Pharma-White House Deal Imperiled Despite $100M Outlay

Industry Delivers on Pro-Health-Care-Reform Marketing, but Admin May Not Honor Its End of Bargain in Shifting Bill

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NEW YORK (AdAge.com) -- It's looking likely that the Pharmaceutical Research and Manufacturers of America wasted up to $100 million in advertising to promote a health-care-reform bill that will ultimately offer the industry no protection.

Some pharmaceutical-industry observers and blogs are suggesting that the backroom deal made last year by the drug makers' top lobbying group and the White House -- a controversial handshake agreement that limited Big Pharma's share of footing the health-care bill at $80 billion over 10 years -- has fallen apart now that President Barack Obama has introduced a revised form of the bill last in the wake of shifting public opinion. And the deal's architect, PhRMA President Billy Tauzin, a former Congressman from Louisiana, announced his resignation last month. That resignation is effective June 30.

The problem for PhRMA is that it's already honored its end of the deal and can do nothing to stop the terms from changing. The new health-care proposal includes, among other things, a clause that allows the government to negotiate directly for Medicare drug prices. That language was not in the initial health-care bill as part of PhRMA's deal with the White House. And as of now, that $80 billion cap is likely to increase to $90 billion, if not more. Indeed, with no firm deal in place, there's nothing protecting PhRMA at all.

PhRMA did not return a request for comment by press time.

"The deal PhRMA negotiated could still be on the table, but you need to have the other side actively engaged," said longtime pharmaceutical expert Peter Pitts, a former associate commissioner at the FDA and now president of the Center for Medicine in the Public Interest. "The White House is not necessarily in coordination with the Senate and the House, so it's confusing and now it's a bit of a crapshoot."

Strong effort
PhRMA had vigorously backed last summer's version of the bill, which appeared headed for passage, with ad campaigns on several fronts. Notably, it teamed with Families USA to resurrect the "Harry and Louise" characters from the first health-care debate in the early 1990s under then-President Bill Clinton. This time, however, Harry and Louise were proponents of the health-care reform package, after objecting to the proposals some 17 years ago.

Last August, PhRMA Senior VP Ken Johnson told Ad Age that while he wouldn't speculate on the amount of money, PhRMA's board "has agreed to make a significant commitment to try and bring health-care reform across the finish line."

As recently as Feb. 22, PhRMA put out a statement after the new version of the bill was introduced that said, "We remain committed to health-care reform done in a fair and smart way. We continue to believe that all Americans should have access to high-quality, affordable health-care coverage and services."

The White House, of course, has no obligation to honor its end of the deal. "I'm not sure the deal is dead, but if it's based on a handshake with Billy, it sure sounds dead," said John Mack, editor-publisher of Pharma Marketing News.

Even Republican leaders, who always enjoyed a good relationship with PhRMA, were never enamored with the pact. Late last month, at a White House bipartisan summit after the president announced details of the new health-care bill, Sen. John McCain, R-Ariz., made note of the dealings with special interest groups, saying "one of them that was particularly egregious, and I won't go through the whole list, was PhRMA. PhRMA got an $80 billion deal and in return for which they ran $150 million worth of ads in favor of, quote, 'health reform.' Their over-$2 million-a-year lobbyist [Mr. Tauzin] was here at the White House and was reported to say in the media 'a deal is a deal.' " While PhRMA pledged it would spend $150 million in advertising, the general consensus among experts was that it had only spent up to $100 million before the administration shifted strategy.

AARP, also an active player in the advertising business last year in support of health-care overhaul, said this week it would scale back its media spending this time around. "Are we just going to sit on the sidelines? No," David Sloane, senior VP-government relations for AARP, told Roll Call, the newspaper that covers Capitol Hill. "[But] I don't think advertising is the way to secure votes."

Meanwhile, several entities -- all against the health-care legislation -- have launched or are about to launch ad campaigns, the biggest of which is an effort from the U.S. Chamber of Commerce and a coalition of 248 lobbying groups that will spend up to $10 million in measured media over a 10-day period.

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