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Sep. 14 2009 - 6:46 pm | 360 views | 9 recommendations | 57 comments

PhRMA’s Big Bribe Comes In

President Obama speaks with the head of the International Olympic Commission on September 11, 2009 in the Oval Office (Pete Souza/White House)

President Obama speaks with the head of the International Olympic Commission on September 11, 2009 in the Oval Office (Pete Souza/White House)

The drug industry’s trade group plans to roll out a series of television advertisements in coming weeks specifically to support Senator Max Baucus’s health care overhaul proposal, according to an industry official involved in the planning.

via Drug Makers to Back Baucus Plan With Ad Dollars – Prescriptions Blog – NYTimes.com.

I’ve been completely out of the loop with the health care story these last week and half or so, out of touch actually with the entire earth (I’ve been on a deadline on another story), but upon returning to work today I began getting calls about some alarming maneuverings in congress. We’re apparently finally seeing delivery of the Big Bribe that President Obama and Rahm Emanuel extracted from that pharmaceutical industry in exchange for dropping drug-pricing reform in the health care bill.

To recap: PhRMA, the lobbying arm of the pharmaceutical industry, earlier this year announced that it would be setting aside $150 million to pay for an ad campaign supporting the President’s health care bill. The deal was apparently struck in July, after former Louisiana congressman and current PhRMA chief Billy Tauzin (Rod Blagojevich’s underdog opponent in the upcoming semifinal match of the Corrupt Scumbag of the Century So Far tournament) met with Rahm and other Obama aides in the Roosevelt Room of the White House. Also in attendance were representatives of the usual panoply of awful medical corporations, including Abbott laboratories, Merck, and Pfizer. It was in this meeting that the White House agreed to sell out health care reform in exchange for a few bucks to fund the next couple of election cycles.

Tauzin, who has never been one for subtlety or finesse (he took his $2 million-a-year PhRMA job about ten seconds after he finished pushing through the Prescription Drug Benefit bill), stupidly later revealed some of the contents of that shady meeting, saying that the White House had “blessed” a plan involving the $150 million. He disclosed to reporters that he had extracted a promise from the White House to drop two important reforms: one, to allow the government to negotiate bulk rates for drugs in Medicare, and the other to permit the importation of cheap drugs from Canada (which was once an Obama campaign saw).

The only problem with this plan, from the White House’s side, was that not all of the president’s fellow Democrats played along. Specifically, Energy and Commerce chair Henry Waxman put a provision in his health care bill that allowed the government to negotiate lower rates. If Waxman’s language were to be allowed to survive, it would queer the White House’s deal.

So here’s what started happening to kill Waxman’s language. First of all, PhRMA started paying its bribe.

The $150 million it committed to support Obama’s bill is now being rolled out in pro-reform ads, which are being aired mostly in the districts of freshman congressmen. The ads are cheesy, half-hearted tripe blandly supporting the weak-as-fuck remnants of Obama’s health care plan, an example being this “Eight Ways Health Reform Matters To You” ad that salutes the end of coverage denials for those with pre-existing conditions.

Now we’re also seeing pressure from a group of freshmen and Blue Dogs, who have composed a letter to a quartet of House Committee chairs requesting that the Waxman language be removed from the health care bill and replaced with the PhRMA language, which happens to be the language the White House is pushing and which will appear in the Baucus bill in the Senate. The pro-PhRMA language retains the preposterous government subsidy to the pharmaceutical industry in the form of laws banning Medicare from negotiating market rates. It is completely useless and of no possible social benefit to anyone except pharmaceutical companies, but this group still managed to get 60 people to sign this letter.

What does this letter say? Does it argue that the PhRMA language is better for America than the Waxman language? Does it say it will cost taxpayers less and provide cheaper drugs to more people? Hilariously, no. What it says is that this PhRMA language, while worse than the Waxman language, is not quite so bad as you think (it doesn’t save as much as the Waxman language, but it still has a 50 percent price reduction, which isn’t terrible!). Moreover, the letter says, substituting this language will help the bill get passed! Here’s the actual language, addressed primarily to Waxman:

“Your efforts to remove this onerous burden on Medicare beneficiaries… are to be greatly commended. However the commitment by President Obama and the AARP to support legislation that would provide a 50 percent reduction is a dramatic step forward in helping fill the doughnut hole. Equally important, it moves us toward our goal of health care legislation.”

In other words, your attempt to put in a real reform is cool and all, but PhRMA has us by the balls, so help us out.

Interestingly, the congressmen who wrote the bill — former NFL bust Heath Shuler and Illinois Democrat Debbie Halvorson — did not post the letter on their web sites, which is very unusual. One guesses that they are not particularly proud of this particular bit of shameless whoring.

Progressives this week are fighting to accumulate the votes needed to stop any health care bill that doesn’t have a public option. Hopefull they can stop this PhRMA payoff as well. If you’ve got a phone, call your congressman and give him/her hell about this…

This fight on the Hill over health care is extremely interesting and also a very important moment in our history. It was somewhat accidental that the Democrats decided this year to even try this reform; it probably wouldn’t have happened had not a certain segment of their campaign contributors, most notably the major manufacturers like the auto companies, seen their businesses start to crater in part because of health care costs. That’s where the top-down momentum for actually doing something about our absurdly inefficient system probably came from.

So Obama gets elected and swoops into Washington with a big mandate and now the question for him becomes, how do I make all of my various sponsors happy? If you look at the proposals carefully you can see that the whole policy debate is shaped by this dynamic. What is consistently present throughout the policies favored by the White House is an effort to use tax money to subsidize the existing employer-based private system instead of doing the logical thing and taking the bite — for a bite had to be taken out of someone — out of the pharma and insurance industries.

As an added bonus for all of us, the “reform” will include individual mandates designed to significantly increase the insurance and pharma industry’s customer base. So in the end, what we’re looking at is a pair of handouts to corporate donors: tax subsidies to ease the cost of insurance for employers, and mandates to push more business to the health care industry.

On the road to trying to pull this appalling snow job off, however, the Obama administration has stumbled on opposition from both sides. Obviously it will be an enormous victory if progressives can somehow get passed a bill with a real public option and reform of drug prices. But failing that, it would be a very important achievement just to kill the bill entirely. It seldom happens that the public is awake and focused enough to have this kind of OK Corral confrontation with the DC oligarchy, and it has to take advantage.


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  1. collapse expand

    Huh – I thought i came across an article in the Times today that discussed congress’s work to help Medicare recipients pay for all meds they were taking. Perhaps that was yesterday, because I can’t find it now. Sigh. Thanks for drawing mu attention to this disgusting bit of news. And I thought the big cave was going to be the public option rather than a single payer plan (dreaming again).

    Yes people, call all congressional reps. You can call any pf them, but generally you can only email your specific representative – Baucus and Weiner are a few exceptions.

    This would be the day my phone died…

  2. collapse expand

    I don’t know where else to direct this message, but I’ve heard that mtaibbi on Twitter is not the real Matt. Wondering if that’s true and if so, here’s hoping you’ll ever consider rectifying the situation.. ?

  3. collapse expand

    We really need to get smarter about politics. We should’ve learned by now nothing much changes from one administration to the next except maybe for the tone. Which is good, it’s better to not piss-off our allies or inflame our enemies. But the day-to-day saugage making deals of Washington are too grossly depressing for people who allow themselves to get their hopes up.

  4. collapse expand

    Hey Matt! We’ve missed you! There are a few contributors here who have been doing their very best to defend this dogshit reform and we could have used your input.

    I love that you use the word “bribe” to describe this “deal.” If the meeting was anything close to what Tauzin describes, I can’t see how it can be called anything other than a bribe. Isn’t that illegal? Shouldn’t that be investigated? Didn’t Democrats lose their minds when Cheney had the energy companies in to make a deal? Oh – that’s right, Cheney was on the OTHER team.

  5. collapse expand

    Glad you’re back Matt. It’s been so depressing lately to see CNBC shills all over still peddling their ‘greed is good’ crap and being human is bad for business. This coupled with the new realization that old white guys acting like spoiled brats equals constant media coverage and changing pole numbers is enough to make me want to shoot myself in the head.

    Please redouble your efforts with all the good work you do. You’re one of the few true journalists left.


  6. collapse expand

    And I suppose the networks will be happy to endorse the sellout health care BS if they get a nice piece of the ad campaign money being funded by PhRMA. No wonder the rhetoric concerning Obama is so glowing. It is the saddest and most disgusting evidence of the Democrats having learned the worst of the worst of Karl Rove….or is it the reverse of that? Was KKKarl Rove just the A-Student of “The Chicago Way”?

  7. collapse expand

    Unfortunately, my congressman is #1 Cheney dick licker Pete Hoekstra. Pete is too busy teabagging in his bid for Michigan governor to take a call. Besides, asking him to fight Big Pharma would be like asking Harry Reid to grow a pair. Ain’t gonna happen.

  8. collapse expand

    Is this what they meant when they kept saying “the the enemy of good”? The implication is that this will be “good” and we need to sit and take it.

    Great article.

  9. collapse expand

    I still can’t figure out whether Obama intended to sell the country out all along or whether something happened when he took office that made the sell out seem like a good idea. Not that it matters, but there is something about this that just doesn’t make any sense.

    Too many weird things are happening–open gun carrying at his personal appearances and the sign that said “Death to Obama…” People were arrested at Bush appearances for wearing “Out of Iraq” T-shirts and Bush got no shit for keeping protesters penned up a mile away from where he was speaking. This kind of thing could be prevented but it isn’t.

    And then Obama does a complete 180.

    Business as usual just seems like too easy an answer.

    I’m just sayin’, what the fuck?

    • collapse expand

      One has to observe the Big Picture: both McCain and Obama had the same coterie of economic advisors. McCain had Gramm, and Obama had Rubin — both the observable parties behind the passage of the Financial Services Modernization Act and the Commodity Futures Modernization Act (the first allowing for deregulation of the banking, investment and insurance industries, i.e., ultramonopoly creation, while the second allowed for ultraleveraging by those ultramonopolies).

      Next, Obama received the UBS stamp of approval (from a meeting with their CEO). Now why would an American presidential candidate need the approval of the major Swiss bankster????

      The fix was obvious when it was stated that single payer was “off the table” – just like it happened with the Clintons, when they said single payer was not to be considered, and then they had closed-door meetings with the members of the pharmaceutical and insurance industries — just like President Obama!


      In response to another comment. See in context »
  10. collapse expand

    Sadly, Barack Obama will go down in history as being the first African American President – and that’s about it.

    • collapse expand

      I am suprized by what I think is a bit of overreaction to this story. I still think President Obama will end up very successful overall when he finishes his term(s). He has spoken well and has been very thoughtful as he tiptoes through all of these policy minefields knowing at any time a small issue can blow up in his face. He has to negotiate to some extent with everybody to make things happen and do it while trying to remain ethical as possible, which seems to be nearly impossible for a modern politician. He is a good man. I will continue to support him (the structure of our government is a different matter), despite the fact I did not vote for him.

      In response to another comment. See in context »
      • collapse expand

        like you sharkdb, i did not vote for Obama either. and i certainly try to look at Obama’s actions through the same filters as you do.

        and although i didn’t buy into the Change hype at the beginning, i was 100% behind him when he took office. a big part of his campaign was change and transparency, neither of which are reflected here. that’s my biggest concern. horse trade politics.

        i’ve not done a thorough reading of the highlights in the Baucus bill yet, but from what gather from trusted sources, there are some suspect provisions in there that i’ll want to read up on.

        Matt is the only one i have seen talking about this. i’ve seen some thinly veiled references in other media outlets, but We The People should be upset with this. it seems obvious that the goal here is to get something passed, check off a campaign promise. because you know there will be no checking off of any boxes under the military section of the TODO list!

        In response to another comment. See in context »
  11. collapse expand

    why would the admin cede to the pharma industry? To get a hollow bill passed? I don’t see hc industry connections as top contributors aside from a likely indirect connection with the big banks, i.e., goldman, ms, jpm and citi.

    • collapse expand

      It’s a backdoor bailout of the insurance industry, as opposed to the obvious and front door bailout of the banksters (and the one insurer to date, AIG). The same layer upon layer upon layer of securitization which will continue to destroy our economy for years to come was part and parcel of the insurance industry (remember: the deregulation was of the banking, investment and insurance industries).

      The insurance-linked securities, the ILWs, reinsurance with notes, Collateralized Risk Obligations, and on and on, are superleveraged as are all those other securitized instruments.

      There are those who claim they are still worth something? How? How do they know? How can they tell? After so many layers of securitization, just as with dilutions of beer, what is left?

      In response to another comment. See in context »
      • collapse expand

        I see how parts of the bill act as subsidies for insurance/pharma but I think the admin is more pragmatic than a backdoor bailout. I guess its really a question of who holds the cards and I’m gonna go with, not the admin but the 5 committees. I’m not surprised reps and senators are plastic with their ideals but for the admin to act illogically, especially for $150 mm dollars, which in these times would be crisis adjusted to a drop in the bucket makes no sense.

        In response to another comment. See in context »
      • collapse expand

        Don’t know about that. The health insurance companies may be the only industry in America that doesn’t need a bail-out. Take a look at their quarterly and annual reports and you’ll see what I mean.

        In response to another comment. See in context »
        • collapse expand

          Agreed, bailout, front or backdoor is conspiratorial at best. So the admin bed the hc lobby to extricate Canadian drugs and gov’t price-brokering. Still leaves possibility of a public option,

          In response to another comment. See in context »
          • collapse expand

            “Still leaves the possibility of public option..”

            In what universe do you live in?? Prez Obama gave a speech where he completely DUMPED the public option (although he reframed the exchange plan as “public option”) and instead embraced the neocon/Wall Street planck of exchanges, barring citizen access to right to redress via tort “reform” and mandating millions of Americans buy private shoddy insurance.

            He states they will make it illegal for insurance corps to toss the sick off their policies, yet we will first have to sue for the right to sue (see previous neocon/Wall Street tort “reform”) should we seek redress in such a matter.

            And should such legal action go all the way to the Supreme Court, why, he’s already appointed an insurance industry-friendly judge to the unananimously pro-corporate bench (Judge Sotomayor). Can anyone shout: “Who could have ever seen that happening?”

            One has to understand the layers of securitized loans between the major five (JPMorgan Chase, Citi, Goldman Sachs, BofA, Morgan Stanley) and the private equity firms and the pension firms investors and their insurance industry investments (see link to chart under Ungar responses) to fully grasp the significance of a much-needed backdoor bailout of the insurance industry.

            ‘Nuff said….

            In response to another comment. See in context »
        • collapse expand

          Take a look at their balance sheets. With little to deficit net worth, their survival (and ability to pay their lenders) is dependent on continuing to generate their revenues and profits.

          In response to another comment. See in context »
          • collapse expand

            Thanks, Marie, you are right on target, please see my following two posts which elaborates on response to Ungar (and ignore the remark about balance sheet – my mistake, I meant to say annual reports).

            In response to another comment. See in context »
        • collapse expand

          Sorry, dood, but we are waaay past the point in what passes for American high finance today when balance sheets indicate can be trusted.

          Take a far closer and detailed look at the involvement of leveraged buyouts by private equity firms in the healthcare/health insurance industry. Next, take a detailed look at how those LBOs were structured financed. The specifics of their funds, and funds of funds, and in turn the number of securitizations involved in their investors regarding pension funds, foundations, hedge funds, etc., and so on.

          Then you begin to understand my first post.

          In response to another comment. See in context »
        • collapse expand

          Next, Mr. Ungar, you’ll want to go to this site, page 53, and note the financial firms involved, and THEIR derivatives exposure outstanding.

          Studies these details closely and enlightenment will surely follow.

          In response to another comment. See in context »
  12. collapse expand

    People need to be aware of this information! It is completely despicable. So much for “change” this is the same old shady shit!

  13. collapse expand

    Cheney was the power behind the “throne” of the Bush Administration……is Rahm Emanuel (and his Blue-Dog Corporate moderates, the (DLC) coalition) the power behind the throne in the Obama Administration….? Or were we all just fooled again …?

  14. collapse expand

    It’s almost as if you think there was a conspiracy . . .

    I do love the Internet. When one door shuts, another one opens.

    And I knew you could be civil.

    I was surprised at the professional and courteous tone in your legitimate “out of office reply”, not having had the benefit of seeing said P & C tone in any response sent to any of my messages.

    Compare that to the snarky response now that you’re sending out should anyone like me email you.

    What is it about the 9/11 thing that so pushes your buttons? What gives, Mr. Taibbi? Have you thought about it at all?

    In case you didn’t get my other messages in which I asked you if you thought governments ever use false flag operations in order to enact policy changes, and in which I mention that you seem to be a fairly intelligent person who appeared to have some desire for the truth (witness your articles revealing the dare I say conspiracy that Goldman Sachs was involved in and now this one–obviously conspiracies exist), but boy, ask you why you think World Trade Center #7 collapsed into its own footprint around 4:30 that afternoon, and all hell breaks loose. I just wonder how many architects you’ve spoken to, like Richard Gage.
    Curiouser and curiouser, but I’ve had enough.

  15. collapse expand

    Hi Matt! I’m a huge fan of your writing, and I greatly appreciate your making this health care nonsense clear for me, and lots of other people.

    And I know this is pretty random, but I happened to notice on one of your older posts that one of the users on this website asked you about coming to speak at Emerson College, and you said you would like to, but needed details (obviously).

    I’m actually a freshman at the school, and I was wondering if you could tell me anything about whether or not you are coming here to speak. Needless to say, I would be pretty excited if you were!

    Could you answer here? Or my e-mail address is logan_green21@yahoo.com. But I know you are busy. I just thought it would be worth a shot.


  16. collapse expand

    Until we somehow get rid of big money politics and move to some type of public financing of national and statewide elections the money interests will always win. With the Supreme Court considering Citizens United v. Federal Election Commission the ramifications of allowing even greater big money into politics is possible and then our country will really become the corptocracy that many want. The big pharma issue is only a product of a broken political systems that desperately needs to be remedied.

  17. collapse expand

    Speaking on a mid-term election basis, a bipartisan bill could give dems a better chance at retaining majority, given co-ops are in the final bill (sfc bill just released proposes co-ops which shouldn’t come as a surprise). The public option’s petrification seems to be nearing completion unfortunately, so I’m just looking on the bright side. I think hc bill markup is set for sept 21st.

  18. collapse expand

    Why is this so fucking hard? Medicare for all. Take the amount out of people’s paychecks and ban the employer tax exemption. Doctors in the top 10% of charges per patient in each specialty will be automatically audited, cap rates on medical malpractice lawsuits for pain and suffering and have independent review panels to determine if malpractice suits have merit. Medicare negotiates for the best drug prices for consumers.

    If you don’t want the government sticking its nose in your health care business, then pay out of pocket your own damned self. There is no one sane talking about making that illegal.

    Jesus Christ, it’s not that damned hard if you put patient care first. We can’t afford to pay 50% of the world’s drug bill, spend 30% of our money on administration that has nothing to do with care, have the world’s richest doctors, and the huge number of medical malpractice suits we do.

    That these aren’t the Dems talking points is clear that we are being sold out. Baucus wants Co-ops? Who has ever heard of co-ops before this debate? They are a joke!!!!

    Providing a workable health care plan is a piece of cake if you put people first. These politicians are such idiots. For once in their life on this life and death issue, I was hoping they would do what is right instead of what potentially is unpopular to the moneyed crowd.

    Let’s face it. The politicians in Washington just don’t give a shit about the health of their constituents.

  19. collapse expand

    A lot of progressives are puzzled as to why it seems that Democrats in general and Obama in particular have given away more than they had to in the name of getting health care reform passed. Are you saying that this was all posturing? That Democrats, or at least Obama, never wanted real health care reform and always intended to sell it?

    If the price was support for the Baucus debacle, he (and we) really got screwed since health care would have supported that gift anyway.

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    I'm a political reporter for Rolling Stone magazine, a sports columnist for Men's Journal, and I also write books for a Random House imprint called Spiegel and Grau.

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