The Treatment

A Sweetheart Deal For Pharma--and Who Else?

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Thanks to the New York Times, we now know the details of an agreement between the White House and the drug industry. And it's looking more like the sweetheart deal that cynics always said.

Actually, it's thanks to Billy Tauzin--head of the drug industry lobby PhRMA--who spilled the bean during an on-the-record interview.

Some quick background: Earlier in the summer, the White House made a big splash by announcing the drug industry had agreed to sign off on legislative changes that would cut its revenue stream by $80 billion. But it turns out there was a second half to that agreement:

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.”

What does this all mean? Karen Tumulty explains:

...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.

Ezra Klein has more and wonders who's playing what angle here. Tauzin, after all, knew what he was doing when he spoke to the Times:

This is going to be a big deal. It exposes the soft underbelly of the administration's current strategy: There's no industry opposition because the bill doesn't threaten any of the relevant industries. That's also, at least in part, why it doesn't save any money.

But I imagine the folks at 1600 Pennsylvania are pretty pissed at Tauzin today. It's one thing to make that deal. It's another thing to see it on A1 of the New York Times. But Tauzin is so confident in the White House's desire to retain his support that he could spill the whole thing to reporters in an on-the-record interview and be assured that he'll face no reprisals. His argument this morning was that the White House has given his industry immunity, and Congress has to respect that. We'll see whether it will.

Indeed. And I wonder how long before we get details of the other deals the administration has struck...

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