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Discord on Health Care Dulls Luster Of New Pacts

Vice President Biden, with the American Hospital Association's Rich Umbdenstock, discusses a deal with hospitals on health-care reform.
Vice President Biden, with the American Hospital Association's Rich Umbdenstock, discusses a deal with hospitals on health-care reform. (By Ron Edmonds -- Associated Press)

Reid assured the group that the Senate legislation would not be rushed, said Sen. Charles E. Grassley (R-Iowa).

The White House campaign to disarm industry began two months ago with an announcement by six interest groups -- including doctors, insurers and organized labor -- that they would "do their part" to slow the rate of growth of health-care spending by 1.5 percentage points a year.

"The quid pro quo is 'I'll give you savings if you let me play,' " said Dan Mendelson, president of the consulting firm Avalere Health.

Next came a proffer of $80 billion by the drug industry's Pharmaceutical Research and Manufacturers Association, or PhRMA. Drug companies pledged to increase rebates to the federal government and provide 50 percent discounts on prescription medications for seniors who fall into Medicare's "doughnut hole." Once a senior passes his initial coverage limit, he must pay 100 percent of the cost of prescription drugs before he reaches the threshold of catastrophic coverage.

Enticed by the savings for seniors, AARP, with its 40 million members, blessed the deal with the drug industry in a photo opportunity at the White House with Obama.

"The most significant element of this was AARP," said one administration aide working on health policy.

"The seniors were less than enchanted with the notion of health-care reform," said PhRMA chief W. J. "Billy" Tauzin. The deal "gave them a reason to be supportive."

But both sides now make clear that the accord was on the single issue of the Medicare drug discount, and they remain far apart on several other potentially explosive issues.

In a private meeting at the White House on Tuesday, the chief executives of five pharmaceutical companies informed Emanuel and White House health czar Nancy-Ann DeParle that they have serious concerns about proposals to allow the purchase of imported medications and on regulations on generic biologic drugs, Tauzin said.

The Biotechnology Industry Organization, a trade group, and AARP sparred publicly over the generics issue and how many years of patent exclusivity should be given to those products.

"Now one of the nation's largest health insurers, the AARP, says 'cheap and fast' should drive the biosimilars health-care debate," BIO charged in a radio spot.

BIO, in pushing for a minimum of 12 years of patent protection, is "asking for a protection deal twice as sweet" as those given to traditional drugmakers 25 years ago, said AARP spokesman Jim Dau. "The real question is: How much more money do they think they can wring out of patients and taxpayers?"

The administration had expected a good-news bump yesterday from Biden's event with the hospitals. But several state hospital lobbyists formed the "Value Coalition" to push back against a one-size-fits-all deal. In a document distributed to the 50 state associations that make up the American Hospital Association, the group argues for a different approach.

"America's hospitals and the communities they serve are very concerned about any proposal that relies on payment cuts as the primary means by which to fund reform efforts," the document says. Instead, it argues for an "incentive" system that rewards -- not penalizes -- hospitals that have already cut costs.

That proposal was hotly discussed by state association leaders during a 5 p.m. conference call on Tuesday, according to a participant. The coalition plans to go public with its objections soon.

One state association member who helped draft the alternative proposal said the group is not trying to derail health-care reform legislation.

"Much of the agreement . . . has merit, and we would support those provisions. Where we have a major problem is across the board Medicare cuts," the member said. "Such a move merely penalizes low-cost providers when our lower cost should be recognized and perhaps rewarded."

Even if the side deals between the White House and industry hold, several House Democrats reiterated that they will have limited impact on them.

"The people who write the legislation are the members of Congress," said Rep. Diana DeGette (D-Colo.). "We appreciate these discussions, but everybody is well aware legislation has to come through the House and Senate."

Emanuel, however, thinks the desire for affordable health-care reform will trump concerns over specific legislative provisions.

"It leaves those who oppose reform as the defenders of the status quo," he said.

Staff writer Shailagh Murray contributed to this report.

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