Obama, Rival Join On Health

Drug Industry Supports Change, Gets Assurances

August 14, 2009|By Tom Hamburger | Tom Hamburger,Tribune Washington Bureau

WASHINGTON - -As a candidate for president, Barack Obama criticized drug companies and the influence they wield in Washington. He ran a TV ad targeting the industry's chief lobbyist, former Louisiana Rep. Billy Tauzin, and the role Tauzin played in preventing Medicare from negotiating lower drug prices.

Since the election, Tauzin has morphed into the president's partner. He has been invited to the White House a half-dozen times in recent months. There, he says, he secured an agreement that the administration would not try to overturn the Medicare drug policy that Obama had criticized.

At the same time, Tauzin says the industry he represents is offering political and financial support for the president's health care initiative, a remarkable shift considering that the drug companies vigorously opposed a national overhaul when Bill Clinton was president.

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

Much of the bargaining took place during a July meeting in the Roosevelt Room between Tauzin, industry CEOs - including those from Abbott Laboratories, Merck and Pfizer - Obama's 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 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 health care legislation works its way through Congress. And a president who six months ago blasted drug companies for greed now hails their work on behalf of the public good.

"I think the pharmaceutical industry has been quite constructive in this debate," Obama recently told reporters. "And the savings that they've put on the table are real and significant and are appreciated."

The drug industry's political transformation provides an example of Obama's approach to achieving his health care goals, which includes a willingness to negotiate and compromise, even with those he has 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, is helping to underwrite a multimillion-dollar TV ad campaign promoting comprehensive health care 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, 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.

Tauzin said he carefully negotiated 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 said is tantamount to price-setting and a threat to the industry. Tauzin said the industry also asked the administration not to allow the import of cheaper drugs from Canada and Europe 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 believes that health reform will reduce drug prices so significantly that the legislation once backed by Obama "will not be necessary."

"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 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. "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 says that PhRMA's support for Obama's initiative represents 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 health care. 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 health care."

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