Politics & Policy

A Backroom Drug Deal

Obama's turnabout on insider dealings.

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The White House has yet to entice any members of the Axis of Evil to the negotiating table, unless Billy Tauzin counts. The former Louisiana congressman doesn’t head a rogue state, but PhRMA, the drug-industry trade group whose name is itself a swear word for liberal Democrats.

Tauzin cut a deal with the White House that is keeping PhRMA out of its customary place in the pantheon of Democratic hate groups — for now. Pres. Barack Obama goes out of his way to praise the drug industry. Tauzin has visited the White House half a dozen times and has committed to a $150 million advertising campaign on behalf of Obamacare. He’s become the “good German” of the health-care debate — that is, the good $2 million-a-year drug-industry lobbyist.

Tauzin agreed to pass along $80 billion in savings over ten years. It wasn’t clear what exactly PhRMA had gotten in return until congressional Democrats began to run afoul of the unacknowledged provisions of the deal. It turns out the White House had committed not to not to do three things: impose more than $80 billion in savings, have the government set prices in the Medicare prescription-drug program, and import cheaper drugs from Canada.

Obama had strongly endorsed the last two measures in last year’s campaign. Of course, little that Obama said last year bears on how he governs. But his turnabout on insider dealing would be hilarious if Obama’s shifts hadn’t become so commonplace that they’ve lost their capacity to amuse.

In an ad last year called “Billy,” Obama explained that “the pharmaceutical industry wrote into the prescription-drug plan that Medicare could not negotiate with drug companies.” Obama noted that Tauzin shepherded the legislation to passage before going to work for PhRMA. “That’s an example of the same old game-playing in Washington,” Obama intoned. “I don’t want to learn how to play the game better. I want to end the game-playing.”

Obama deserves points for efficiency, if not consistency. Now the drug industry doesn’t even have to bother writing legislation. It just has to shake hands in a backroom with Obama. Dick Cheney should be jealous. The allegedly underhanded, CEO-coddling vice president merely had a secret energy task force. Obama has bought off an industry group in a secret deal to spare it the worst of a far-reaching government scheme.

Tauzin explained to the New York Times: “We were assured: ‘We need somebody to come in first. If you come in first, you will have a rock-solid deal.’” The implication? Play ball, or pay the price. The insurance industry thought it had responded to the same implicit threat by telling Obama it would stop excluding people with pre-existing conditions from coverage. It has been savaged anyway as “villains” by Democrats who figure they need to vilify at least one industry group, lest their health-care pitch lose its populist edge.

So who got the best of the PhRMA deal? Tauzin is nothing if not slick. PhRMA will charge half price for drugs to those seniors caught in the “doughnut hole” of Medicare coverage, when they have to pay 100 percent out of pocket. As a result, seniors may pass more quickly from the doughnut hole to the phase where the government picks up almost the entire price of drugs. Tauzin’s generosity actually may end up costing the federal government more money.

Nicely played. But slick doesn’t equal farsighted. Democrats in Congress want the government to impose drug prices within Medicare and want more than $80 billion from PhRMA. When pushed, will Obama really choose stereotypical lobbyist Billy Tauzin over stereotypical liberal lawmaker Rep. Henry Waxman? Especially when Obama has an allergy to saying “no” to his Left in Congress? Even if the deal holds, PhRMA will be at the mercy of a government system that will tend to squeeze out even those private players who have obligingly assisted in creating the predicate for their own destruction.

That’s why PhRMA doesn’t really belong in the Axis of Evil. It’s too naïve.

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