[Ip-health] WSJ: Big Pharma Winning Most of What it Wants in HealthCare Debate

[Sarah Rimmington]

http://online.wsj.com/article/SB124779006528954995.html

WALL STREET JOURNAL JULY 17, 2009
*Drug Makers Score Early Wins as Plan Takes Shape*
By ALICIA MUNDY and LAURA MECKLER


WASHINGTON -- The pharmaceuticals industry, which President Barack Obama
promised to "take on" during his campaign, is winning most of what it
wants in the health-care overhaul.

The final contours of the legislation are far from settled, but the
industry, led by a onetime powerful congressman, has notched a string of
victories.

Legislation expected soon in the powerful Senate Finance Committee will
leave out cost-cutting steps as part of an agreement with the industry
and the White House, according to Congressional aides, industry
lobbyists and others involved in the talks.

The missing items include two planks of Mr. Obama's campaign platform:
allowing cheaper drugs to be imported from Canada and giving the federal
government the right to negotiate Medicare drug prices directly with
pharmaceutical companies.

While the industry has engaged in vigorous lobbying just as Mr. Obama
took office, that alone doesn't explain all the success. Reimportation
and Medicare drug-price negotiation are largely symbolic and
Congressional researchers have said they won't save much money in the
long run.

Meanwhile, a separate Senate committee voted this week as part of its
health bill to give branded biotechnology drugs at least 12 years of
market exclusivity, a defeat for makers of cheaper copycat medicines.
"This is the best year the drug industry has had in decades," said Nancy
LeaMond of AARP, the seniors' lobby, which is seeking greater
price-cutting on drugs.

Pharmaceutical firms say cutting drug prices would hurt innovation and
make it harder to bring new medicines to market, and say they are making
sacrifices as part of the health-care overhaul.

Last month, the industry agreed to what Mr. Obama touted at the White
House as $80 billion over 10 years in give-backs to help pay for
expanded health insurance. About $50 billion of the total is available
to help pay for the overhaul, expected to cost $1 trillion over a decade.

The remainder comes from an agreement to sell more brand-name drugs to
certain Medicare beneficiaries at a 50% discount -- which saves those
seniors money but also generates new business for the industry. White
House spokeswoman Linda Douglass said the deal represented "an
unprecedented commitment" from "an industry that has opposed
health-reform efforts in the past."

The pharmaceuticals industry has a war chest it can use either to back a
health-care bill or rally public support against it.

Already radio spots helped secure congressional support for extended
protection for biotech drugs.

If Mr. Obama retreats on some drug-industry issues, it might help him
land a much bigger prize: a broad health-care bill. "The motivation for
the White House and Finance Committee is to take PhRMA and its money out
of any possible opposition, and that's really what's driving these
agreements, along with the desire to get financing for the bill," said
John Rother, another AARP lobbyist, referring to the Pharmaceutical
Research and Manufacturers of America. "Think about who has money enough
to cause a problem."

On Thursday, PhRMA and the liberal group Families USA unveiled
television ads featuring "Harry and Louise," the fictional couple in ads
that helped defeat health legislation during the Clinton administration.
In the new ads, the couple now favors a health overhaul.

PhRMA didn't respond to requests for comment on its ad strategy.

Some Democrats, including Mr. Obama, have pushed Congress to establish a
pathway for generic biological drugs. But the Senate health committee
voted this week to give biologics 12 years of market exclusivity --
separate from any patent protection they might enjoy. The White House
had proposed seven years.

Last month, when it seemed that the bill would be more favorable to
generics, Watson Pharmaceuticals Inc., a big generics maker, announced
the acquisition of Arrow Group of Europe for $1.7 billion as a platform
to develop biologics. "Now we have to rethink our strategy," said Watson
Chief Executive Paul Bisaro. "We're all very disappointed."

In a statement, the Biotechnology Industry Organization said the 12-year
window is a "fair and reasonable period to ensure continued biomedical
innovation."

PhRMA is headed by former Republican Rep. Billy Tauzin, who was chairman
of the House Energy and Commerce Committee and began reaching out to
Democrats shortly after Mr. Obama was elected.

He was among the first people in the health-care industry to sit down in
negotiations with the administration when it took office. That effort
came to fruition with the June announcement of the $80 billion deal. "I
think they probably are the most effective and well-financed health
stakeholder group in the country," said Ron Pollack, president of
Families USA.

The House bill includes about $30 billion more in cuts to the drug
industry than the Senate version, according to calculations by outside
analysts. It also contains one particular measure that drug companies
don't like. When the Medicare drug benefit went into effect, certain
seniors who were getting drug coverage through Medicaid moved on to the
new Medicare program. "It was like a $2 billion-a-year windfall for drug
companies," said Rep. Henry Waxman (D., Calif.), because Medicare prices
are higher.

The House bill proposes rebates that would take back that money, but the
Senate Finance Committee left that out, and the White House declined to
say whether it supports the effort to impose the rebates.

The Finance Committee had proposed using this policy as a stick to make
sure that drug companies gave seniors the 50% discount they were
promising as part of the $80 billion deal.

Drug makers found that objectionable, and the announcement of the
agreement was delayed for 48 hours while they found another enforcement
mechanism, according to one lobbyist involved.

--
Sarah Rimmington
Attorney
Essential Action, Access to Medicines Project
Washington, DC
Tel: +1 (202) 387-8030
Cell: +1 (202) 422-2687
www.essentialaction.org/access/