In May 2009, after the administration was hit by negative stories about the rising costs of its proposed healthcare overhaul, a drug industry lobbyist emailed colleagues, saying that this was ‘perfect timing to cut our deal with the White House as this is swirling.’ Negotiations were conducted in private and the industry seemed to think it was getting a good deal. White House concessions to industry included abandoning price controls for prescription drugs and abandoning President Obama’s campaign pledge to allow the re-importation of cheaper drugs.

The ups and downs of the pharma industry’s response to the bill’s progress through the legislature were under considerable scrutiny at the time. The press reported the huge amounts spent in lobbying and advertising and the fact that the industry was at the same time supporting and opposing the bill. Complaints were made about the ground given to Big Pharma during negotiations.

The emails indicate that the White House originally wanted about US$100 billion in savings and other breaks, but got only US$80 billion, in return for increasing the number of patients with health insurance and drug coverage. They show that drugmakers won other unpublicised deals from the administration. These included a promise from the White House not to demand that drugmakers negotiate Medicare prices with the federal government, which could have reduced drug costs.

In the tussle, former White House Chief of Staff, Mr Jim Messina told drug company representatives in June 2009 that if they did not cooperate on the initiative, President Obama would demand a 15% rebate on Medicare drugs and push to remove the tax deduction for direct consumer advertising―items that could cost the industry US$100 billion over the next decade.

Those threats apparently worked, since parties worked out a deal shortly thereafter. The drug companies agreed to pay higher Medicaid rebates and a new healthcare reform fee to raise US$80 billion for the legislation and promised to run positive television ads about it.

In exchange, the White House gave them direct input into the new policies and promised to let them continue to set their own drug prices.

Editor’s comment
So did these exchanges violate the promises of transparency President Obama made during his 2008 campaign? Or was the deal-making no different from what was done for major legislation under previous presidents? Do not forget it is election year.

Please feel free to share your thoughts via email or in the comments section below. What is your opinion on these ‘behind closed doors’ deals? Should such practices be allowed? Is there a need for complete transparency in dealings with the pharmaceutical industry? 

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