The White House - PhRMA Deal: What Really Happened?

I've been trying to peel back some of the spin layers and figure out whether there really was a secret deal to between the White House and PhRMA that would have perpetually protected drug makers from the rapacious reach of Congressional Democrats. The notion that an iron-clad, inked deal existed is a convenient bit of history for the pharmaceutical industry and "drafts" of the "deal" are circulating everywhere.

For Democrats disillusioned with the administration, the "deal" was the last straw. Dan Froomkin, writing at the Huffington Post, calls it "the Obama White House's first really major credibility crisis." He accused White House press secretary Robert Gibbs of "lying" because Gibbs denied there was a deal, albeit in "conflicting" ways, and the "evidence for [a deal] is considerable."

CBS News's Sheryl Attkisson last week revealed a key point, which is that PhRMA agrees that the White House never agreed to drop its support for pursuing Medicare-negotiated drug pricing and drug reimportation.

However, it's also clear that the White House was keen on negotiating with PhRMA -- and that the negotiations involved discussions about ways to limit the ramifications that Congress' health care bills would have on the companies.

So when is a deal really a deal?

The White House agreed, along with Sen. Max Baucus, to not _push_ for the inclusion of Medicare-bulk drug pricing as part of the health care bill itself. (A White House spokesman, Dan Pfeiffer, has admitted this.)

Further, the White House told PhRMA it would not urge House members to rewrite the part of the Medicare Part D expansion that made 6 million Medicaid recipients eligible for the new Medicare benefit. It's not clear how well Baucus briefed other members of the Finance Committee, who denied knowledge of a "deal." Indeed, Baucus could have only been speaking for himself as chairman; he would not use his powers to persuade other Democrats to adopt anti-PhRMA positions as part of the health are bill.

The White House's denials about a deal were broad. Senior Adviser David Axelrod told members of Congress that there was no deal to change the White House's position on these issues. At the same time, Jim Messina, the White House deputy chief of staff (and former Baucus CoS) who was the point person for the negotiations, made it clear to senators that the president had authorized him to try and secure PhRMA's support for the overall legislation, and that Baucus had agreed (two months ago) to a tactical retreat: the Finance Committee wouldn't pursue these issues RIGHT NOW. But it was made clear to PhRMA that, post-health care reform, the White House was no longer bound by the deal. A PhRMA source confirms that PhRMA understood this -- and understood as early as 6/22, when news of the deal was first announced.
The House was largely cut out of these negotiations. White House officials have since reassured House Democrats that while it cannot publicly support these measures in a House-Senate conference, it will not insist on them -- if PhRMA gets the short end of the stick in those deals, the White House won't veto legislation because of it.

From the White House's perspective, getting PhRMA to commit publicly to cut $80 billion was the goal, and it was a success. It is much easier for the White House to slowly back away from its part of the deal than for PhRMA to back away from its promises.

That leads me to the reason for those "draft" memos that are circulating:

Ryan Grim of the Huffington Post obtained from a health care lobbyist a July 7 memorandum that listed what PhRMA had agreed to -- and what it was getting in return. Grim says that the person who prepared the memo was directly involved in the negotiations. Grim's a good reporter, and I have no reason to disbelieve him.

These memos aren't fabricated. The White House believes that they were drafts that PhRMA circulated internally in order to pacify its consistents, who were worried that PhRMA had committed them to profit cuts without getting anything back in return. My PhRMA source doesn't deny it (won't confirm it either), other than to say that the memos don't reflect the deal that PhRMA understands to be in effect today.

In June, PhRMA CEO Billy Tauzin did not realize that the Republican base would be as angry as it is in August, and now has every reason to make it appear as if the White House conceded more than it did.

Incidentally, PhRMA believes that a health care bill will pass Congress. That's why they've sort of agreed with the White House denials of the deal. They don't want to anger House Democrats into writing more punitive provisions.