The negotiations ultimately produced a May 2009 agreement by the Pharmaceutical Research and Manufacturers of America, Advanced Medical Technology Association, the American Hospital Association, the American Medical Association, America's Health Insurance Plans, and the Service Employees International Union to cut $2 trillion from the growth rate of national healthcare spending over 10 years.
“Of these negotiations, the deal with PhRMA was the most carefully orchestrated, with extensive communications between top PhRMA officials and key White House personnel,” stated a May 31 letter to committee Republicans from the staff sifting through records related to the healthcare deals.
White House negotiators, such as Nancy-Ann DeParle, then the president's senior healthcare adviser, had sought an agreement from drugmakers to accept $100 billion worth of reduced payments over 10 years, according to investigators. However, e-mails showed that when the drug industry balked, the White House accepted $80 billion in cuts, mainly through increased Medicaid rebates and paying for half of the cost of drugs in the so-called Medicare doughnut hole.
“PhRMA also had direct input into the actual legislative policies that produced the $80 billion, including the proposal for closing the Part D doughnut hole,” according to the Republican memo.
In exchange for the cuts, in part, the administration agreed to block enactment of policies opposed by the pharmaceutical industry, according to investigators.
In response to the Republican investigation, Matthew Bennett, senior vice president for PhRMA, issued a written statement that his group had a long history of advocating for policies that ensure patient access to innovative medicines and foster medical progress.
“Before, during and since the healthcare reform debate, PhRMA engaged with Congress and the Administration to advance these priorities,” he said. “The biopharmaceutical sector collaborates with a wide variety of stakeholders, including physician organizations, provider groups and consumer and patient advocates, to pursue the shared, bipartisan goal of improving patient access to high-quality health care coverage, services and treatments. We look forward to ongoing work with Congress and the Administration on bipartisan policy solutions that improve patient health.”
Democrats said the deal-making outlined by the Republican investigation was both the latest example of a long legislative tradition undertaken by presidents of both parties before enactment of major laws and inaccurate in some important details.
For example, the conclusion that PhRMA agreed to only $80 billion in payment reductions was significantly less than the amounts included in the final legislation, said a joint statement by Reps. Henry Waxman, ranking member of the committee, and Diana DeGette, ranking member of its Oversight Subcommittee.
“Interviews the Committee staff conducted with PhRMA lobbyists reveal that the final legislation will cost the drug companies $110 to $125 billion,” the Democrats wrote. “This is substantially more than the amount the Republican memorandum says the White House was able to obtain.”
The committee is next expected to study another aspect of the deal-making leading up to the law's enactment in which the drug industry allegedly agreed to undertake an advertising campaign to sway public opinion in favor of the law.
