E-Mails Reveal Extent of Obama's Deal With Industry on Health Care

Jun 8, 2012

Just making sure this hasn’t gotten lost in all the coverage of the President’s assessment that private sector is “doing fine.” ….

FYI –

E-Mails Reveal Extent of Obama’s Deal With Industry on Health Care
New York Times
Peter Baker
June 8, 2012
http://www.nytimes.com/2012/06/09/us/politics/e-mails-reveal-extent-of-obamas-deal-with-industry-on-health-care.html?pagewanted=all

WASHINGTON — After weeks of quiet talks, drug industry lobbyists were growing nervous. If they were to cut a deal with the White House on overhauling health care, they needed to be sure President Obama would stop a proposal by his liberal allies intended to bring down medicine prices.

On June 3, 2009, one of the lobbyists e-mailed Nancy-Ann DeParle, the president’s top health care adviser. Ms. DeParle sent a message back reassuring the lobbyist. Although Mr. Obama was overseas, she wrote, she and other top officials had “made decision, based on how constructive you guys have been, to oppose importation on the bill.” 

Just like that, Mr. Obama’s staff abandoned his support for the reimportation of prescription medicines at lower prices and with it solidified a growing compact with an industry he had vilified on the campaign trail the year before. Central to Mr. Obama’s drive to overhaul the nation’s health care system was an unlikely collaboration with the pharmaceutical industry that forced unappealing trade-offs.

The e-mail exchange that day three years ago was among a cache of messages obtained from the industry and released in recent weeks by House Republicans — including a new batch put out on Friday morning detailing the industry’s advertising campaign in favor of Mr. Obama’s proposal. The broad contours of the president’s dealings with the drug industry were known in 2009 but the newly public e-mails open a window into the compromises underlying a health care overhaul now awaiting the judgment of the Supreme Court.

Mr. Obama’s deal-making in 2009 represented a pivotal moment in his young presidency, a juncture where the heady idealism of the campaign trail collided with the messy reality of Washington policymaking. A president who had promised to air negotiations on C-Span cut a closed-door deal with the powerful pharmaceutical lobby, signifying to some disillusioned liberal supporters a loss of innocence, or perhaps even the triumph of cynicism.

But if it was a Faustian bargain for the president, it was one he deemed necessary to forestall industry opposition that had thwarted efforts to cover the uninsured for generations. Without the deal, in which the industry agreed to provide $80 billion for health reform in exchange for protection from policies that would cost more, Mr. Obama and Democratic allies calculated he might get nowhere.

“There was no way we had the votes in either the House or the Senate if PhRMA was opposed — period,” said a senior Democratic official involved in the talks, referring to the Pharmaceutical Research and Manufacturers of America, the drug industry trade group.

Republicans see the deal as hypocritical. “He said it was going to be the most open and honest and transparent administration ever and lobbyists won’t be drafting the bills,” said Representative Michael C. Burgess of Texas, one of the Republicans on the House Energy and Commerce subcommittee that is examining the deal. “Then when it came time, the door closed, the lobbyists came in and the bills were written.”

Some of the liberals bothered by the deal-making in 2009 now find the Republican criticism hard to take given the party’s long-standing ties to the pharmaceutical industry.

“Republicans trumpeting these e-mails is like a fox complaining someone else raided the chicken coop,” said Robert Reich, the former labor secretary under President Bill Clinton. “Sad to say, it’s called politics in an era when big corporations have an effective veto over major legislation affecting them and when the G.O.P. is usually the beneficiary. In this instance, the G.O.P. was outfoxed. Who are they to complain?”

Dan Pfeiffer, the White House communications director, said the collaboration with industry was in keeping with the president’s promise to build consensus.

“Throughout his campaign, President Obama was clear that he would bring every stakeholder to the table in order to pass health reform, even longtime opponents like the pharmaceutical industry," Mr. Pfeiffer said. "He understood correctly that the unwillingness to work with people on both sides of the issue was one of the reasons why it took a century to pass health reform.”

In a statement, PhRMA said that its interactions with Mr. Obama’s White House were part of its mission to “ensure patient access” to quality medicine and to advance medical progress.

“Before, during and since the health care debate, PhRMA engaged with Congress and the administration to advance these priorities,” said Matthew Bennett, the group’s senior vice president.

Representative Henry Waxman of California, the top Democrat on the House committee and one of those who balked at Mr. Obama’s deal in 2009, now defends it as traditional Washington lawmaking.

“Presidents have routinely sought the support and lobbying clout of private industry in passing major legislation,” Mr. Waxman’s committee staff said in a memo released in response to the e-mails. “President Obama’s actions, for example, are no different than those of President Lyndon B. Johnson in enacting Medicare in 1965 or President George W. Bush in expanding Medicare to add a prescription drug benefit in 2003.”

Still, what distinguishes the Obama-industry deal is that he had so strongly rejected that very sort of business as usual. During his campaign for president, he specifically singled out the power of the pharmaceutical industry and its chief lobbyist, former Representative Billy Tauzin, a Democrat-turned-Republican from Louisiana, as examples of what he wanted to change.

“The pharmaceutical industry wrote into the prescription drug plan that Medicare could not negotiate with drug companies,” Mr. Obama said in a campaign advertisement, referring to Mr. Bush’s 2003 legislation. “And you know what? The chairman of the committee who pushed the law through went to work for the pharmaceutical industry making $2 million a year.

“Imagine that,” Mr. Obama continued. “That’s an example of the same old game playing in Washington. You know, I don’t want to learn how to play the game better. I want to put an end to the game playing.”

Once he arrived at the White House, though, he and his advisers soon determined that one reason Mr. Clinton had failed to pass health care reform was the resilient opposition of industry. Led by Rahm Emanuel, his chief of staff and a former House leader, and Jim Messina, his deputy, White House officials set out to change that dynamic.

The e-mails, which the House committee obtained from PhRMA and other groups after the White House declined to provide correspondence, document a tumultuous negotiation, at times transactional, at others prickly. Each side suspected the other of betraying trust and operating in bad faith.

The White House depicted in the message traffic comes across as deeply involved in the give-and-take, and not averse to pressure tactics, including having Mr. Obama publicly assail the industry unless it gave in on key points. In the end, the White House got the support it needed to pass its broader priority, but industry emerged satisfied as well. “We got a good deal,” wrote Bryant Hall, then senior vice president of the pharmaceutical group.

Mr. Bryant, now head of his own firm, declined to comment. So did Mr. Emanuel, now mayor of Chicago; Mr. Messina, now the president’s campaign manager; and Ms. DeParle, now a White House deputy chief of staff. Mr. Tauzin, who has left his post as the industry’s lobbyist, did not respond to messages.

The latest e-mails released on Friday underscore the detailed discussions the two sides had about an advertising campaign supporting Mr. Obama’s health overhaul.“They plan to hit up the ‘bad guys’ for most of the $,” a union official wrote after an April meeting with Mr. Messina and Senate Democratic aides. “They want us to just put in enough to be able to put our names in it — he is thinking @100K.”

In July, the White House made clear that it wanted supportive ads using the same characters the industry used to defeat Mr. Clinton’s proposal 15 years earlier. “Rahm asked for Harry and Louise ads thru third party,” Mr. Hall wrote.

Industry and Democratic officials said privately that the advertising campaign was an outgrowth of the fundamental deal, not the goal of it. The industry traditionally advertises in favor of legislation it supports.

Either way, talks came close to breaking down several times. In May, the White House was upset that the industry had not signed onto a joint statement. One industry official wrote that they should sign: “Rahm is already furious. The ire will be turned on us.”

By June, it came to a head again. “Barack Obama is going to announce in his Saturday radio address support for rebating all of D unless we come to a deal,” Mr. Hall wrote, referring to a change in Medicare Part D that would cost the industry.

In the end, the two sides averted the public confrontation and negotiated down to $80 billion from $100 billion. But the industry believed the White House was rushing an announcement to deflect political criticism.

“It’s pretty clear that the administration has had a horrible week on health care reform, and we are now getting jammed to make this announcement so the story takes a positive turn before the Sunday talk shows beat up on Congress and the White House,” wrote Ken Johnson, a senior vice president of the pharmaceutical organization.

In the end, House Democrats imposed some additional costs on the industry that by one estimate pushed the cost above $100 billion, but the more sweeping policies the firms wanted to avoid remained out of the legislation. Mr. Obama signed the bill in March. He had the victory he wanted

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