Smoking gun: Memo proves secret deal denied by Obama and pharma?

posted at 4:56 pm on August 13, 2009 by Allahpundit
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Maybe Naked Emperor News was right. Maybe this really is the mother of all Obama lies. Thanks, HuffPo!

It says the White House agreed to oppose any congressional efforts to use the government’s leverage to bargain for lower drug prices or import drugs from Canada — and also agreed not to pursue Medicare rebates or shift some drugs from Medicare Part B to Medicare Part D, which would cost Big Pharma billions in reduced reimbursements.

In exchange, the Pharmaceutical Researchers and Manufacturers Association (PhRMA) agreed to cut $80 billion in projected costs to taxpayers and senior citizens over ten years. Or, as the memo says: “Commitment of up to $80 billion, but not more than $80 billion.”

Representatives from both the White House and PhRMA, shown the outline, adamantly denied that it reflected reality. PhRMA senior vice president Ken Johnson said that the outline “is simply not accurate.” “This memo isn’t accurate and does not reflect the agreement with the drug companies,” said White House spokesman Reid Cherlin…

PhRMA’s Johnson cast doubts on the provenance of the outline. “The memo, as described, is simply not accurate,” he said in a statement. “Anyone could have written it. Unless it comes from our board of directors, it’s not worth the paper it’s written on. Clearly, someone is trying to short circuit our efforts to try and make health care reform a reality this year. That’s not going to happen. Too much is at stake for both patients and the U.S. economy. Our new ads supporting health care reform are starting this week, and we are redoubling our efforts to drive awareness of why this issue is so important to America’s future.”

Johnson added that “no outside lobbyists — not a single one — were ever involved in our discussions with the Senate Finance Committee or the White House so someone is blowing smoke.”

One memo produced by one lobbyist is an awfully thin reed on which to rest a charge like this, as any Rathergate veteran would remind you. The most transparent administration evah making secret promises to private industry not to push as hard as it might to control costs on its flagship policy measure? Why, it’s almost too good to check. Exit question for the economists among us: Why would the pharmaceutical business risk creating a monopsony among its consumer base by supporting a government program that could eventually lead to a single-payer system? Having only one client — especially a client with the power to regulate the price you can charge him — gives him an awful lot of leverage over you. Which is, er, a bad thing, isn’t it? Yet they’re ready to plunk down $150 million to advertise on behalf of it, on the word of a guy from Chicago that he won’t double-cross them and demand lower prices once the bill is safely passed and he has the power he wants. Good work, pharma.

Update: The obvious answer to the exit question, I guess, is that they get 47 million more people in need of medicine who suddenly have the wherewithal to pay for it. But even at that number, is giving up all that economic leverage worth it in the long run? Maybe they’ve concluded that whatever passes won’t be single-payer and won’t end up evolving into single-payer over time. If they have a reason to believe that given the competitive pressures that private insurers are going to face, I wish they’d speak up about it more.

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