DRUG DEALERS / THE WALL STREET JOURNAL REVIEW & OUTLOOK

REVIEW & OUTLOOK

AUGUST 7, 2009, 11:39 P.M. ET.

Drug Dealers

The White House buys Big Pharma’s silence

Democrats are trying to explain opposition to ObamaCare as a sinister conspiracy controlled by the hidden hand of the health-care industry. Psychologists call this projection. Why bother with a new conspiracy when you’ve already clinched a secret deal with the President?

Part of the Obama health strategy has been to assiduously co-opt the key health “stakeholders,” primarily with the leverage that legislation was inevitable so they might as well negotiate. Doctors, hospitals, insurers and the drug makers bought it—or perhaps it is more accurate to say were bought. This week it emerged that the pharmaceutical industry’s supposedly voluntary peace offering to cut drug costs by $80 billion to help finance ObamaCare was an explicit quid pro quo in exchange for White House protection.

After the industry trade group PhRMA announced the plan in the Rose Garden in June, liberals on Capitol Hill promptly declared that they were “not bound” by it, as Henry Waxman and Nancy Pelosi repeatedly put it. If the industry could do Mr. Obama the favor of $80 billion, liberals wanted it to eat $100 billion in cuts, or $160 billion, or more.

“The President made the agreements he made,” Mrs. Pelosi said. “And maybe we’ll be limited by that. But maybe not.” Sure enough, the House health bill pockets the money and then imposes price controls in Medicare and other “rebates” from manufacturers, much like Medicaid requires now.

Chief pharma lobbyist Billy Tauzin’s clients were probably wondering about the return on their investment. Then, lo, Mr. Tauzin disclosed this week in a page-one story in the New York Times that, yes, the concessions were capped at $80 billion, no further. “We were assured: ‘We need somebody to come in first. If you come in first, you will have a rock-solid deal,’” Mr. Tauzin said. “Adding other stuff changes the deal.” The White House confirmed Mr. Tauzin’s account.

It’s astonishing to watch the press corps pass all this off as just another day at the Oval Office. During the Bush years, even eye contact with a business, CEO or lobbyist was treated as prima facie evidence of corruption. There was the furor over Dick Cheney’s “secret energy task force,” and even the Iraq war was engineered to benefit Halliburton, Blackwater and Big Oil. But apparently having corporate America dictate public policy is fine as long as it’s the largest expansion of the welfare state since the Great Society.

As for Mr. Tauzin’s gambit that playing nice would spare his industry, he evidently missed the sign hanging above Congress’s chambers: “Abandon all hope, ye who enter here.” Mr. Waxman responded, “PhRMA would like to see if they can get a bargain. I think that PhRMA should contribute more than PhRMA wants to contribute.” Senator Dick Durbin chimed in that “I don’t think any, if many, of us feel bound by any understanding or agreement along those lines.”

What this Abbott and Costello routine exposes is the industry folly of thinking that liberals could be appeased. By now it is beyond obvious that Democrats view whole segments of the health-care industry as expendable. After all, what do insurers really do, besides bilk consumers? Government already pays Medicare bills; it can handle the under-65 crowd too. Over time doctors can be transferred into the civil service, but if they’re good sports maybe at a higher pay grade than the DMV. As for drug research and development, the National Institutes of Health can fill in—and as a bonus, all those government-funded professors won’t care about profits either. For the Democrats running Congress, merely allowing a business to continue to exist is a concession.

Even if Mr. Tauzin’s strategy works this time around, it will only push his clients deeper into Mr. Waxman’s embrace as government pays for the majority of American medicine. If ObamaCare is defeated, it will be due to the common sense of the American people, not to the health-care lobbies that have become its political partners.


Copyright 2009 Dow Jones & Company, Inc. All Rights Reserved