What Did The White House Know About the PhRMA Deal?
August 08, 2009 11:49 AM
At the time, Sen. Max Baucus, D-Mont., chair of the Senate Finance Committee, announced that pharmaceutical companies had agreed to a deal as part of an overall health care reform package, where the companies will provide, as Baucus put it, “affordable prices on prescription drugs when Medicare benefits don’t cover the cost of prescriptions,” as well as kicking in some money for health care reform efforts.
President Obama said in a paper statement that “the agreement reached today to lower prescription drug costs for seniors will be an important part of the legislation I expect to sign into law in December. This is a tangible example of the type of reform that will lower costs while assuring quality health care for every American.”
But on Thursday the New York Times’ David Kirkpatrick reported that under pressure from pharmaceutical industry lobbyists, the White House “assured drug makers that the administration stood by a behind-the-scenes deal to block any Congressional effort to extract cost savings from them beyond an agreed-upon $80 billion.”
On the campaign trail, then-Sen. Obama had supported measures to allow the government to re-negotiate drug costs, but apparently this deal would preclude such a move.
Former House Energy and Commerce chairman Bill Tauzin, R-La., now the head of Pharmaceutical Research and Manufacturers of America, or PhRMA, told the Times, “We were assured: ‘We need somebody to come in first. If you come in first, you will have a rock-solid deal.’ 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.”
“They wanted a big player to come in and set the bar for everybody else,” Tauzin told the Times, asserting that in terms of contributions from the pharmaceutical industry, “$80 billion is the max, no more or less. Adding other stuff changes the deal.”
Tauzin said that after the deal was reached with Baucus, he confirmed the terms of the deal with White House Chief if Staff Rahm Emanuel, deputy Chief of Staff Jim Messina, and health care reform czar Nancy-Ann DeParle.
“They blessed the deal,” Tauzin told the Times. “As far we are concerned, that is a done deal. It’s up to the White House and Senator Baucus to follow through.”
On Wednesday, Messina seemed to confirm this deal, emailing the Times: “The president encouraged this approach. He wanted to bring all the parties to the table to discuss health insurance reform.”
But after the Times story appeared, some Democrats on the Hill expressed disappointment that the White House and Senate Finance Committee had made this deal with the lobbying group without consulting them, eliminating a way to help pay for the health care reform legislation and save money for the government.
Now the White House seems to be distancing itself from the notion it entered into any deal.
“The White House, Senate Finance Committee and PhRMA agreed that PhRMA would contribute $80 billion to lower costs as part of the health insurance reform legislation that the President expects to sign this year,” Linda Douglass, the communications director of the White House Office of Health Reform, told ABC News Saturday.
Asked if the deal precludes the government engaging in direct negotiations for the Medicare prescription drug benefit, Douglass said “that issue was not discussed” during the White House negotiations with PhRMA.
The Times reported today several Senate Democrats said that “in a private meeting, White House officials had told them there was no such deal, sowing yet more confusion…” And White House officials told the Times that Messina “had not intended to confirm that the deal ruled out price negotiations.”
But Messina was not the only one who seemed to confirm the deal.
On Friday, before the White House officially backed off the notion of a deal, White House press secretary Robert Gibbs seemed to confirm the deal, telling CNN’s Ed Henry during the briefing, “we feel like $80 billion is — is an appropriate amount. And I think the — I don’t have the statistic in front of me, but I think the House bill has $85 billion in it, so I would argue that we’re all in the same ball park.”
Henry said, “there is a deal that you won’t squeeze any more?”
Said Gibbs: “Well, I hate to blow our cover here, but we announced it publicly.”
“But there had been some reports saying you privately told Democratic senators that there is no such deal,” Henry said.
“I don’t know where that’s coming from,” Gibbs said. “I don’t what that’s being based on.”
The confusion is complicated even further by the fact that in June, reporter Tommy Christopher, now with Mediaite, asked if the deal with PhRMA included a promise to not pursue Medicare negotiating prices with the pharmaceutical industry.
Gibbs’ initial response: “Well, look, again, the structure of part of that agreement was to use a portion of that $80 billion to pay up to — for the pharmaceutical industry to pay up to 50 percent of the cost for a name brand drug for a senior that falls between the point at which Medicare Part D stops providing help, and when catastrophic coverage — I think it is $6,500, a little bit more than $6,500 — level kicks in. So filling in that — what’s commonly known as — ironically, in health care — the doughnut hole, about — that up to 50 percent of the name brand — the price for that name brand drug would be paid for, and I think that provides a hefty discount that will bear appreciable benefits for seniors all over the country.”
When pressed as to whether there was a deal, Gibbs said, “I don’t know the answer.” He said he would “check on it,” but Christopher says he never got back to him.
When asked Friday by ABC News as to why he avoided answering the question about such a deal in June, Gibbs said, “You’re asking me to recall why I didn’t remember something in June. I — I — that I don’t know the answer to. Obviously, the agreement that we have is — is in the confines of health insurance reform that’s being worked on right now.”
A few hours after that, the White House disputed the notion of any deal.
At the time of the deal, Tauzin referred to, in an interview with ABC News, “an old political adage, you come to the meal or you become the meal.”