During the campaign, Barack Obama promised his cheering crowds that, when he rolled up his sleeves to work on health care, he would have “insurance company representatives and drug company representatives at the table. They just won’t be able to buy every chair.” Now is the time to look at just what kind of seats special interest groups are having at Obama’s table and what they’re doing to bring the public around to their ways of thinking. This is the fourteenth of an occasional series of posts that will analyze their activities and how the media are covering them. The entire series is archived here.
Last week, The New York Times published a much-too-familiar story: special interests are flooding the airwaves with expensive ad buys in hopes of influencing the way ordinary folks view health care reform. The piece identified the Pharmaceutical Research and Manufacturers of America—otherwise known as Big PhRMA—as “one of the biggest players in the debate in support of an overhaul.”
Big PhRMA supporting health reform? The companies that have driven up health care costs with their me-too drugs that aren’t any better than older, cheaper ones; that have encouraged consumers to demand expensive drugs to cure ailments they didn’t have before, like restless leg syndrome; that persuade doctors with note pads and golf outings to prescribe more costly drugs instead of cheaper generics; that don’t want consumers to buy cheaper drugs from Canada? What gives here? Have they had a sudden attack of noblesse oblige?
Alas, the Times gave readers a false impression of just what those clever drug companies have been up to. While cultivating a good guy image with the public—and the press—PhRMA has been working behind the scenes, making deals here and there with lawmakers to protect the industry’s considerable profits.
TV advertising has been the tool of choice in the public persuasion department, and PhRMA has used it with a vengeance. Last fall, PhRMA launched a mega-million PR blitz promoting the benefits of the free market, featuring TV talk show host Montel Williams. In one soft and subtle pitch, Williams said that everyone should have affordable health insurance, and that “doing what’s best for patients is what’s best for everyone.”
PhRMA also gave a front group called America’s Agenda: Health Care for Kids (PhRMA was the sole funder) $11 million to produce commercials thanking twenty-eight politicians for supporting expansion of the Children’s Health Insurance Program. What better way to get the public on your side than to say you support insurance for kids? (Of course, dear reader, more insured kids also means mom and dad now can pay for medicines those kids need, which equals more sales.) In February, PhRMA, the Service Employees International Union (SEIU), Families USA, and the American Cancer Society’s Cancer Action Network coughed up $10 million for thank-you ads aimed at eighty-three law makers. “Tell (your member) thanks for standing up for our kids,” advised the commercial, “and that now’s the time to guarantee quality, affordable health care for all.”
Then came July, and PhRMA’s three-week ad run that resurrected Harry and Louise, the infamous TV couple that helped sink the Clinton plan in 1994. This time, they supported reform, with Louise arguing for “a little more cooperation, a little less politics.” This campaign was a bit cheaper, only costing $4 million; Families USA was also a sponsor. “I think this is probably as powerful a symbol that anyone can imagine that shows why middle-class families need health care reform,” said Ron Pollack, who heads Families USA.
Two weeks ago, PhRMA linked up again with Pollack’s group, along with the AMA, the Federation of American Hospitals (the for-profit guys), and the SEIU. This uber-marketing coalition, calling itself Americans for Stable Quality Care, is touting Obama’s consumer protections and “quality, affordable care you can count on”—-those Democratic focus-grouped slogans that poll very, very well among the American public. The price of this ad buy: $12 million.
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.
When Campaign Desk first reported on drug industry lobbying last November, we urged reporters to connect the dots on this one. Reporters have told us that it’s hard to do that. Still, enough of how nice Harry and Louise are; enough of the oohs and ahs over the strange bedfellows ad campaigns; enough of reporting on industry thank-you notes. Americans are being sorely misled.