Rahm shows his pragmatic ways in deal with prescription drug manufacturers

White House Chief of Staff Rahm Emanuel is in the unusual position of arguing against healthcare bills he championed as a House member.

Emanuel, one of the principal architects of healthcare reform, played a crucial role in striking an accord with the pharmaceutical industry earlier this year. And now some congressional Democrats want to rip that deal to shreds.

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In exchange for billions of dollars in concessions to help finance health reform, drug companies received a promise that health legislation that Emanuel has touted would not be in the final bill.

Emanuel and other White House advisers made a calculation early in the healthcare debate that they needed at least one powerful industry on board with their plans to overhaul the nation’s healthcare system. Suspecting that the insurance industry would probably not be on board, the divide-and-conquer strategy focused on the pharmaceutical industry.

A veteran of the Clinton White House, Emanuel witnessed the death of healthcare reform in 1994 after it was attacked repeatedly by powerful players in the healthcare community.

Fifteen years later, that experience appears to be guiding Emanuel’s thinking.

A White House aide told The Hill, “Having stakeholders at the table who previously opposed reform has been an important part of this process.”

Some Democrats on Capitol Hill believe Emanuel and others could have gotten more from the Pharmaceutical Research and Manufacturers of America (PhRMA), adding they did not sign off on the pact and are not bound by it.

It’s a politically intriguing situation for Emanuel, who during his career in the House positioned himself as a leading antagonist of the pharmaceutical industry.

He spearheaded a drive in 2003 to pass legislation allowing for the importation of cheaper drugs from Canada and other countries. In 2006, while chairman of the Democratic Congressional Campaign Committee, he championed a push to allow the government to negotiate drug prices for Medicare beneficiaries. The latter was included in the House Democrats’ “Six in ‘06” campaign platform.

Both proposals have long been opposed by PhRMA.

In the deal crafted by Senate Finance Committee Chairman Max Baucus (D-Mont.) and approved by Emanuel, drug companies agreed not to oppose healthcare reform and even help pay for it. The industry agreed to cut the cost of brand-name prescription drugs for seniors by $80 billion over 10 years, covering about half of those seniors who fall into the Medicare prescription drug “donut hole.”

In return, Baucus and White House officials said they would support a reform package that would not include the drug importation measure nor the measure to allow the government to negotiate drug prices on behalf of Medicare beneficiaries, according to a report in The New York Times.

The Senate is an important battleground if the White House deal with PhRMA is to be preserved. That is because legislation passed by the House Energy and Commerce Committee already includes several provisions disliked by the industry.

The legislation crafted by panel chairman Henry Waxman (D-Calif.) would give the secretary of the Department of Health and Human Services authority to negotiate Medicare drug prices and would require the industry to pay an additional $63 billion over 10 years in Medicaid rebates.

In the weeks ahead, Democratic Policy Committee Chairman Byron Dorgan (N.D.), Senate Health, Education, Labor and Pensions (HELP) Committee Chairman Tom Harkin (D-Iowa) and others will push policies that the White House pledged to fend off.

Dorgan said he “wasn’t involved” in the deal. Dorgan added that a senior White House official denied that the president would oppose drug re-importation provisions in healthcare reform.

Dorgan said he will offer an importation amendment to the healthcare reform bill when it reaches the Senate floor, something that administration officials may find difficult to lobby against. Not only did Emanuel sponsor drug re-importation bill that passed the House in 2003, Obama himself was a former co-sponsor of Dorgan’s proposal and campaigned on the issue last year.

Unlike many Democratic proposals, Dorgan can count on the support of a few Republicans. Sen. Olympia Snowe (R-Maine), whom many Democrats consider a crucial vote in the healthcare debate, is the lead GOP co-sponsor of the measure. Sens. John McCain (R-Ariz.) and David Vitter (R-La.) have also supported it.

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When the House defied a veto threat from President George W. Bush and passed the re-importation bill in 2003, Emanuel and other proponents of the legislation congratulated each other on the House floor.

Rep. Jo Ann Emerson (R-Mo.), who was among those who worked with Emanuel on that bill, said she does not understand why her former colleague agreed to the deal.

“PhRMA got off easy,” she said.

Rep. Marion Berry (D-Ark.), who has asked Democratic leaders to attach re-importation language to the House healthcare bill, said, “They never should have engaged in that negotiation before knowing more about what they were doing.”

Waxman told The Hill that he is also “open-minded” about including drug re-importation legislation in the healthcare package if it passes the Senate.

Critics of the proposal argue that the Congressional Budget Office has estimated that it would not save much money, but Harkin and liberal advocates disagree.

“Our assumption is that if the prohibition that prevents Medicare from bargaining for cheaper prices was rescinded and Medicare did have the ability to bargain for cheaper prices, it would have a dramatic impact on getting prices down,” said Ron Pollack, executive director of Families USA, a liberal group.

Pollack defended Emanuel by saying the PhRMA deal would be worthwhile if it helps Congress expands health coverage to millions of Americans.

But one senior Democratic senator said the $80 billion in concessions from the drug industry amounted to “pocket change” when compared to its projected profits over the next decade.

Another lawmaker, Sen. Sherrod Brown (D-Ohio), a member of the HELP Committee, said, “I don’t think that’s enough and whatever those agreements were, they are not agreements I’m a part of ... I’m hopeful we can do a lot better there.”

But Brown indicated he understands Emanuel’s deal-making, noting that the former Illinois lawmaker “now has a new boss.”

Ken Johnson, a senior vice president at PhRMA, however, disputed the notion that drug companies have won an overly favorable deal. He noted that pharmaceutical stock prices have remained flat and that pharmaceutical indexes have fallen on the Dow Jones Industrial and S&P 500 exchanges.

“Part of our agreement will provide immediate relief for seniors and disabled Americans who hit the coverage gap, cutting their out-of-pocket costs in half,” said Johnson. “Our agreement also will provide billions of dollars to help expand coverage to millions of uninsured Americans. That’s a huge commitment, which will force our companies to make some very tough choices.”