How the White House’s Deal With Big Pharma Undermines Democracy

I’m a strong supporter of universal health insurance, and a fan of the Obama administration. But I’m appalled by the deal the White House has made with the pharmaceutical industry’s lobbying arm to buy their support.

Last week, after being reported in the Los Angeles Times, the White House confirmed it has promised Big Pharma that any healthcare legislation will bar the government from using its huge purchasing power to negotiate lower drug prices. That’s basically the same deal George W. Bush struck in getting the Medicare drug benefit, and it’s proven a bonanza for the drug industry. A continuation will be an even larger bonanza, given all the Boomers who will be enrolling in Medicare over the next decade. And it will be a gold mine if the deal extends to Medicaid, which will be expanded under most versions of the healthcare bills now emerging from Congress, and to any public option that might be included. (We don’t know how far the deal extends beyond Medicare because its details haven’t been made public.)

Let me remind you: Any bonanza for the drug industry means higher health-care costs for the rest of us, which is one reason why critics of the emerging healthcare plans, including the Congressional Budget Office, are so worried about their failure to adequately stem future healthcare costs. To be sure, as part of its deal with the White House, Big Pharma apparently has promised to cut future drug costs by $80 billion. But neither the industry nor the White House nor any congressional committee has announced exactly where the $80 billion in savings will show up nor how this portion of the deal will be enforced. In any event, you can bet that the bonanza Big Pharma will reap far exceeds $80 billion. Otherwise, why would it have agreed?

In return, Big Pharma isn’t just supporting universal health care. It’s also spending a lots of money on TV and radio advertising in support. Sunday’s New York Times reports that Big Pharma has budgeted $150 million for TV ads promoting universal health insurance, starting this August (that’s more money than John McCain spent on TV advertising in last year’s presidential campaign), after having already spent a bundle through advocacy groups like Healthy Economies Now and Families USA.

I want universal health insurance. And having had a front-row seat in 1994 when Big Pharma and the rest of the health-industry complex went to battle against it, I can tell you first hand how big and effective the onslaught can be. So I appreciate Big Pharma’s support this time around, and I like it that the industry is doing the reverse of what it did last time, and airing ads to persuade the public of the rightness of the White House’s effort.

But I also care about democracy, and the deal between Big Pharma and the White House frankly worries me. It’s bad enough when industry lobbyists extract concessions from members of Congress, which happens all the time. But when an industry gets secret concessions out of the White House in return for a promise to lend the industry’s support to a key piece of legislation, we’re in big trouble. That’s called extortion: An industry is using its capacity to threaten or prevent legislation as a means of altering that legislation for its own benefit. And it’s doing so at the highest reaches of our government, in the office of the President.

When the industry support comes with an industry-sponsored ad campaign in favor of that legislation, the threat to democracy is even greater. Citizens end up paying for advertisements designed to persuade them that the legislation is in their interest. In this case, those payments come in the form of drug prices that will be higher than otherwise, stretching years into the future.

I don’t want to be puritanical about all this. Politics is a rough game in which means and ends often get mixed and melded. Perhaps the White House deal with Big Pharma is a necessary step to get anything resembling universal health insurance. But if that’s the case, our democracy is in terrible shape. How soon until big industries and their Washington lobbyists have become so politically powerful that secret White House-industry deals like this are prerequisites to any important legislation? When will it become standard practice that such deals come with hundreds of millions of dollars of industry-sponsored TV advertising designed to persuade the public that the legislation is in the public’s interest? (Any Democrats and progressives who might be reading this should ask themselves how they’ll feel when a Republican White House cuts such deals to advance its own legislative priorities.)

We’re on a precarious road — and wherever it leads, it’s not toward democracy.

Originally published at Robert Reich’s Blog and reproduced here with the author’s permission.

3 Responses to "How the White House’s Deal With Big Pharma Undermines Democracy"

  1. Anonymous   August 10, 2009 at 11:26 am

    If the governments of the developing world cut the deal as outlined above then it is termed as crony capitalism. I wonder where are the mainstream journalists pertaining to such arrangement between the big pharma and the government? Actually, the lot of the same drugs sold in the US is much cheaper in the developing world. It is extremely weird that the regulators are not aware of this?

  2. Guest   August 10, 2009 at 12:28 pm

    RR commentaty is right on. Big Business (i.e. Pharma and WallStreet) has too much influence on federal government. And, this is only the begining. It looks as if Big Business is covering it’s a$$ by manipulating the media outlets; journalist that could cause a “problem” for thier agenda. The whole monstrouscity is alarming and perhaps beyond control, short of a revolution against the king pin politicians and Big Business CEO/Boards. Interestingly, I find myself thinking “who would the military support in a grass roots revolt?” History is right. It has taken centuries, but coruption and the self intersts of a few deteriorates all societies. Tread lightly Mr. President, you may be one of the few that can derail this tragidy. Long live democracy!

  3. Anonymous   August 14, 2009 at 9:14 am

    Kind of ironic for you to “worry” about a deal like this with Obama and an unscrupulous industry like big pharma while being a big supporter of universal health care and the Obama admin..It just goes hand in hand with everything else people are trying to warn you about. Do you honestly believe that just because you didn’t like Bush that must make Obama perfect? The US is like a woman who can’t choose a good man, if the last one abused her she will invariably choose another initially subtle yet worse abuser the next time. We are way past the “Red Flag” stage in this relationship with Obama and well into the denial phase.