fined millions for defrauding patients.And what do we call those who privately fan a birther movement that you won't publicly support unless its fanning the flames of racial strife. Hmm and what do you call a media that refuses to write about any of those things, but couches everything that reformers to in a negative context.
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I know -- you call it a uniquely American response!
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4
"Reform" is, I agree, a difficult term. Wouldn't most people see "reform" as being one that enables them to get health insurance notwithstanding pre-existing conditions etc., minimising or eliminating instances of recscission, and bringing healthcare inflation down.
The "deal" is only for 10 years and has a specific dollar amount currently of $80 billion. KT, is it the case that the bills currently out there ascribe a different (i.e. higher) dollar amount of savings with respect to drug companies? or do they proceed on the basis of the $80 billion reduction? How does the CBO score it?
Pelosi has already indicated that she doesn't consider herself bound by any WH agreements. What do you think would happen if the WH reneges on this agreement in a finally enacted bill?
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5
I wonder if this part of the story would have been worth highlighting
"The drug industry trade group, the Pharmaceutical Research and Manufacturers of America, also opposes a public insurance plan. But its lobbyists acknowledge privately that they have no intention of fighting it, in part because their agreement with the White House provides them other safeguards."
This was as much about the insuance industry getting isolated and removing a block on the public option as it was about limitting the pharmaceutical industry to $80 Billion dollars in commitments.
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6
KT:
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The term "reform" is only "difficult" (meaningless on any given day) if one accepts the premise that the will of the American people can not or will not be done by this legislation or this government, i.e. "reform" = "whatever they end up doing".
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If proponents of reform could say:
."Under this plan, all people will be able to buy affordable comprehensive insurance that guarantees them their trusted doctor, and which cannot be taken away."
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, then there would be no ambiguity about the "definition" of "reform". At the moment, they can't say that, though.
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To that end ("affordable)", reducing the purchase price of pharmaceuticals via volume discount negotiations or imports may be a key component, without which the plan will obviously fail.
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Of course, if the plan isn't the one described above, and we have to use scare quotes around the word "reform", then "reformers" have already failed.-
6.1
Stuart,
What is the will of the people? It strikes me that it is extremely difficult to identify that at the moment.
I think proponents of reform are saying something quite like what you suggest. The question is whether the $80 billion is sufficient reduction, all things being equal, to achieve this goal.
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7
This forecloses that possibility.
Um, KT, it doesn't. The president, if forced by legislation to the contrary, can say "Sorry guys. Them's the breaks."
In fact, seems to me that Big Pharma leaking this breaks the deal. The only motive they would have for doing so is preventing an effective health care bill from reaching the floor.
Come to that, have they pulled their lobbyists off the case, in exchange for this secret agreement? Is Tauzin lobbying for passage of a public plan? Is he sending money to Bernie Sanders?
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8
The president, if forced by legislation to the contrary, can say "Sorry guys. Them's the breaks."
I'm trying to imagine him vetoing the legislation.
The article however makes it appear that pharma is actually throwing out advertising revenue in favor of the reform bills.....?
Count me among the officially confused.
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9
As I said above, the deal only lasts for 10 years. This is "foot in the door" legislation: better to get the whole foot in, but a big toe alone could just as easily push the door wide open.
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10
Dirks
This whole kabuki theater thing is making me a crazy. A good bill with a strong public option will easily pass. That's why the lobbyists' focus is on gutting the bill that will be voted on. Media coverage is complicit in the lobbyists' efforts.
Why? Revenue, I'd say. CNN killed a Media Matter ad buy, not just on CNN, but on local cable on other channels.
I don't watch the teevee much, but when I have had it on the news channels, Pharma seems to provide a lot of the ad buys.
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11
Slightly off topic but I just re-read Joe Klein's column after inauguration. The last para stood out:
"It would be nice to think the magnitude of the problems facing the nation would lead to a minimum of puerile contentiousness, but vile still seems to be the default position for some of Obama's noisier detractors — "Obama Flubs the Oath" was the inaccurate headline greeting the new President on the Drudge Report. Too many of us in the media remain reluctant "to set aside childish things." Happily, though, our new President seems to have an honest predilection for treating his opponents with respect. He seems intent on hearing their points of view and arguing, decorously, with them — that's why he accepted a dinner invitation at conservative columnist George Will's house. This is radical behavior in the village on the Potomac. It could force everyone to argue more carefully, to think twice before casting aspersions, to remember that the goal has to be more than temporal electoral victories — but, in this moment of peril, a better and stronger nation, a less ugly and dangerous world."
To the last sentence, I thought: "It could and it should, but it hasn't"
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12
An' 'ere I were, just yesterday, thinkin' tha' one way t' cut costs would be t' prohibit th' advertisin' o' prescription drugs on th' TV, so run-o'-th'-mill yahoos who be knowin' nothin' bout' drug interactions, chemistry, 'r anythin' else medical-related would just stop "Askin' yer doctor 'bout..." an' leave th' prescribin' up t' th' professional!
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Bu' then we'd be in th' sorry situation where drugs be prescribed as medical' needed, instead o' accordin' t' th' success o' th' marketin' campaign.
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An' we all be knowin' if we cut back on th' consumption o' prescription medications, th' pharmaceutical industry'd no' be 'appy.
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YARR! -
13
Thanks for doing your job, Karen. It truly is a rare pleasure to have a reporter working who actually does journalism instead of mindless college-freshman essays. Not many left like you, and (as I think I said before) almost all working for magazines now. I leave out the many good journalists who are bloggers, of course; As far as I know, few, if any, of them are "professionals".
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14
Does anyone else remember when Obama promised that there would be absolute transparency in health care reform?
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Instead, we not only get deals negotiated in secret, we aren't even told everything that has been negotiated away when the deals are announced.
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Obama seems to be handling this as if the health care parasites were a criminal enterprise, and the first member of the group who cracks gets the best "deal" from the prosecutors. The only difference is that there can be no "secret" parts of a deal when you're dealing with criminal defendants.
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The other thing is that this "$80 billion in savings" remains chimeral. There is no legislative or regulatory proposal detailing the mechanism by which this savings will be achieved... but one proposal doesn't represent the savings it purports to...
_“An estimated $30 billion will help pay for a new program that discounts brand-name drugs for senior citizens who fall into a gap in Medicare prescription drug coverage, commonly known as the "doughnut hole," a White House official said. That new program—offering brand-name drugs at half price—could create new business for the industry while also providing seniors with price breaks.
“Under the deal, these seniors can buy brand-name drugs at 50% off. http://online.wsj.com/article/SB124567211118336815.htm
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in other words, this is the equivalent of a 50% off coupon for a name brand product that is still more expensive than the equally effective "store brand" version. The "savings" are only achieved when you contribute to drug company profits.
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To give you some idea of how bad Obama's drug company deal is, consider this...
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the Congressional Budget Office projects that if drug manufacturers were required to give Medicare Part D plans the same rebates they give the Medicaid program, the federal government would save $110 billion over ten years—$30 billion more than PhRMA's offer with that single change.
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http://www.ourfuture.org/blog-entry/2009072702/drug-manufacturers-promise-80-billion-rx-savingsmdashbut-how-much-are-they-sav
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its glaringly obvious that Obama sold out the American people who need real health care reform in order to claim success as a "negotiator" with the drug company parasites.-
14.1
yes, you are right. Might as well give up on any reform now, and consign the next three and a half years to a futuristic dustbin.
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14.2
I advocate giving up on comprehensive health care reform now, and going at it again after the 2010 election with the Democrats running on a "medicare for all with a robust private option" platform.
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we can still achieve some stuff this year -- like increased regulation of insurance companies, allowing Medicare to negotiate drug prices (and get the same rebates Medicaid does), phasing out "Medicare advantage", and changing the way that Medicare reimbursement rates are calculated (put an independent agency in charge, rather than have them be subject to the whim of congress.)
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All of these proposals are easy to "sell" to the american people, and should not be held up until "comprehensive" reform can be achieved.
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We can also get a head start on Medicare for All by extending eligibility for medicare to those 55 and up -- and increasing medicare taxes accordingly.
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but at this point, any "single" reform bill is going to be a disaster.... its going to reform very little, won't be implemented for years, and will stop the momentum for real reform in its tracks.
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Of course, the alternative is to pass a bill that can be called "comprehensive reform" that makes Obama look good -- which some people think is all that is important in this discussion -
14.3
I have some sympathy with your approach, but what makes you think a more radical effort will succeed in 2010? If, as you say, Obama has sold you out, why won't he do so again? If he withdraws the whole thing now and starts again, the media will trumpet his failure to the high heavens and if dems in congress are not swayed by him now, they won't be after the media has taken him through the wringer.
FWIW, I don't think Obama succeeding is the be all and end all, but I will think that it is a crying shame that the man elected to bring about change is unable to do so, not through lack of trying on his part - or lack of bona fides - but because the people of your great country have let themselves down again.
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14.4
A more "radical" approach can work in 2011 if Democrats run on a specific health care platform in 2010, and then use that platform as the template for legislation.
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The reason why we're looking at mega-FAIL right now is that Obama put "everything" (except single payer) back on the table -- and gave parasite-dependent scum like Baucus and Reed control of the table. In 2010, we'll have a new table -- and a new baseline for negotiations.
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"Single payer" may still be impossible to pass in 2011, but what will pass in its stead will be a plan that will inevitably lead to a plan where basic health care needs are covered by the government ("single payer") with private insurance providing "enhanced" coverage. -
14.5
Pluk, I'm glad to see that people like you and others that would be considered (correct me if I'm wrong) left of center are willing to call out Obama when you feel like he has done wrong. Leaders are best kept honest, not by critics in the opposite party, but by the ones in their own. That's what the main problem was with the Republicans from 2000-2006.
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14.6
Th' way we be gettin' it done in 2010 be t' primary every f*ck*n' Democrat who be sellin' us out now, an' send 'em packin' in favor o' a new crop less likely t' be so tied t' th' purse strings o' th' special interest corporate groups!
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O' course, real campaign reform'd be helpin' too...so's those strings be no' established in th' first place. No more outside (o' th' State 'r District) fundraisin', an' cap corporate/PAC donations a' th' same total as individuals.
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I be wi' plukasiak on this one - th' legislation we'll be gettin'll be worthless t' us fer th' most part - better t' let it die than saddle ourselves wi' a' huge, long(er)-term debacle, li' wha' 'ppears t' be headin' our way now!
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Yarr!
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Before I get into posting Ulysses' worth of polling data, I'd like to commend KT as well for her superlative professional investment in this profoundly important issue.
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16
I must confess, I am not an expert in pharmaceuticals, but don't American companies lead the world in drug research etc.? If so, don't we want to make sure that we don't kill the goose?
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16.1
The top company is Swiss (Novartis), number 2 is a US company (Pfizer), followed by a German company (Bayer) and a UK company (GlaxoSmithKline)*
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Looks like socialized healthcare has killed any of the gooses, nice try, though.
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* http://en.wikipedia.org/wiki/Pharmaceutical_industry#Industry_revenues
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17
I don't want to under-estimate the problems faced by Congress and the White House in the current health care dog fight. But, from time to time, as I read about some slick move which includes the White House, Rahm and Axelrod, I wonder if the WH is "getting too clever by half".
My take: Nancy Pelosi has been pretty consistent about where she stands. The Blue Dogs and the WH? I'm seeing jive.
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17.1
The whole episode, with contending committees is a mess. I'm inclined to agree with you and pluk: the WH is working at several levels, and at least one of them is under the radar. Transparency has been an early casualty.
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18
i must confess, I am not an expert in pharmaceuticals, but don't American companies lead the world in drug research etc.?
That is indeed a topic that raises a lot of emotion but very little light. The amount of money it takes to bring a drug to market is indeed high and the amount of research that ends up not reaching market is also exceedingly high. So the research ends up being subsidized by gouge-worthy pricing on medicines that are protected by patents. Other countries are less generous in granting the monoply rights that those patents represent.
Whether you think this is fair or not seems to depend entirely on your political proclivity to declare corporate profits as reaonable or evil. In any event, it's an area where simply referring to 'market' forces is entirely inadequate to describe what's happening.
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18.1
PD - It be no feedin' Thursday!
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18.2
Get over it PW, I've got things to say, and some people think them worthy of response.
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18.3
It should also be noted that the 6th largest company in Europe is Fortis, an Insurance Provider (amongst other things).
So now that "public option will kill the private market" meme can be buried in a shallow unmarked grave next to "the pharmaceutical companies won't be able to afford to innovate".
And yes, I know its don't-feed-em-Thursday, but this was too easy and its a set of memes even rational folk seem to buy into too easily.
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19
I must confess, I am not an expert in pharmaceuticals, but don't American companies lead the world in drug research etc.? If so, don't we want to make sure that we don't kill the goose?
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most of the money for groundbreaking therapeutic drugs comes from the government and/or private organizations. The drug companies spend enormous sums reinventing the wheel, because that new wheel can be patented each time a small change is made.
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For instance, did you know that Oxycotin, Percodan, and Percocet are pretty much the same drug -- all are based on the same form of "synthetic" codeine called oxycodone (note the codeine/codone similarity). The only difference is that percocet is oxycodone with with Tylenol, percodan is oxycodone with aspirin, and oxycotin is oxycodone with an "inert" binder (that slows down absorbtion of the drug.)
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Drug combanies made billions on a drug first offered in 1916 by combining it with easily available other drugs, and selling it as a "brand name" patented product. That's how the industry works -- and its how the industry can afford to offer drugs at much lower prices in other countries.-
19.1
Avast, mateys!
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Remember, kbanginmotown instituted "No Feedin' Thursdays" just a few weeks ago!
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It be workin' great a' pr'vidin' a' least one mostly troll-free day 'ere in th' Swamp - so DON'T BE FEEDIN' T'DAY!
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ARRGH! -
19.2
Arrrg, Wenchy!
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Ye be gettin' my 'eartfelt t'anks fer beatin' the "No Feedin' T'ursdays" drum like I've been!
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Hopefully, we can get the Swamp t' come on board...
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20
Maybe KT or someone could weigh in on this. We certainly don't want to stop the development of new drugs that make people's lives better, whether or not the prices are "gouge-worthy". Are there ways to reduce the costs of getting drugs to market? Would tort-reform help drive down drug prices?
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20.1
"Would tort-reform help drive down drug prices?"
No, but it would allow pharmaceutical manufacturers to put many more drugs of dubious efficacy and severe side-effects on the market with little fear of consequences. Next question.
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Additionally, pluk, these same companies negotiate with Germany, France and Canada where prices are about 30% lower on average. The take here is really up in the stratosphere. All the talk about the high costs of developing advanced medications conveniently forgets the tax breaks, university and foundation funded research and the work done abroad. We cannot always claim to be the first in breakthroughs any longer.
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But sevenoaks07, that doesn't mean they can afford to do the same price here. If Germany will only pay X, then it may make sense for the drug cos. to sell to Germany at a per unit loss because there is still marginal profit for each sale.
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22.1
What??
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That's like saying we lose money on every sale but we make it up in volume.
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23
Spob: I think tort reform is worth looking into but we need to find accurate information on its impact on insurers rates. Insurers can easily release info if they choose to do so. For now tort reform comes across in the guise of a bogeyman,
I think the thrust of your point is worth pursuing: is there a way to collect info on drug and medical services pricing that can be tested for accuracy? I can't get around the fact that someone I know recently paid $4000 a day for a hospital stay.
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23.1
Tort suits do drive up the cost of providing medical care. It also helps drive better medicine.
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But really, should the makers of Vioxx have had to pay millions on those bogus claims?
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I appreciate the point you are making spob. My info is that these same companies are giving away stuff in Africa at low prices via the Gates /Buffet Foundation and others (Clinton's ?), So one could argue that we are subsiding the efforts of the great ad the good who operate in the "Third World". It's a mess.
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24.1
Thanks, KT.
You provide a necessary piece of the puzzle.I thought that the very idea of the drug companies supporting a public option and the government's "right" to negotiate prices was fishy. Do you remember the case when the government determined the price at which it would source the anthrax vaccine? The drug companies have not forgotten.
sevenoaks07:
" .. companies are giving away stuff in Africa at low prices via the Gates /Buffet Foundation and others .."
Indeed.The case of our capitalist America's (british-american) ruling elites (of the "manifest destiny" ilk) and our government (that would invade countries, torture and kill thousands and destroy civilizations in pursuit of resources) being "nice" to their eternal victims in the Third World should serve as a warning to tread gingerly. It is our of character, so to speak.
Note:
1) Those "low prices" you mention as coming from the western companies to the Africans are higher than those of generic drugs that would be available to the Africans.
{The western companies reap the windfal profits - and the coffers of western countries get the tax revenue. So why don't the African countries go for generic drugs, you may ask. Ever heard of "regime change"? Or searched deeper into the case of Patrice Lumumba? Or Idi Amin?}2) Resource-wise Africa is the wealthiest continent. De Beers, for instance, thrived in the midst of starving, landless, captive slave labor in Africa.
{Apartheid stand: Give the natives their land - and they will not work in the mines for slave wages less than needed to replace the calories they expend}
Nigeria, for instance, is among the top ten producers of crude oil, timber and rubber IN THE WORLD. So why isn't Nigeria producing its own drugs - generic drugs?
{ You read about the recent slaughter in Nigeria. What piece of the puzzle was missing? Within the decade, Africa region centered around Nigeria will replace the Middle East as the epicenter of the crusaders' torture and killings by western countries in search of resources. Read about the reach of the benign AFRICOM in nearly all African countries.}3) The USA and the European countries are against African countries producing their own drugs - including generic drugs.
{Do you remember Clinton raining bombs in Africa? He was on a spree of bombing pharmaceutical plants that threaten the plunder and profits of western drug companies in Africa. Indeed, he was in hot pursuit of WMDs just as Bush was in hot pursuit of same WMDs in Iraq.
And you may not be aware that Gore was on the forefront of stopping South Africa from getting assistance from Brazil to build plants to produce generic drugs for its ailing HIV/ADS sufferers. And many lives have thereby been lost, thanks to the kindly citizen Albert Gore, the darling of the European kith and kin who honor him.}4) In the mid-1960s, African countries like Uganda, Somalia and Sudan were stable(r), more prosperous and most of their people fed before the (now more virulent) USA/European countries moved back in as the new bosses. Now most, including Kenya, Uganda and Rwanda are basket cases with most of their citizens poor and starving..
{Not surprising: Haitians were poor before the USA moved in to control things and Haitians is even poorer now. So, what was the deal?
And President Mugabe who would wrest control of Zimbabwe's resources from foreign plunderers and place it in the hands of the locals is demonized by the enlightened foreigners like you and I. }We are duplicitous and evil, right?
What is new.
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25
I wasn't aware that any Vioxx claims were bogus. Nothing in my quick google results gives me any indication that they are either. Are we sure that you're not letting your own opinions pre-color the relevant facts?
http://www.google.com/hostednews/ap/article/ALeqM5iIn0BBOCcHEDUNEvcjfmMW-YgSeAD99RK98G0
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