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Obama's Deal With Drug Firms Survives

By Ceci Connolly
Washington Post Staff Writer
Friday, September 25, 2009

In the high-stakes battle over health care, the White House and the drug lobby make an unusual -- and unusually powerful -- team.

The extent of their combined clout showed Thursday as Democratic senators tried unsuccessfully to override a deal the industry struck months ago with the Obama White House and Senate Finance Committee Chairman Max Baucus (D-Mont.). If the deal fell apart, industry allies warned, the drug lobby could pivot from health-reform cheerleader to committed opponent armed with a $125 million war chest.

"They're not foolish," said Sen. Thomas R. Carper (D-Del.), whose state is home to pharmaceutical giant AstraZeneca. "I know I would walk away."

The showdown in the Finance Committee, over an amendment to squeeze more money out of drug companies, was an early test of the ability of Baucus and President Obama to hold together a tenuous coalition of industry and special-interest players that crushed health reform 15 years ago. It also foreshadowed battles to come: Democrats in both the House and Senate vowed anew to seek larger concessions from an industry that spent $92 million in lobbying in the first half of this year.

"I hope it passes here or on the [Senate] floor," said Sen. Charles E. Schumer (D-N.Y.), a supporter of the amendment. In the end, Carper and Sen. Robert Menendez (D-N.J.), whose state is home to drugmakers Johnson & Johnson and Merck, joined with Baucus and the panel's Republicans to defeat the measure, proposed as an amendment to a bill written by Baucus.

The pharmaceutical fireworks came in an otherwise sluggish third day of committee deliberations on Baucus's bill. Republicans tried but failed to restore proposed cuts in the Medicare program and to remove a requirement that every American carry health insurance. The panel has yet to resolve how to make insurance affordable, an issue of concern to several Democrats and Sen. Olympia J. Snowe (R-Maine), who is believed to be a key swing vote.

In the House, Democratic leaders discussed how to bring a bill to the floor by mid-October. The central outstanding issue is the shape and format of a government-sponsored alternative to private insurance.

House Speaker Nancy Pelosi (D-Calif.) said that some ideas proposed by centrist Democrats were not acceptable. She rejected a proposed "trigger" that would implement the so-called public option if affordable coverage is not available to the majority of Americans after several years. "A trigger is an excuse for not doing anything," she said, summing up what she described as the "attitude" of many colleagues.

If the trigger is off the table, the key decision ahead for Pelosi's leadership team is choosing between competing versions of the public option that House committees have approved. One is preferred by the party's dominant liberal wing, while another is backed by a large bloc of moderate-to-conservative Democrats.

The Senate Finance Committee has not yet addressed that issue, but a group of Democrats intends to demand votes Friday on adding a public insurance option to the bill written by Baucus. Although the measure is expected to be defeated, Sen. John D. Rockefeller IV (D-W.Va.) predicted that his colleagues would come to view the government plan as the most effective way to control spiraling health-care costs.

"There really isn't an alternative, except the status quo," Rockefeller said. "This whole health-care fight is about getting away from the status quo so people can have health insurance they can afford."

Democrats also sought to increase pressure on all but the smallest employers to provide insurance for their workers.

But it was the debate on the pharmaceutical industry that sparked the most dissension Thursday.

Under the agreement negotiated by the White House, drug companies pledged to contribute $80 billion in discounts and fees over the next decade in return for a universal health-care bill that could deliver 30 million newly insured customers. Some of the money would provide 50 percent discounts on brand drugs purchased by seniors who fall into a Medicare coverage gap, known as the doughnut hole.

For the Obama White House, it was the first critical building block in its strategy to neutralize potential adversaries and lock in dollars to help defray the cost of its health-care overhaul. Drugmakers, meanwhile, saw an opportunity to buff their image and limit financial exposure in an unpredictable political process.

Democrats not privy to the closed-door talks chafed at the deal, accusing the administration of settling too early for too little.

"The so-called pharma deal, cut with whomever, was pretty lenient," Schumer said.

Sen. Bill Nelson (D-Fla.) led the attack, arguing that his amendment would recoup money the government lost when it moved elderly Medicaid beneficiaries into Medicare. Drug companies pay 15 percent rebates on Medicaid drugs but not on Medicare prescriptions.

Carper and Menendez said it would be unfair -- and politically risky -- to back out of the deal.

Research editor Alice Crites and staff writers Shailagh Murray, Paul Kane and Ben Pershing contributed to this report.

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