BREAKING: Tauzin Out at PhRMA

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THE TREATMENT FEBRUARY 12, 2010

BREAKING: Tauzin Out at PhRMA

Billy Tauzin announced on Thursday that he is stepping down as leader of PhRMA, the drug industry trade group. And if you're a fan of health care reform, like I am, you're probably not sure whether that's good news or bad news.

Believe it or not, it may be neither--at least based on some very preliminary reporting Thursday evening.

Tauzin, as you may recall, was a central player in the deal PhRMA made with the White House and Senate Finance Chairman Max Baucus last year.* Under the terms of the deal, PhRMA agreed to endorse the Senate's reform framework, including provisions that would, in theory, mean about $80 billion in reduced revenue for the industry. Exactly what the administration and Baucus promised in return remains the subject of some dispute, but both sides have acknowledged that the reformers told the drug industry they'd not be seeking further financial concessions, at least not without consultation.

That deal struck many liberals, including this writer, as overly generous to the industry. But it also bothered critics on the right, including some drug industry executives, who felt it countenanced too much government intervention while poisoning relations with PhRMA's traditional allies in the Republican Party.

Tauzin's sudden departure, at a time when reform's prospects are shaky, has the look and feel of an ouster at the hands of these executives--and perhaps a prelude to something more drastic, like PhRMA turning around and opposing reform. Given the industry's clout and resources, that could be devastating, even at this late date.

But a handful of industry insiders I contacted Thursday night were skeptical--on both counts.

One acknolwedged that a rift has developed between Tauzin and some Republican-leaning CEOs from the drug industry. But the drug industry isn't monolithic and, this source explained, Tauzin's relationship with more Democratic-leaning CEOs isn't great, either.

Remember, Tauzin was a former Republican congressman who had switched from the Democratic Party once they lost the majority--and then left Congress to join PhRMA right after he helped usher the Medicare drug benefit through Congress. According to this source, Tauzin's activity during and after negotiations over the deal didn't improve that relationship:

He alienated some in the White House and many on the Hill. And, as he did this, he alienated some of the few Democratic leaning PhRMA CEOs. Concurrently, as he stood by his (very good for PhRMA) deal, some of the Republican CEOs got increasingly upset that they were alienating their usual base Republican friends and taking an approach they rarely do.

Another insider I interviewed suggested it was more a matter of Tauzin realizing it was time to move on, as much for his own reasons (he's had health problems) as the fact that his support inside PhRMA was weaker than it had been. Meanwhile, an industry official reached late in the evening flatly denied that Tauzin was pushed out. "In fact, the vast majority of [PhRMA's] board urged him to stay on," the official said.

(Tauzin was not available for comment.)

As for PhRMA's position on health care reform, I put that question directly to Ken Johnson, PhRMA's spokesman and senior vice president. He sent back a prepared statement:

We continue to believe that all Americans should have access to high-quality, affordable health care coverage and services.  No one should be denied insurance because of a pre-existing condition, and no one should lose their home or face bankruptcy because they are uninsured or underinsured.

These beliefs guided us at the beginning of this important year-long national debate, and they continue to guide us today.  If done in a smart way and a fair way, comprehensive health care reform will benefit patients, our economy and the future of our nation.  We remain committed to do our part to help expand access to the tens of millions of Americans who are uninsured today and who all too often are forced to make difficult choices when faced with a serious illness or medical emergency.

It's hedged, but, as far as I can tell, no more than any previous PhRMA statements were.

As I said, whether PhRMA's support for reform is a virtue or vice depends on your perspective. A bill that extracted more concessions from the industry would, in my opinion, make health care a lot more affordable. But you could make a case that such a bill would never have gotten this far in the legislative process.

Update: Chris Frates and Carrie Budoff Brown have more in Politico, including a source saying it was really less about legislative strategy and more about Tauzin's management style:

A pharmaceutical lobbyist familiar with the organization said there is little that will change with Tauzin’s departure, including the $80-billion deal.

"Nothing changes on the PhRMA deal because the secret is that they weren't talking to him anyway," the lobbyist said. The main players, the lobbyist said, were the chief executives of the major drug companies.

Another drug lobbyist familiar with the situation said PhRMA ran an effective strategy that produced a bill the industry could live with while earning the good will of Democrats for working to pass reform.

The first lobbyist said that Tauzin was too hands off when it came to dealing with lawmakers, the White House and PhRMA's own board.

Indeed, lobbyists familiar with the situation said Tauzin's departure has less to do with legislative strategy than it does with drug company chief executives who were unhappy with Tauzin's work ethic and management style.

"The CEOs lost confidence in him a long time ago," the second drug lobbyist familiar with the situation said.

The Politico story makes one other important point. One issue for PhRMA, going forward, is whether the final reform bill will involve further concessions from the industry, as many liberals (particularly in the House) have wanted. Before the Massachusetts election through reform into such turmoil, sources were saying reformers were push the drug industry to relinquish (a little) extra revenue in order to finance better drug coverage for seniors. It's not clear where that proposal stands now.

*Over at the Sunlight Foundation's blog, Paul Blumenthal has exhaustive, and dispiriting, account of how PhRMA's deal with Baucus and the White House came together.

Follow Jonathan Cohn on Twitter: @jcohntnr

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posted in: the treatment, health care, phrma, billy tauzin, carrie budoff brown, chris frates, ken johnson, max baucus, congress, democratic party, medicare, republican party, senate, white house

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