Obama’s Secret Deal With The Drugmakers

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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?”