Pharma’s Deal With The White House

Earlier this week the Wall Street Journal ran an editorialal that dissected the deal that big Pharma made with the White House. The essence of it was that their pledge to reduce costs by $80 billion was part of a deal with the Obama administration that capped their “sacrifice” at the $80 billion level. In other words pledge to take a big hit and we won’t squeeze any more money out of you.

It was a stupid deal on the part of the drug companies because they assumed that Pelosi, Reed et.al. would roll over for it. The fact is that Congress is writing the bill and they promptly announced that the deal was an Obama deal and not one they were bound by.

All in all, Pharma got what it had coming but the deal raises bigger questions.

The Journal pointed out that had this occurred in the Bush administration, the press would have been all over it. Remember Haliburton and Big Oil, the root of all evil. Doing secret deals with business that had a dog in the fight was viewed as corruption personified. Essentially, the capture of policy by business.

I was going to post about this at that time and then passed because I thought the Journal editorial a bit hysterical, though it raised important points. But lo and behold we have a certifiable liberal calling the administration to task for this gambit.

Robert Reich on his blog has this to say about what Pharma is doing in return for the deal the White House cut:

In return, Big Pharma isn’t just supporting universal health care. It’s also spending a lots of money on TV and radio advertising in support. Sunday’sĀ New York Times reports that Big Pharma has budgeted $150 million for TV ads promoting universalĀ health insurance, starting this August (that’s more money than John McCain spent on TV advertising in last year’s presidential campaign), after having already spent a bundle through advocacy groups like Healthy Economies Now and Families USA.

I want universal health insurance. And having had a front-row seat in 1994 when Big Pharma and the rest of the health-industry complex went to battle against it, I can tell you first hand how big and effective the onslaught can be. So I appreciate Big Pharma’s support this time around, and I like it that the industry is doing the reverse of what it did last time, and airing ads to persuade the public of the rightness of the White House’s effort.

But I also care about democracy, and the deal between Big Pharma and the White House frankly worries me. It’s bad enough when industry lobbyists extract concessions from members of Congress, which happens all the time. But when an industry gets secret concessions out of the White House in return for a promise to lend the industry’s support to a key piece of legislation, we’re in big trouble. That’s called extortion: An industry is using its capacity to threaten or prevent legislation as a means of altering that legislation for its own benefit. And it’s doing so at the highest reaches of our government, in the office of the President.

When the industry support comes with an industry-sponsored ad campaign in favor of that legislation, the threat to democracy is even greater. Citizens end up paying for advertisements designed to persuade them that the legislation is in their interest. In this case, those payments come in the form of drug prices that will be higher than otherwise, stretching years into the future.

Reich is right on the mark. This is a troubling development. It is not something unique to the Obama administration but it does point out the rot that is spreading throughout government. We have seen it with the large banks and now with the drug companies. Washington is locked in an unholy embrace with big business and that’s a threat to all of us.

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