For anyone who didn't notice earlier, this description by PhRMA CEO Billy Tauzin spells out the dynamics:
Pressed by industry lobbyists, White House officials on Wednesday 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. . .
"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."
. . .
Mr. Tauzin said the administration had approached him to negotiate. "They wanted a big player to come in and set the bar for everybody else," he said. He said the White House had directed him to negotiate with Senator Max Baucus, the business-friendly Montana Democrat who leads the Senate Finance Committee.
Mr. Tauzin said the White House had tracked the negotiations throughout, assenting to decisions to move away from ideas like the government negotiation of prices or the importation of cheaper drugs from Canada. The $80 billion in savings would be over a 10-year period. "80 billion is the max, no more or less," he said. "Adding other stuff changes the deal."
Some elements of the deal have been reported earlier in the NY Times and other newspapers, as well as in this report in the LA Times by Tom Hamburger, but experts following pharmaceutical issues doubt that the full extent of the dealings between big pharma, the White House and Senator Baucus are known.
The crushing defeat of the proposals by Senator Brown and Representative Waxman to speed entry of generic biologic medicines (known as biosimilars), was partly due to the hands-off approach taken by the White House, which was been widely read as a green light for Democrats to side with big pharma on a hugely important issue that will be extremely difficult to fix later. (More on this issue here).
The so-called cost savings from big pharma of $8 billion per year for 10 years are a joke for an industry that generates more than $300 billion in US sales from products that mostly replicate but do not significantly improve therapeutic benefits over existing medicines. Moreover, the "savings" will likely take the form of lower consumer co-payments for medicines or small discounts of reimbursements for expanded government backed insurance programs. PhRMA and its members are also getting mandatory insurance coverage, and increased legal obligations to buy their expensive drugs. The White House has abandoned any real effort to control costs in the pharma sector.
Unreported by the press are the favors that the White House and Baucus are doing in the international arena. The White House has slapped and pressured Thailand for issuing compulsory licenses on medicine patents, killed an industry-opposed medical R&D treaty at the WHO (here and here), opposed a PAHO resolution on transparency of pharmaceutical economics, and collaborated on a disastrous manipulation of a WHO Expert Working Group on R&D Financing that is embracing industry norms for intellectual property protection. The Administration has refused to answer questions from the TransAtlantic Consumer Dialogue (TACD) on intellectual property aspects of pandemics. The White House won't release the negotiating text of the so-called "Anti-counterfeiting Trade Agreement," or even the names of the documents they are withholding, claiming they are state secrets. (More details here)
Senator Baucus is also working on proposals to mandate high drug prices in all but the poorest developing countries. Senator Baucus asked that Pfizer CEO Jeff Kindler (a frequent White House guest these days) work out the details with the late Professor John Barton, in secret negotiations attended mostly by pharma industry lobbyists, and Microsoft officials.
Tauzin asks who can trust a White House that does not keep it's promises. Good question. One might start by asking what to make of this October 4, 2008 stump speech by President Obama.