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Inside the Administration’s Deal with the Pharmaceutical Lobby

Former Rep. Billy Tauzin, now CEO of PhRMA, talks with his congressional spokesman, Ken Johnson, in 2002. (Mark Wilson/Getty Images)Last August, the Los Angeles Times reported that a deal had been reached between the White House and the lobbying group Pharmaceutical Research and Manufacturers of America (PhRMA). The pharmaceutical industry promised to deliver $80 billion in cost savings and to run television ads supporting the health care reform effort. In exchange, the White House would prevent Medicare renegotiation of drug prices and the re-importation of drugs from abroad.

Now, in a methodically researched report drawing on public records and press accounts, the Sunlight Foundation has gone back and forensically examined how the deal came to be.

To get a full picture of the interlocking interests at work, the full piece is worth a read. Here are a few of the key findings:

  • The process began last March 4, with Billy Tauzin, the former congressman who is PhRMA’s CEO, indicating an interest in supporting health care reform a day before the first major White House meeting with industry leaders on the topic.
  • By mid-April, a White House deputy chief of staff, Jim Messina, and Sen. Max Baucus’s chief of staff, Jon Selib, had convened a meeting with industry representatives at the headquarters of the Democratic Senatorial Campaign Committee, resulting in PhRMA’s funding of two nonprofits designed to campaign on the reform effort’s behalf. The Sunlight Foundation writes that “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.” AKPD also employs Axelrod’s son as director of research.
  • In June, Sen. Baucus announced that he had secured $80 billion in cost savings from the pharmaceutical industry. At the time, Tauzin said of the agreement: “Today marks an important first step toward our shared goal of providing high‐quality, affordable health care to everyone in America. We applaud President Obama and Senate Finance Committee Chairman Baucus for their commitment to comprehensive health care reform.”
  • During a July 7 meeting involving Rahm Emanuel, Messina, Selib and pharmaceutical lobbyists, the terms of the deal were laid out in clear language. A memo summarizing the meeting, obtained by the Huffington Post a month later, outlined how the industry would generate a package of cost savings “of up to $80 billion, but not more than $80 billion.” In exchange, the White House agreed to “oppose importation” and “oppose rebates in Medicare Part D,” among other things.
  • The Sunlight Foundation also examined the defeat of Sen. Byron Dorgan’s drug re-importation amendment, introduced last December and heavily opposed by the pharmaceutical industry. “Dorgan’s amendment was defeated with numerous Democrats previously in support of re-importation switching to “no” votes,” the Sunlight Foundation noted.

Recently, in the aftermath of Massachusetts Senator Scott Brown’s election, Tauzin announced that he would step down as CEO of PhRMA. As ProPublica has reported, when Tauzin was in Congress, he was at the forefront of crafting Medicare Part D, “the prescription drug program for seniors that has produced billions of dollars of profits for pharmaceutical companies.” A short time later, he had retired and was at the helm of PhRMA, earning as much as 10 times his salary as a lawmaker.

As the Sunlight Foundation observes, there was some irony in the White House having worked with Tauzin to secure a deal on health care:

Tauzin’s job change became fodder for a campaign ad that then presidential candidate Barack Obama ran in the spring of 2008 simply titled “Billy.”

The Sunlight Foundation also prepared a short video summary of the report:

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