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The unlikely union of Pharmaceutical Research and Manufacturers of America or PhRMA and the White House has many wondering about the true nature of this partnership. Especially taking into consideration the powerful lobby�s opposition to any kind of health care reform for years. The Real News spoke with Donna Smith, Community Organizer for California Nurses Association, about drug industry’s possible impact on the final legislation. Produced by Ania Smolenskaia

Story Transcript

Obama’s PhRMA deal
Producer: Ania Smolenskaia

ANIA SMOLENSKAIA, TRNN: The unlikely union of Pharmaceutical Research and Manufacturers of America, or PhRMA, and the White House, has many wondering about the true nature of this partnership, especially taking into consideration the powerful lobby’s opposition to any kind of health-care reform for years. Drugmakers were the first out of six groups to strike a deal with the White House back in June, agreeing to cut their draw by $80 billion over a ten-year period if the legislation passes Congress. As a testimony of their unwavering support, the industry’s lobby group is projected to spend $150 million on TV ads in support of the health reform.


Harry and Louise 2009

LOUISE: A little more cooperation, a little less politics, and we can get the job done this time.



DONNA SMITH, COMMUNITY ORGANIZER, CALIFORNIA NURSES ASSOCIATION/NATIONAL NURSES ORGANIZING COMMITTEE: The pharmaceutical companies in this country make, bar none, the biggest profit margin of any industry on the planet, and it’s a huge, troubling factor that they’re so closely entwined with this health-reform effort. I think a lot of Americans know that when the Part D drug benefit passed on our Medicare program just a few years ago, it did not indeed make things better for cost factors for the Medicare program. And for a lot of the people who are getting drugs and services through Part D, big pharma makes deals that make big pharma money.

SMOLENSKAIA: In his 2008 campaign ads, Obama denounced Billy Tauzin, head of PhRMA, for blocking Medicare from negotiating for lower drug prices. Tauzin, one of cofounders of the House Blue Dogs coalition, crossed over to the Republican side in ’95.

BARACK OBAMA, US PRESIDENT: The pharmaceutical industry wrote into the prescription drug plan that Medicare could not negotiate with drug companies. And you know what? The chairman of the committee, who pushed the law through, went to work for the pharmaceutical industry, making $2 million a year.

SMOLENSKAIA: In their last week’s article, Los Angeles Times reports that Tauzin said he carefully negotiated his agreements with the White House, offering the $80 billion discount program in return for assurances that there would be no government price-setting in Medicare Part D, Medicare prescription drug coverage for seniors.

SMITH: They talk about they’re going to hold costs down, maybe they’re going to shave off a few billion dollars here over the next ten years and a billion dollars there. But that’s a drop in the bucket in comparison to what they will gain by having a purchase-insurance mandate that would make every American citizen purchase coverage that would allow them to buy the drugs that big pharma will not be required to negotiate any bulk pricing for or any lower pricing for anyone. So it’s a huge windfall for them that if health-care reform passes. With all of us purchasing coverage through private insurance and bringing those dollars in to buy pharmaceuticals, it’s a huge, huge benefit to them.

SMOLENSKAIA: According to Los Angeles Times, Tauzin also said the industry asked the administration not to allow the import of cheaper drugs, because of safety concerns.

SMITH: Big pharma, they get a patent on a drug that comes out, and that drug is charged at a certain level that they say reimburses them for the development and all the marketing and all the early portions of getting that drug to market through the FDA and all those kinds of things. But then many of us know they tweak that drug’s formula just ever so slightly at the end of that patent agreement, and they get another patent extended for another period of time, again reaping huge profits on the backs of the American people. And sometimes people who desperately need those medications can’t purchase them, can’t buy them. And if President Obama has already given up the right to negotiate bulk pricing on medications, that is a ridiculous thing to offer on our behalf. We wouldn’t want him to do that. If we want to be economical and be fiscally responsible, we negotiate the best deal for the people of this country, not the one that makes big pharma the happiest. Wal-Mart is able to offer drugs at a generic price because they negotiate, they buy in such huge quantities. I came from a state, South Dakota, where there were actually bus trips arranged of senior citizens who would get on buses and travel across the Canadian border in order to go up and buy medications at a price they could actually afford, along with being able to pay their housing costs and just live and survive. I mean, how tragic this country. We say we care about senior citizens, and then to allow those kinds of things to transpire and to say, you know, we have scare tactics about, oh, maybe drugs aren’t as safe that come from another country, we don’t watch out for the safety measures as closely. That is ridiculous, to think that countries like Canada would allow drugs that were unsafe to be on the market. I mean, it’s an insult to the people of Canada and to those systems that have developed very safe processes of their own over time.

SMOLENSKAIA: Republicans are clearly displeased with political support the White House is getting from industry groups. In a letter to Tauzin, Republican Congressman John Boehner scolded him for making a deal with “Big Government”. He wrote that “appeasement rarely works” as a conflict resolution strategy, and that the deal is a “threat to PhRMA’s groundbreaking medical research, and the American people, including PhRMA’s customers�and the families of PhRMA’s employees�face the prospect of higher costs and reduced quality in health care.”

SMITH: The United States taxpayer is already paying for a lot of that research and development through the institutes of health, through major institutions, universities, and academic institutions, so it’s a fallacy to think that if we were to reform health care and hold big pharma down on some of its costs, that we wouldn’t have research and development. In fact, other countries are doing quite well with systems in which the public funds the research and the public takes advantage and shares all the information across the board on what happens. This has been kind of the Obama administration’s strategy from the beginning is that you vilify these folks, the insurance industry and the pharmaceuticals, and then you cut deals in secret with them, and then you announce that these deals are such a marvelous find for the American people. It’s an interesting strategy, although I don’t find it a very elegant strategy or necessarily a very successful one if we look at what’s happening with health-care reform right at the moment. And it’s unfortunate, because this president is a bring-it politician, and you look at what he’s allowing to be sold under his watch and you think, this is such a loss for the nation that we aren’t further along in this health-care discussion, completely celebrating it, accepting the fact that health care is a basic human right, as he declared during his campaign, and moving forward from that position instead of just moving forward from the position that we want to keep the market in place, including big pharma and the insurance industry.


Please note that TRNN transcripts are typed from a recording of the program; The Real News Network cannot guarantee their complete accuracy.

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Donna Smith is a community organizer and legislative advocate for the California Nurses Association.