The thank-you note theme runs deep. Last Tuesday, PhRMA and Families took to the airwaves again—this time with a $3.5 million campaign in fifteen senators’ home states, thanking them for working across the political divide. The ads, which run through Labor Day, ask voters to call and thank their senators, and urge them to keep trying to find a way around the partisan gridlock. And there was Ron Pollack in an AP story that got a fair amount of pickup, this time saying: “We want to underscore for people in Montana how important is the work that Senator Baucus has been doing.”
Okay—this is PhRMA’s Mr. Nice Guy side. But is PhRMA really so nice? “More cooperation and less politics”—really now, Louise! PhRMA and company lobbyists have been swarming Capitol Hill for months, making sure that reform won’t damage their bottom lines. Some of the best reporting on Big PhRMA’s lobbying prowess comes from The Wall Street Journal’s Alicia Mundy, who has earned her bonafides covering the drug industry for many years. Last week, Mundy called Tony Butler, managing director and research analyst at Barclays Capital, who told her “the probability of health care reform significantly hurting the drug industry is diminishing each day.”
Wowsers! But if drug makers escape unscathed, what about patients who can barely afford their medicines? Thanks to Mundy, the answer to that question is slowly dribbling out. In mid-July, about the time Harry and Louise returned, Mundy and her colleague Laura Meckler reported that the drug companies were getting most of the concessions they wanted. For example, a Senate committee voted to give branded biotechnology drugs at least twelve years of market exclusivity before generics could hit the market. A House committee approved the same provision, and added one that would allow the companies to make minimal adjustments to existing drugs as a way of extending their monopolies. That means cheaper generics are a long way off for this class of expensive drugs used in gene therapy and blood products. A sweet deal indeed!
Then came the infamous memo that told how the president struck a juicy deal with Big PhRMA. Drug makers agreed to sell discounted drugs to needy seniors who have reached the so-called donut hole in their Medicare prescription drug benefits, where there is no help paying for their drugs. This will help seniors with high drug needs, but it also helps PhRMA sell more drugs. The net/net most likely works in the companies’ favor. Drug makers have also agreed to throw a small bone to the government, giving larger price rebates for the Medicaid program.
In return, Obama agreed to some big concessions that call into question his campaign promises. The White House agreed to oppose the importation of cheaper drugs from other countries (something candidate Obama once supported), oppose negotiations for lower drug prices under Medicare (candidate Obama also supported this), oppose shifting payment for “infusion drugs” now administered at home under Medicare Part B to Part D, the drug benefit (which means companies continue to get paid more). And now the real biggie: the administration promised not to ask the companies for rebates under the Medicare prescription program.
A bit of history here: In 2006, when low-income seniors moved from Medicaid to Medicare for their drug benefits, the government found itself paying higher prices for drugs than when seniors were covered under Medicaid. Some congressional Democrats had hoped to force the drug companies to return some of that money, which totals more than $60 billion. The issue is so crucial for the companies, which call the rebates “price controls,” that a high-ranking congressional Democrat noticed that an industry lobbyist was vigorously pushing members of Congress to oppose rebates, implying that PhRMA could spend the millions set aside for ad campaigns either to “support” reform or oppose it. In other words, the industry could send poison pen letters just as easily as thank-you notes. Now that’s hardball lobbying.