Amid Obama barbs at Fox News, HMOs; PhRMA emerges as an unlikely Dem ally

The White House has recently launched attacks at several groups, but pharmaceutical companies have dodged the administration’s ire.

The White House has recently launched attacks at Fox News, HMOs and the U.S. Chamber of Commerce, but pharmaceutical companies, a longtime boogeyman for Democrats, have dodged the administration’s ire.

President Barack Obama bashed drug companies on the campaign trail, but the brand-name industry’s trade group has since emerged as an unlikely ally for the White House.

The deal the Pharmaceutical Research and Manufacturers of America (PhRMA) made with Democrats over the summer, repeatedly touted by Obama as a breakthrough to passing healthcare reform, has kept the powerful trade association on friendly terms with Obama and his advisers.

PhRMA President and CEO Billy Tauzin, working with the White House and Senate Finance Committee Chairman Max Baucus (D-Mont.), agreed to an $80 billion hit this summer, much of which would come in the form of half-price brand-name drugs for Medicare beneficiaries who fall into the program’s annual “doughnut hole” gap in coverage.

“This is a significant breakthrough on the road to healthcare reform — one that will make the difference in the lives of many older Americans,” Obama said after the deal was announced.

Since then, the White House and Baucus have been forced to defend the agreement against attacks from Democrats and Republicans skeptical of backroom deals and what, exactly, the pharmaceutical industry was getting in return.

PhRMA spokesman Ken Johnson said a friendly relationship between Democrats and the pharmaceutical industry can only improve the chances for successfully passing healthcare reform.

“We’ve delivered on our promise to do everything possible to try and make healthcare reform a reality this year,” said Johnson, who expects PhRMA’s efforts to pay dividends in the future. “Without question, we have shown that we can be valuable and we can be trusted.”

The new House healthcare bill will test PhRMA’s relationships because it contains provisions that are strongly opposed by the powerful trade association. Whether the White House moves to eventually strike some of the House’s language in conference discussions remains to be seen.

While Speaker Nancy Pelosi (D-Calif.) targeted drug companies for additional savings in the new, merged health bill, she has not employed the same type of rhetoric that she used on health insurers.

Pelosi this summer called the insurers “villains” in the healthcare debate.

In addition to offering up a concrete amount of money toward reform and assistance to crucial senior voters, PhRMA has also fronted a $150 million healthcare reform advertising campaign and partnered with liberal groups such as Families USA, continuing a strategy it began during the 2007 debate on expanding the Children’s Health Insurance Program (CHIP). In June, the group ran spots praising four vulnerable Democratic House members who voted to expand CHIP.

“Right now, Billy Tauzin should be placed in the advocacy hall of fame,” said Ralph Neas, the CEO of the nonpartisan National Coalition on Healthcare. “We don’t want to demonize any sector of the healthcare economy,” Neas said, but added, “Do I think that PhRMA got an especially good deal? Yes.

“All of the stakeholders should stay at the table and pay their fair share of cost-containment,” Neas said. “Shared sacrifice and shared responsibility should mean something — and we’re not there yet.”

PhRMA and the Biotechnology Industry Organization separately waged a successful campaign to dial back Democratic proposals to open the market to generic versions, called biosimilars or follow-on biologics, of complex biologic drugs.

The Senate Health, Education, Labor and Pensions Committee adopted language giving brand-name companies 12 years of exclusivity for their products, as did the House Energy and Commerce Committee — against the wishes of Chairman Henry Waxman (D-Calif.), who backed a five-year period. The White House floated a seven-year waiting period, while the industry sought 14 years.

In spite of these tentative victories, one pharmaceutical lobbyist said drug companies are growing increasingly uneasy because while Obama and Baucus may be sticking by their deal so far, other Democrats on Capitol Hill are another story entirely.

“There is a growing sense that that deal isn’t enough,” the lobbyist said. “I think it’s at the point of high anxiety” among drug makers. PhRMA knows that its member companies will measure the trade group’s performance this year on how the deal holds up. “Nobody gets more than [PhRMA] that they picked a strategy and it better godd--n work.”

For instance, though Baucus and two other Democrats on the Finance Committee joined with Republicans to stop it, Sen. Bill Nelson (D-Fla.) came close to passing an amendment to slash Medicare drug payments by as much as $100 billion by adopting rebates already in the House bill. The House bill includes such rebates and when the Senate bill hits the floor, Nelson will find more allies.

Democrats in both chambers are also still looking to tack on a number of provisions strongly opposed by PhRMA, such as giving the federal government that authority to negotiate drug prices for Medicare beneficiaries, filling the doughnut hole completely by lowering payments and allowing cheaper drugs to be imported from abroad.

The biosimilars legislation is also under assault by liberals, generic drug makers and the AARP, who would rather see that language stripped from the healthcare reform bill than remain at 12 years.

At the same time, PhRMA’s efforts to cozy up to the ruling party have rankled its erstwhile GOP allies. Republican anger with PhRMA boiled over in August when House Minority Leader John Boehner (R-Ohio) penned a letter chastising Tauzin, a former GOP congressman from Louisiana. “Appeasement rarely works as a conflict resolution strategy,” Boehner wrote.

In a nod to the Democratic Party’s liberal base, the president has continued some of the tough talk toward pharmaceutical companies he employed during the campaign.

“Drug and insurance companies stand to benefit when tens of millions more Americans have coverage,” Obama said in June. “So we’re asking them, in exchange, to make essential concessions to reform the system and help reduce costs. It’s only fair.”

But tellingly, the White House and Democrats have been much tougher against the health insurance industry, which has been engaged in an increasingly bitter fight with Obama and Congress.

Earlier this month, the White House and Senate Democrats excoriated America’s Health Insurance Plans (AHIP) for releasing a report saying the Finance Committee bill would increase insurance costs for families by $4,000 each year. “It’s a health insurance company hatchet job, plain and simple,” Baucus spokesman Scott Mulhauser said at the time.

The drug industry has put its money where its mouth is when it comes to campaign contributions, too, according to data from the Center for Responsive Politics.

Since the 2002 election cycle, the share of pharmaceutical campaign cash given to Democrats has rocketed from just 20 percent to 53 percent in the current cycle.

The most dramatic change occurred after Democrats won control of Congress in 2006: During that cycle, drug makers gave 29 percent of their $11.2 million in contributions to Democrats. In the 2008 cycle, it was 49 percent of $15.6 million; so far in the 2010 cycle, it’s up to 53 percent of $3.4 million.

Obama also enjoyed a fundraising advantage over former rival Hillary Rodham Clinton and Republican opponent Sen. John McCain (Ariz.) from pharmaceutical companies during the presidential race.

From last fall until early this year, PhRMA also shuffled its in-house lobbying team, placing former Democratic Senate aide Bryant Hall in charge and promoting two other Democratic lobbyists to more senior positions.

Despite the White House’s and Baucus’s continued defense of their accord with PhRMA, several factors — not to mention lawmakers — are conspiring to threaten it.

Many House Democrats are still bitter about PhRMA’s longstanding support for the GOP and wary of the industry.

Moreover, the Democratic leaders and committee chairmen besides Baucus openly resent having the White House-PhRMA deal dropped into their lap along with similar arrangements with hospitals and other health sectors.