Obama gives powerful drug lobby a seat at healthcare table
By By Tom Hamburger
Aug 04, 2009 | 12:00 AM
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.
Since the election, Tauzin has morphed into the president's partner. He has been invited to the White House half a dozen times in recent months. There, he says, he eventually secured an agreement that the administration wouldn't try to overturn the very Medicare drug policy that Obama had criticized on the campaign trail.
"The White House blessed it," Tauzin said.
At the same time, Tauzin said the industry he represents was offering political and financial support for the president's healthcare initiative, a remarkable shift considering that drug companies vigorously opposed a national overhaul the last time it was proposed, when Bill Clinton was president.
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.
Yet everyone agrees that drug companies -- Washington's leading source of lobbyist money -- now have "a seat at the table" at the White House and on Capitol Hill as healthcare legislation works its way through Congress. If nothing else, a popular president who six months ago criticized drug companies for greed now praises their work on behalf of the public good.
"I think the pharmaceutical industry has been quite constructive in this debate," Obama told a small group of regional reporters last week. "And the savings that they've put on the table are real and significant and are appreciated."
The pharmaceutical industry's political transformation provides an example of Obama's approach to achieving his healthcare goals, which includes negotiation and compromise, even with those he and his allies have painted as a source of the problem.
The benefits to the White House go beyond budget savings. Tauzin's trade association, the Pharmaceutical Research and Manufacturers of America, or PhRMA, is helping to underwrite a multimillion-dollar TV advertising campaign touting comprehensive healthcare legislation.
One ad resurrects Harry and Louise, the fictional couple whose caustic kitchen-table comments in ads sponsored by the health insurance industry helped sink Clinton's plan in 1994. This time, with the drug companies paying the bill, Harry and Louise have changed their view.
"A little more cooperation, a little less politics, and we can get the job done this time," Louise says in the commercial, a joint project of PhRMA and Families USA, a health reform advocacy group with which the drug industry used to be at odds.
In an interview, Tauzin said he carefully negotiated his agreements with the White House, offering the $80-billion discount program in return for assurances that there would be no government price-setting in Medicare Part D, the drug program for seniors.
It was important, he said, to block the threat of Medicare price negotiations, which he called tantamount to price-setting and a threat to the industry. In addition, Tauzin said the industry asked the administration not to allow the import of cheaper drugs because of safety concerns.
Linda Douglass, a White House spokeswoman, said that when drug company executives brought up the import plan, they were told that the administration believed that health reform would reduce drug prices so significantly that the legislation once backed by Obama would "not be necessary."
It's far too early to tell whether the pharmaceutical industry's decision to back Obama's health initiative will pay off.
"Since Obama came into office, the drug industry has received everything it wants, domestic and foreign," said James Love, who leads an international nonprofit promoting low-cost distribution of drugs to fight the world's most devastating diseases.
"Yes, the drug companies are getting tremendous sweetheart deals" from Obama, said Lawrence Jacobs, a University of Minnesota political scientist who studies the history of health reform and other major social and economic changes. "But these bargains are the price of admission for achieving substantial reform."
Tauzin, a Democrat who helped found the conservative Blue Dog coalition in the House before switching to the Republican Party in 1995, was chairman of the House committee that helped shepherd Medicare drug legislation through Congress, including the provision that the government not interfere with price negotiations.
Tauzin said PhRMA's support for Obama's initiative represented no shift in the industry's basic philosophy.
"Our principles haven't changed, but we are looking at a different situation today," he said. "There's an opportunity now to get a health bill passed that doesn't provide for government control of healthcare. We are participating as fully as we can now because we see an economic and moral imperative to do something when so many millions of people don't have access to healthcare."
The prescription for PhRMA's partisan activities has changed recently along with the political landscape.
In 2005 and 2006, during Tauzin's first two years at PhRMA, just a third of the industry's $19.5 million in campaign donations went to Democrats. Tauzin came into the organization, he said, determined to make it more bipartisan and more generally appealing to the public.
This year, for the first time in two decades, Democrats have so far picked up more of the industry's campaign cash -- 54% -- than Republicans, according to the Center for Responsive Politics.
And PhRMA, a reliable backer of conservative candidates and causes in the past, has shifted allegiance in other ways, including joining labor leaders in a high-priced ad campaign to build grass-roots support for Obama's health plan.
Besides the new "Harry and Louise" ads, the industry is underwriting commercials that praise potentially vulnerable Democratic incumbents.
Other things haven't changed, including the industry's unrivaled investment in lobbying.
In just the last four months, the industry has spent $68 million on lobbying in Washington, assuring its continued standing atop the nation's lobbyist spending list.
Sen. Bernie Sanders (I-Vt.), a champion of importing drugs from Canada and reducing the cost of pharmaceuticals, professes continued suspicion of the industry, including its deals with the White House.
"The drug companies form the most powerful lobby in Washington," he said. "They never lose."