Tag Archives: Billy Tauzin

Big Pharma Wins Big in Health Care Reform

The Republicans look a sour lot this morning, but the pharmaceutical industry, which helps foot the campaign bills of a sizeable chunk of members of both parties, is delighted with the legislation, and with its Democratic friends in the White House and on the Hill.

Members of Congress in both parties generally have lined up behind the insurance and pharmaceutical industries from the get go. So it should come as no surprise that the Democrats, who long ago gave up any pretence of opposing corporate power, found a way to accomodate the pharmaceutical companies on the way to its tepid reform. To a large extent, the “debate” over health care was a show debate, an extended round of Washington smoke and mirrors. The administration early on cuts its deal with Big Pharma, and pretty much stuck to it throughout the process.

In fact, the Dems actually made the drugsters look good, celebrating the industry’s generous “concessions” and “discounts” while ensuring that no real threat to Big Pharma’s profits would make their way into the final bill.

The industry’s  main goal from the very beginning has been to fend off any government power to negotiate or seriously regulate drug prices–and this they did. 

Big Pharma’s second big win was to prevent any measure that would have opened the way for American consumers to buy less expensive drugs abroad, especially from Canada.

At the same time, the supposed give-backs by the drug industry are projected to more than pay for themselves. The much-lauded discounts on brand name drugs for seniors in the Medicare prescription drug program, for example, are good for Big Pharma because they discourage oldsters from switching to generics.

And more insured people simply mean more money coming into the coffers, for Big Pharma as well as for the insurance industry.

Confirmation of the industry analysis came early in the day from the stock market, where drug stocks initially remained level; there certainly was no rush to dump shares, which is what would be expected if the bill actually represented any threat to profits. And by 1 p, EST, CNN Money was reporting a rally in health care stocks.

“I was unable to find anything in there that would cause me to have anxiety if I were a shareholder in a pharmaceutical company,” Ira Loss, a senior health-care analyst at the research firm Washington Analysis, told Dow Jones. According  to the ticker story:

Billy Tauzin, who led the industry’s negotiations on health care with lawmakers, said overall drug makers fare well. “While we’re not totally happy,” Tauzin began, “we generally feel like it tracks with our principles.”

Sanofi-Aventis SA (SNY) Chief Executive Christopher Viehbacher said in an interview that the impact of the legislation will be neutral to slightly negative “but better for the industry than if healthcare reform didn’t pass.”

Tauzin, head of the Pharmaceutical Research and Manufacturers of America or PhRMA, and Viehbacher said getting protection for brand-name biologics is among the important provisions for the industry. Drug makers pushed hard to get 12 years of exclusive market protection while the White House and some lawmakers wanted to lower the protection to seven years.

Despite fees and rebates imposed by the legislation, “analysts say drug makers will end up recouping those costs through new customers: The bill would provide insurance coverage to an additional 32 million Americans.” The Dow Jones story continues:

Chalk up another good round for Pharma and Biotech in health care reform,” began a note to clients Friday from Concept Capital, a research firm.Ken Tsuboi, co-manager of the Allianz RCM Wellness Fund, sees the impact of bill, and its $90 billion in concessions over 10 years, as relatively minor in an industry that has annual global sales of about $750 billion, with about $300 billion in the U.S., and margins close to 30%.”I think that it is actually a pretty good deal for Pharma,” Tsuboi said.

The GOP, which purports to be the party of big business, ought to be applauding at least these portions of the health care reform–and perhaps when the cameras go away, some of them will quit bitching and count their blessings.  As for the obnoxious Tea Party gang, if they start threatening the real power in this country, which is vested in corporations, they may well find themselves whipped and isolated.

Ignagni v. Obama: Another Victory for the Health Insurance Industry

For months, even as other Democrats fell by the wayside, Nancy Pelosi has been saying she wouldn’t put through health reform without a “robust” public option. Instead, she this week agreed to a provision that would make any public plan weak to the point of meaninglessness.

In announcing the House Democrats’ health reform plan, Pelosi made it clear that she has abandoned any ideas that the public option’s payment rates should be based on Medicare rates, or otherwise standardized and set by the government. Instead, the government-run  insurance plan will negotiate rates with doctors and hospitals, just as the private insurers do.

What this means is that plan rates under the public option will be pegged to those of the insurance industry, eliminating any real chance that the public option will bring down health care costs by “competing” with the private companies. There is no waffling here. Just complete capitulation to private industry.

Pelosi apparently gave in under pressure from members of her own party. But the real winner in the health reform debate are not the so-called moderate Democrats, or the Republicans, and certainly not Obama or Pelosi or Harry Reid. It is Karen Ignagni, president and CEO of America’s Health Insurance Plans. She called the politicians’s bluff—and won.

She knew from the very beginning, as did most of Washington, that the profit-making industries who control the American health care system would emerge victorious. Billy Tauzin, mouthpiece for Big Pharma, whined about Obama’s duplicity but sat tight, knowing the drugmakers had in the end gotten a sweet deal. Ignagni, likewise, didn’t make threats. She waited, then executed her own double-cross and  amidst  liberal yelps ran right through the opposition without a scratch.

Could anyone have blocked Ignagni’s breakaway run? Not in this crew, that’s for sure. LBJ would have stopped her. Liberals scorn Johnson because of Vietnam. But LBJ had a domestic program that he never lost sight of, and that he refused to concede enitrely to the power of corporate America. It was Johnson, after all, who got the bill creating Medicare through Congress, over the objections of the AMA and a lot of other powerful interests. Neither Pelosi nor the  oh-so-clever Rahm Emanuel has Johnson’s dealmaking abilities–or his spine. 

Big Pharma Is the Big Winner in Health Care Reform

 Big Pharma was the real winner in last week’s shouting match between Obama and the insurance industry. Insurance execs took all the heat for attacking the White House’s health care reform plan after the administration and lawmakers had negotiated for months to craft a proposal that the industry could live with. Meanwhile, Pharmaceutical Research and Manufacturers of America (PhRMA), the main industry umbrella group, got to play the good guy—all the while escaping scrutiny for the fact that in recent months it has been quietly jacking up drug prices. 

Of course, Big Pharma already stands to hit the jackpot from Obama’s proposed reform plan. Under the deft direction of its chief lobbyist, former Louisiana congressman Billy Tauzin, PhRMA had already secured a valuable deal from the White House to provide a $80 billion in cost savings over the next 10 years in return for the President’s promise to oppose controls on drug pricing and importation of drugs from abroad.

As Fox’s Brian Sullivan points out, health care reform will increase the market for pharmaceuticals by tens of millions of people—a stock market bonanza:

The top 10 prescription drugs in America do around $40 billion per year in sales. It is estimated that 30 to 40 million Americans… lack insurance, or about 20 percent of the population. These 30 to 40 million new ‘customers’ will have greater access to doctors and prescriptions. …this could add another 20 percent to sales of just the top 10 drugs alone. Twenty percent of $40 billion is—bingo—$8 billion per year. And remember that only factors in the top 10 drugs. There are hundreds more in the market. It is clear that $8 billion in cost cuts will be made up in multiples over the years.

But just in case someone throws a wrench into the deal, Big Pharma has been hedging its bets by quietly running up drug prices this year. The Pharmalot blog reports:

During this year’s third quarter, eight of the biggest drug makers introduced hefty price increases of an average 8.7 percent—easily outdistancing the core Consumer Price Index of 1.4 percent, according to a recent research report by Credit Suisse analyst Catherine Arnold.

Who led the pack? Schering-Plough (soon to be bought by Merck) with a 12.8 percent hike, while Abbott imposed a 4.4 increase (Abbott’s price hikes have, in fact, been declining over the past year, the report notes). What about the others? Merck upped the ante by 9.9 percent; Wyeth (soon to be part of Pfizer) drove prices higher by 9.3 percent; Lilly was at 9.1 percent; Bristol-Myers Squibb prices rose 8.9 percent; Johnson & Johnson increased prices by 7.8 percent, and Pfizer prices rose 7 percent.

Of course, the White House could back out of its arrangement. But as the Senate Finance Committee moved the legislation last week, the deal seemed to be holding together just fine. Newsweek’s Howard Fineman explains how two attempts to ramp up funds from the drug industry were beaten—not by Republicans, but by Democrats:

The Senate Finance Committee’s bill, which passed out of committee on Tuesday, leans very hard on Medicare—but treads very lightly on the private sector. Sen. Bill Nelson, a Democrat from senior-dominated Florida, apparently had not gotten the memo about leaving Big Pharma alone. He wanted to offer two amendments, each of which would have taken another $100-billion-plus bite out of the industry’s Medicare revenue. Tauzin was not pleased. Neither was the White House. The senator was talked out of offering one amendment. He narrowly lost on the other after [Jim] Messina, the White House aide, called to express his dismay and to remind everyone that a deal was a deal. Democrats celebrated the outcome as a victory. The only losers were the American people. But, hey, they weren’t at the table.

Obama’s Sellout to the Drug Kingpins

Obama and the Democrats’ sellout on health care is hardly any secret, but today’s news of an outright backroom deal guaranteeing drugmakers control over pricing is one for the history books. Even the Republican right, so detested by liberals, doesn’t get down for big business quite like this.

Among other things, this slimy arrangement  with Billy Tauzin, head of Big Pharma’s trade association PHRMA,  throws American antitrust law out the window. This is a clearcut cartel-style arrangement, openly sanctioned by the President. All this baloney about competitive markets! It is patterned after the international oil cartel of the early part of the last century, which divvied up Middle East oil, and the U.S. automaker cartel to prevent instllation of safety devices in the 1950s and 60s.

As it now stands, there is no control over drug pricing in the United States, save for a gesture in that direction under the Medicare Part D prescription drug insurance plan for the elderly. The system currently allows drug firms to set prices they charge for prescription drugs under Medicare in what amount to sweetheart deals with the private insurance companies that actually handle the insurance under the Medicare plan. Because drug pricing and insurance costs are set—basically at will—by these two industries, critics have demanded the government step in and set prices. Those demands haven’t gone anywhere, but never has there been an explicit announcement from on high about the deal. It’s always been just another one of Washington politics dirty little secrets.

Here is the way the New York Times reported it this morning, including an extraordinary public concession from the President.

 “We were assured : ‘We need somebody to come in first. If you come in first, you will have a rock-solid deal,’ ” Billy Tauzin, the former Republican House member from Louisiana who now leads the pharmaceutical trade group, said Wednesday. “Who is ever going to go into a deal with the White House again if they don’t keep their word? You are just going to duke it out instead.”

A deputy White House chief of staff, Jim Messina, confirmed Mr. Tauzin’s account of the deal in an e-mail message on Wednesday night.“The president encouraged this approach,” Mr. Messina wrote. “He wanted to bring all the parties to the table to discuss health insurance reform.

As for $80 billion drug company voluntary gift to the President to help achieve the appearance of a bi-partisan deal for health care reform, it’s all smoke and mirrors. No more than $20 billion is to go to a widely hailed plan to help Medicare recipients by subsidizing their drugs while they are in the Medicare coverage gap known as the “donut hole.” The rest is to be doled out according to some yet to be known plan set forth by the drug makers.

In addition, as I’ve written before, the money to “help” the elderly is limited to brand name drugs, many of them coming off patent and about to go generic. The industry wants to keep on selling oldsters the expensive brand names, but Medicare recipients could save money under the existing plan by buying generic equivalents when they fall into the donut hole. Under the Big Pharma plan, elderly people who choose the name brand drug will get a subsidy–thus discouraging them from switching to generics. And of course, once they come out of the coverage gap and they’ll be charged full price once again, and the government will pay up. In the long run, it’s only likely to increase the drug companies’ private profits, at public expense. So once again, the “concessions” are all on one side.