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Miles Mogulescu

Miles Mogulescu

Posted: August 6, 2009 04:23 PM

Why Aren't Progressive Groups Protesting Obama's Back-Room Deal with Big Pharma?


Today's NY Times front page reconfirmed the news that President Obama has made a back-room deal with the pharmaceutical industry to block any Congressional health care legislation that would allow Medicare or most other parts of the federal government to negotiate lower drug prices with the pharmaceutical industry or would allow importation of cheaper drugs from Canada.

This is extraordinarily disturbing for several reasons:

  • This is the only line in the sand that President Obama has drawn in setting forth what provisions are essential in a health reform bill in order for him to sign it instead of veto it. For example, Obama has refused to state that he won't sign a health reform bill without a robust public option. And indeed, the strongest version of the public option still on the table -- the one in the Committee Bill in the House -- is already fatally compromised: Its availability will be limited only to the individual insurance market and not to employers. According to the Congressional Budget Office, when it is fully implemented in 4 or 5 years, it will only insure a maximum of 10 million Americans (compared to over 35 million for Blue Cross) and will have no impact on bringing down health care costs.
  • Such backroom deals with special interests and lobbyists are in direct conflict with Obama's campaign promises to change the way Washington does business. The deal was struck with Billy Tauzin, the pharmaceutical industry's chief lobbyist. For those who don't remember, Tauzin is the flamboyant former Democratic turned Republican Congressman from Louisiana who chaired the House Energy and Commerce Committee, the same Committee now chaired by Henry Waxman, which is writing the House version of health care reform. Even as Tauzin was drafting the Medicare Drug bill -- which banned Medicare from negotiating lower prices with drug companies -- he was secretly negotiating a 2 million dollar a year job as the pharmaceutical industry's chief lobbyist.
  • The ban on Medicare negotiating lower drug prices has cost taxpayers tens of billions of dollars in higher drug costs and made the drug companies tens of billions of dollars at taxpayer expense, helping to undermine the financial viability of Medicare. According to the Medicare Trustees, the cost to the taxpayers of this provision will be $8.7 trillion over the next 75 years. That averages out to $116 billion a year, which alone would more than pay for the entire 10-year $1 trillion dollar estimated cost of Obama's Health Care reform, without raising taxes. In return for Obama agreeing with Big Pharma to continue this ban, Big Pharma has made unenforceable promises to cut federal drug costs by an aggregate of $80 billion over 10 years (i.e., $8 billion a year, barely a rounding error in the overall cost of health reform).
  • Such deals are the epitome of what's wrong with Washington that candidate Obama criticized and President Obama now seems to embrace. Even as Obama is making such backroom deals with powerful special interests, he's telling progressives to back off on criticizing Blue Dog Democrats who want to undermine meaningful health care reform.


Commenting on the backroom deal with Tauzin and Big Pharma, the Deputy White House Chief of Staff told the NY Times, "The President encourages this approach. He wanted to bring all the parties to the table to discuss health insurance reform." But coming to the table is one thing. Buying the whole table is another.

This is a very bad sign that any health care reform bill which eventually passes both houses of Congress and is signed by President Obama will bring meaningful change that would make affordable health care available to all Americans and will "bend the arc" of escalating health care costs. As I cautioned in my recent Huffpo article entitled "ObamaCare," it's starting to look more and more as though "health care reform" will end up being mostly a federal bailout of the insurance and drug industries.

Here's my question: Where is the outrage against these kind of backroom deals from progressive organizations like Move On, Health Care for America Now, the AFL-CIO, the SEIU, and Families USA, who decided that the most "pragmatic" approach to health care reform was to take single payer off the table and back an incremental approach? Where's the pushback from the Congressional Progressive Caucus telling Obama that they won't vote for a bill which bans the government from negotiating lower drug prices?

Even taking the "pragmatic" incremental strategy at face value, there needs to be a two-way street between these progressive organizations and the Obama administration. Their role can't be just to try to mobilize public support for whatever health reform bill comes out of Congress, no matter how compromised and flawed. It must also be to set minimum standards for throwing their political support behind any such bill and to demand that Obama and Congress listen to the grassroots as well as to corporate lobbyists.

Obama's backroom deal with Big Pharma should fail the smell test with these organizations. They should be mobilizing their grassroots networks, not only to support the idea of health care reform, but to block backroom deals with special interests that undermine real reform. How about a petition campaign from Move On and HCAN demanding Obama renounce his deal with Big Pharma? How about a statement from the House Progressive Caucus that they won't vote for a Bill which includes a ban on the government negotiating drug prices?

Progressive organizations should be playing an inside/outside game with the Obama administration -- mobilizing the grassroots to support the administration when it 's bringing positive change and challenging the president to do better when he fails to stand up to the power of big money. They can't be so enamored with being offered a small seat at the White House table that they give up their political independence and their ability to think critically.

Progressives were outraged when the Bush administration and a Republican Congress banned Medicare from negotiating for lower drug prices. Maybe it's time for a little bit of outrage when the Obama administration does the same.