Dems tap drug maker millions for PhRMA-friendly bill

By: Timothy P. Carney
Washington Examiner
Mar. 17, 2010

As they whip for the health care bill, Democratic leaders pack a mean one-two punch of populist rhetoric and the hefty financial backing of the drug industry.

In the heated yearlong health fight, President Obama has often accused his opponents of willful misrepresentation, even as he and his allies have endlessly repeated the biggest whopper of all — that the bill would rein in the special interests.

The Obama team regularly dismisses opponents as industry lackeys. The Democratic National Committee blasted out e-mails this week warning that "for every member of Congress, there are eight anti-reform lobbyists swarming Capitol Hill" and "Congress is under attack from insurance lobbyists."

But drug industry lobbyists, according to Politico, spent the weekend "huddled with Democratic staffers" who needed the drug lobby to "sign off" on proposals before moving ahead. Meanwhile, we learn that the drug lobby is buying millions of dollars of ads in 43 districts where a Democratic candidate stands to suffer for supporting the bill. The doctors' lobby and the hospitals' lobby are also on board with the Senate bill.

So the battle at this point is not reformers versus industry, as Obama would have you believe. Rather, it is a battle between most of the health care industry and the insurance companies.

(And the insurers are not opposed to the whole package. On the bill's central planks — limits on price discrimination, outlawing exclusions for pre-existing conditions, a mandate that employers insure their workers and a mandate that everyone hold insurance — insurers are on board. They object mostly that the penalty is too small for violating the individual mandate.)

Pharmaceuticals are a far more entrenched special interest than the insurers.

Of all the single-industry lobbies in Washington, the largest is the Pharmaceutical Researchers and Manufacturers of America. PhRMA spent $26.2 million on lobbying last year — that's nearly three times as much as the insurance lobby, America's Health Insurance Plans, which spent $8.9 million.

If you include individual companies' lobbying, pharmaceuticals blow away the competition, beating all other industries by 50 percent, according to data at the Center for Responsive Politics.

Given this Big Pharma clout, it's unsurprising that the bill Obama's whipping for — Senate bill — has nearly everything the drug companies wanted: prohibiting reimportation of drugs, preserving Medicare's overpayment for drugs, lengthy exclusivity for biotech drugs, a mandate that states subsidize drugs under Medicaid, hundreds of billions in subsidies for drugs, and more.

PhRMA chief Billy Tauzin, who was vilified by Obama on the campaign trail, worked out much of this sweetheart deal in a West Wing meeting with White House Chief of Staff Rahm Emanuel. Tauzin visited the White House at least 11 times. He left his imprint so deeply on the current bill that it should probably be called BillyCare rather than ObamaCare.

Recall that pharmaceutical executives and political action committees dug deep trying to save the flailing candidacy of Democrat Martha Coakley in Massachusetts — a race that was explicitly a referendum on health care. She took in more than 10 times as much drug company cash as Republican Scott Brown.

This week, PhRMA, through a front group called Americans for Stable Quality Care, is rolling out millions of dollars in advertisements for the Democrats' jury-rigged package consisting of the BillyCare bill and some as-yet-undetermined "budget reconciliation" measure. The ads reportedly will target wavering Democrats.

But supporters of BillyCare will continue to attack opponents as shills for insurance companies, demonizing, as Obama puts it, "those who profit from the status quo."

Let's look at those profits. Drug makers' combined profit margin last year was 22.2 percent, compared with insurers' 4.4 percent. Drug maker Merck's net income, $12.9 billion, exceeds that of the 10 largest insurers combined.

Pfizer, which netted $8.64 billion last year, gave its CEO, Jeff Kindler, a 12.5 percent salary increase, bringing his compensation to $14.9 million. Pfizer, in a federal filing, attributed the raise partly to Kindler's work "developing and advancing U.S. and global public policies that serve the overall interests of our Company," including his "constructive participation in the U.S. legislative process." Kindler contributed the maximum to Obama's election, and Obama raised more money from the drug industry than any candidate in history.

On this bill, Republicans side with insurers, and Democrats mostly side with the richer and more powerful drug makers. The difference: Republicans didn't cut a backroom deal with the insurers. Obama will still play the populist card, even as the drug lobby is his ace in the hole.
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Timothy P. Carney, The Examiner's lobbying editor, can be reached at [email protected]. He writes an op-ed column that appears on Friday.