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 WhiteHouse-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.

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About Robert Reich 547 Articles

Robert Reich is the nation's 22nd Secretary of Labor and a professor at the University of California at Berkeley.

He has served as labor secretary in the Clinton administration, as an assistant to the solicitor general in the Ford administration and as head of the Federal Trade Commission's policy planning staff during the Carter administration.

He has written eleven books, including The Work of Nations, which has been translated into 22 languages; the best-sellers The Future of Success and Locked in the Cabinet, and his most recent book, Supercapitalism. His articles have appeared in the New Yorker, Atlantic Monthly, New York Times, Washington Post, and Wall Street Journal. Mr. Reich is co-founding editor of The American Prospect magazine. His weekly commentaries on public radio’s "Marketplace" are heard by nearly five million people.

In 2003, Mr. Reich was awarded the prestigious Vaclev Havel Foundation Prize, by the former Czech president, for his pioneering work in economic and social thought. In 2005, his play, Public Exposure, broke box office records at its world premiere on Cape Cod.

Mr. Reich has been a member of the faculties of Harvard’s John F. Kennedy School of Government and of Brandeis University. He received his B.A. from Dartmouth College, his M.A. from Oxford University, where he was a Rhodes Scholar, and his J.D. from Yale Law School.

Visit: Robert Reich

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

  1. The pharmaceutical industry is in a bind, however. Many of their 20-year patented blockbusters are about to become open to synthesis by generic firms, which will (if not interfered with) drastically drop prices, as open competition tends to do. Furthermore, many of the new patents are simply knockoff versions (and extra carbon atom here or there) of older drugs, created mainly as copycat products – and they have an unfortunate record of side effects and poor performance.

    Some of the big companies have tried to buy up generic companies in volume, but nevertheless the juicy returns that pharma shareholders have enjoyed are almost certainly going to be trimmed down sharply as the field grows competitive – which will be good for patients and health care providers, unless monopolistic practices are allowed to develop.

    Given this situation, pharma companies see enlarging the domestic drug market via the expansion of public health programs as one of the few growth opportunities available to them (other than government biodefense contracting for swine flu panics… or was it the avian flu panic? Or is it 1976 all over again?)

    The whole thing is bizarre, but then, so is the health insurance system in the U.S. as it stands today.

    • I agree. If you want to point to industries enjoying a “bonanza” with the current broken healthcare system, look at the INSURANCE industry.

      If you want to talk about the high cost of healthcare, look elsewhere – pharmaceutical products are actually a small portion of the total healthcare bill for Americans. It seems otherwise because we have to go to the drugstore to pay – sometimes out of pocket, but almost always at least a co-pay – for medicines. But doctors’ visits, hospital stays and insurance costs are the bulk of what we pay for healthcare.

      Pharmaceutical companies – American and foreign alike – are struggling across the board – track their stock prices, for example, of the . The billions of dollars invested in R&D to bring new medicines to the market (adding years to our lives, let me remind you!) are invested with the hope of maybe one new drug a year coming to market – and with an expectation that a profitable price can be achieved.

      If you want to see even more major companies shrink in value to desparately be bought up as the industry continues to consolidate, setting a price cap on branded products is the way to go. While you’re at it, why don’t we set price caps on all of our nation’s products. That should be a great way to spur investments in our businesses and re-stimulate our economy.

      • I agree with you in large measure except for your comment about them spending billions to bring drugs to market. Most of the basic medical research done in this country is done by the NIH through tax-sponsored grants. In many cases the drug discovery done by Big Pharma means taking that, quite expensive, basic research and tailoring it, or simply claiming it outright.

        Courtesy of the Byah-Dole act NIH sponsored drug research can be “sold” to drug companies and can become their private property. Thus they can show up and purchase and then claim ownership of advances paid for by your and my tax dollars.

        As a case in point two of the more successful moneymakers of the past decade AZT and Viagra were developed by federal funds. In both cases the resulting drugs were ‘purchased’ by private entities who then claimed private ownership of them and charged money to cover ‘their’ research costs.

        The billions spent to bring new drugs to market are indeed billions. However the money rarely comes from the companies themselves. More often than not it comes initially from you and I.

        • Your description of the development of Viagra is a far cry different than Wikipedia’s history: “Sildenafil (compound UK-92,480) was synthesized by a group of pharmaceutical chemists working at Pfizer’s Sandwich, Kent, research facility in England.” Wiki’s description of AZT’s development is also far more complex and elaborate than you describe. I see little objection to using publicly-funded research as a stepping stone to better mankind via a commercial product (Big Pharma). If “basic research” were so expensive, as you say, I would think the NIH’s budget would be high on a lot of political radars. It isn’t. Point me to any successful government-manufactured product if you think government could do it better/cheaper. They can’t even distribute a billion dollars without knowing where any of it went (the infamous Clunker Program). I’m no scientist, but I get the sense you’re more interested in punishing Big Drugs, and probably any other for-profit venture that has benefitted so many.

          • No, in actuality he’s right – the Bayh-Dole agreements essentially have allowed the pharma industry to outsource a lot of basic R&D to public & private university research departments, and this is only possible because Bayh-Dole allows for exclusive licensing of federally-financed patents to private industry.

            Imagine instead if the university patents were non-exclusive and available to all U.S. companies for a smallish licensing fee. Essentially, that would mean that the drugs would be generics from day one – and this would push pharma companies to start spending less money on advertising and more on in-house research aimed at lowering their manufacturing costs, improving synthesis yields, etc.

            The concern here is that R&D for manufacturing works best when the researchers are near the manufacturers – but so much pharma manufacturing has been offshored to India etc. that it seems more likely that R&D centers would be set up in India, not the U.S.

            In other words, the biotech sector in the U.S. might start to end up in the same shape as other manufacturing sectors – and that would be a further disaster for the U.S. economy.

            P.S. AZT was indeed a publicly financed drug that was taken over by a private corporation – for a good history of the overall issue see:


            “This may seem hard to imagine today, but before Bayh-Dole, there was no such collaboration between those who invented a drug and for-profit companies. Federally-funded research was considered a public good, owned by everybody and nobody. If, say, Doctor A created a breakthrough cancer drug at Harvard, Doctor B at Stanford had free reign to experiment with it as needed to improve it—as did other academics. There were no significant legal hurdles to open, ongoing collaboration and little profit attached to research.”

            “Bayh-Dole changed all this, by granting academic researchers who created new medications proprietary rights to their breakthroughs…”

  2. Extortion or Payoff? This is precisely why Obama should have televised the negotiations as he promised to do. I think Robert Reich is being charitable to say that Obama was extorted into this as I think the evidence points otherwise. Obama was the one who rejected public financing during the general election and if you look at, you’ll see how he’s taking so much money from the very industry he’s supposedly trying to reform. The Obama administration has also gone out of its way to keep the White House visitors list secret as well as the details of what deals Obama has been cutting with lobbyists. I do think we are getting reform, just it is lobbyist-orchestrated reform for the lobbyists benefit rather than for our benefit. The “reform” looks to be headed for requiring everyone to get private insurance with all the prices remaining the same and there potentially being services cut – small businesses and individuals will be worse off while the healthcare industry will be better off. Just because something is “change,” it doesn’t mean it is change for the better – ending up with healthcare reform for the lobbyists would be change for the worse.

    • Dave,
      It saddens me but I agree with you completely. President Obama has betrayed his supporters and the American people at large in so many ways.
      1) Big pharma sell out
      2) Immediately taking single payer off the table and ultimately capitulating on a robust public option
      3) Continued abuse of presidential signing statements
      4) Killing whistleblower protections
      5) Not releasing White House visitor logs
      6) Interfering in the Justice Department’s duty to investigate and prosecute Bush administration illegal activities
      7) Withholding latest prisoner abuse photos.
      Mr. Obama has so far wasted a once in a lifetime opportunity to do good for the 99% of Americans that are not the super rich. He has shown himself to be a corporatist and one who is too timid to lead.

      • I think you have to give Obama some time to earn our trust. We should not judge him based on 200 days of (hopefully) ‘planting seeds’. Some of the things listed aren’t important….nor relate to him being a ‘corporatist’. This issue wtih the Big Pharma is disgusting though and needs to change. I hope Obama won’t fall to the constand lobbying from not only private institutions but Congress.

  3. We’ve been living under a corporate oligarchy for some time, Robert. Are you just waking up to this fact? Don’t you remember Cheney inviting the energy corporations into the White House to write our energy policy, and our lumber industry the Healthy Forests Act, and the chemical companies our Clean Water Act? Where have you been. This is Rome: 21st Century style. Instead of the old patrician families running the show, we have corporations. It does make one thing easier on all of us, though. It really doesn’t matter who you vote for anymore, so you can save yourself the trouble.

  4. Obama is not a dictator. He is going to have to play ball. That’s what he is doing. The reason I’m not freaking is because Obama is a very good player. Obama also has a core liberal ideology. Even if he gets only half of what he wants that will be more than center. We will have a health reform bill that leans left. That does not mean it will be or ideal. It’s not going to be. Lets just acknowledge that. What we must have is strong government regulation on the co-op if that is how it falls. The government is going to need serious leveraging ability to keep the program as a bar setter so that it does not turn into just another Blue Cross. That has to be the line in the sand. I’m not too worried about the drug companies. They are a dog for another day. One giant at a time.

    • I agree totally-

      The right screams Obama passed this onto Congress –

      Apparently – they forgot their nickname- RUBBERSTAMP Congress! They apparently do not even understand their own government!


      Medicare Modernization Act of 2003, which denied Medicare the right to bargain for lower drug prices, locked in overpayments to private insurance companies, and did nothing, nothing at all, to pay for its proposed outlays.

      Please be aware of what happened in 1997!

      Balanced Budget Act of 1997-

      Please- Please- Pay attention to what happened here!

      In 1997, HCA (Hospital Corporation of America) – was the LARGEST HOME HEALTH CARE Company in our country.

      HCA Inc. (formerly known as Columbia/HCA and HCA – The Healthcare Company)
      Note: Hospital Corporation of America (HCA) was acquired by Columbia in 1994.

      Columbia/HCA was a partnership of financier Richard Rainwater of Ft. Worth and lawyer Richard Scott.

      Under the Balanced Budget Act of 1997- Home health – was struggling; about 1,400 agencies closed nationwide in 1998.

      On Sept 8, 1998 Standard and Poors downgraded the bonds of Charter/HCA

      Rainwater also owned a large stake in Magellan Health Care which controls Charter Medical. Magellan, run by Darla Moore, is the largest network of psychiatric hospitals in the country. They are becoming more and more involved in obtaining government money for services formerly not covered as health care, according to Fortune Magazine.

      (Note: Rick Scott was terminated by Darla Moore, the wife of Richard Rainwater in 1997. According to Fortune Magazine, the “Toughest Babe in the Business”, Moore created the Corporate Bankruptcy Finance Tool- DIP- (Debtor in Possession), while employed at a Chase bank on Wall Street.

      “They are becoming more and more involved in obtaining government money for services formerly not covered as health care, according to Fortune Magazine. “


      HCA not only robbed the country’s Medicare/Medicaid system, but the entire Healthcare system and its tentacles.

      Connect- Healthcare Finance Fraud, SEC Fraud, Bankruptcy Fraud, Financial Fraud and Mortgage Fraud- all for ‘market driven healthcare’ in America?

      2009 – The Wall Street Journal reported that Richard Scott, “the former chief executive of HCA Inc,” had formed the non-profit organization Conservatives for Patients’ Rights as part of a “lobbying campaign to derail or modify” President Obama’s health care proposals,…

      In 1997, Rick Scott was terminated by Darla Moore. As part of Richard Scott’s severance package from Columbia he was paid $5.13 million and given a five year consulting contract at $950,000 per year.

      1997 + 5 = 2002

      In 2002 FBI raided the offices of National Century Financial Enterprises in Dublin, Ohio

      “This case is one of the largest corporate fraud investigations involving a privately held company headquartered in small town America,” said Assistant Director Kenneth W. Kaiser of the FBI Criminal Investigative Division.

      In October 2008- Leo Wise, now at the OCE —stated “Ladies and gentlemen, this is a case of staggering fraud,” ‘It is one of the largest frauds the FBI has ever investigated.

      Guess where ALL of Richard Scott’s & Richard Rainwater’s Columbia/ HCA and certain subsidiaries and joint ventures were?

      National Century Financial Enterprises, Inc.! (NCFE).

      One prosecutor stated ‘…’NCFE- the largest corporate fraud investigations involving a privately held company and no one has ever heard of.’

      NO ONE HAS EVER HEARD OF? (The largest corporate fraud investigation…)

      Why is that?

      Richard Rainwater was GW Bush’s ex- partner with the Rangers.

      October 2008, Leo Wise now at the OCE office prosecuted the CEO and co-founder of National Century Financial Enterprises – CEO Sentenced to 30 Years in Prison

      12 Executives/co-Founders already found guilty-

      December 18, 2008, almost one month before GW Bush leaves office- the last person to stand trial, the ONE and ONLY acquittal- James K Happ!

      Jurors stated ‘PROSECUTOR DID NOT DO HIS JOB’-

      Prosecutors’ case fell short juror says-National Century fraud case produces 1st and only acquittal The “not guilty” verdicts that came in federal court yesterday were not so much a vindication of the last National Century Financial Enterprises executive to stand trial, a juror said.

      Instead, they were more a belief that federal prosecutors had not done their job, …

      “He very well may have been guilty. A lot of us thought he was,” said the juror who wouldn’t give his name…

      While Richard Scott was at Columbia in 1997 – James K Happ was CFO of Columbia Homecare Group, Inc.

      James K Happ, only acquittal at National Century Financial Enterprises, Inc‘s who just so happened to be the CFO of Columbia Homecare Group.

      Leo Wise now at the OCE what happened? Jurors stated ‘PROSECUTOR DID NOT DO HIS JOB’-

    • You are missing Robert’s point in your response.
      This is his point:
      “How soon until big industries and their Washington lobbyists have become so politically powerful that secret WhiteHouse-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.)”

      He is addressing the fact that if it were NOT Obama in the White House, you’d be yelling bloody murder.
      PROCESS is the issue here. It is always process that Dems are too lazy to examine, and process where conservatives win out every time. Conservatives like rules, and using them to their advantage. Dems like PERSONALITIES they cacn PLACE their TRUST in. That is lazy.
      You say you agree with the former poster, who says, “Obama is not a dictator.” and “Obama has a core liberal ideology.”
      Then they say, “The government is going to need serious leveraging ability to keep the program as a bar setter so that it does not turn into just another Blue Cross.”

      Be realistic. There is zero chance of getting this leveraging ability with the legislators we currently have – and there will be even less chance after the next election in 2010. One only needs to read the current campaign donation lists to understand that. The time for radical change is now. This is something neocons understand – haven’t you read the “shock doctrine”? This is the time for Obama’s shock doctrine.

  5. As sad as it is I believe the citizens of this country need their own lobby. Without one, we get the short end of every deal. Although we elect these crooks to represent us, they never do. Once they’re in Washington nothing matters but the money. If every citizen would give a small amount we could have the most powerful lobby in town.

    • re: KING – congress IS supposed to be our lobby! the president is supposed to be our lobby. they work for US! this is really maddening.

  6. I’m skeptical. I’d like to see a strategy to achieve HCR that doesn’t co-opt some of the players — doctors or drug makers, etc. Even with the AMA and now pharma on board, the insurers are doing a good job of savaging this thing.

    I guess what I’m saying to the anti-engagement purists like Reich is, what’s your plan for actually getting it done, if you just pick fights with all of the players? It’s easy to say “don’t do deals” with any key players. But then, all you have is a half a dozen enemies who will kill the plan anyway. So what’s your solution, Reich, to actually passing a bill if you don’t bring anyone on board?

  7. Mr. Obama doesn’t have to be a dictator or a tyrant. He’s just bought (like any other US president since and including Reagan) by the big corporate interests. If you don’t believe this you live in Jauja…that mythical place where all lies are truth and all truths are lies.

  8. p.s. Nice to see that liberals are using August to attack Obama, instead of supporting him, or attacking the health insurers who want to kill any reform.

    Real good team work, jerks.

  9. I remember when Obama the candidate stated, “Lobbyists WILL NOT run my WH”, but Obama the President had allowed them to not only run his WH but make deals in the dark of night where none of us know what was decided and promised and how they arrived at those decisions and promises. To say this is troubling is an understatement. I keep thinking ahead to 2012 as I look at Obama the candidate of 2008 and realize that the fabulously inspired grassroots organization he had last year will be NO WHERE AROUND in 2012. He fooled us once, but he will not fool us in 2012. He will desperately need his lobbyists friends in 2012, because we won’t be there for him after his failure to keep those important and vital promises.

    I truly expect to see a civill war in this country with bullets and blood as I believe by Obamaa not keeping his promises, he has not only angered many people, but he has caused us to realize that all politicians are the same – you cannot believe anything they promise – and that anger has bubbled to the point of overflow with no valve to allow the steam to escape. Between Bush and now Obama who was supposed to bring ‘change we could believe in’, the dissappointment is too great to contain. He has failed on transparency, GITMO, overhauling our economic system so that stiff regulations are in place to prevent another crisis, LGBT issues, increased rather than decreased numilitary personnel staying in Iraq with wars in both Afghanistan and Pakistan

    • How about you take into consideration the astoundingly difficult situations Obama inherited from his predecessor, and how challenging it is to change to a path where all are fairly treated, when those against this process are making billlions, have been doing so for some time now, and will use that money, as well as the brains that allowed them to rip us off so well for so long, to thwart his goals at every turn! You are really suffering from limited vision here.

      With these powers against the good Obama wants to do, we have to understand it can’t happen as hast as we would like, and it has to happen in pieces at a time. We all deplore big pharma, but we can’t decapitate every snake head at once.

      Obama will not use illegal immoral Bush tactics to accomplish this. Keep the faith. It’s a long term, lasting change, we are after.

      • Jeezes…Bush never extorted an industry in exchange for support on a piece of legislation. He also never turned a blind eye as demonstrators were killed in the streets just because he needed to negotiatw with the regime.

        Obama has been more amoral than Bush ever was.

        And if the left wasn’t such a bunch of hypocritical sheep you’d understand that.

  10. this is an interesting concept, The citizens lobby group. But is not that what our congress is for. Perhaps democracy in evolution would now require a citizen lobby, the web as it did for the Obama election is providing a centralized focus of citizens to direct our own lobbyist. This could be very powerful.
    Perhaps a tool to take back the failed wall street model, redirect energy dollars.
    The Citizens Lobby. I like it
    If its members ranked 5,000,000 and donated/provided $10. each that is a loud voice.
    Money seams to be the voice.

  11. Mr. Reich’s argument carries an implied moral imperative of “punishing” big pharma. No one can do that right now.

    On side A, Obama goes head to head with Pharma, all fire and brimstone, and gets killed. On side B Obama brings them on board and gets the legislation passed.

    How is this a problem? You seem to want failure, as long as you can wave the flag of moral purity, failure suit you. But why?

    BE PRACTICAL! and stop complaining…

  12. The United States of America…. brought to you by __________. Perhaps our “representatives” should wear uniforms like NASCAR, with all of their sponsors out in the open.

  13. As a senior citizen who was scared to death of Medicare, I now receive it and can’t begin to tell you what a god-send it really is. It basically takes care of any medical care or needs one might have. The premiums are reasonable, but not cheap and thus I need to have another insurance to cover anything Medicare does not cover, but it beats the h*ll out of any private insurance including the Federal Employee BC/BS insurance which now only covers 85% of care [where it used to cover 100%]- the remainder is out of your pocket and when one has severe medical problems such as many serious back surgeries, 85% of a $30K per surgery bill is just not good enough. I don’t see why Medicare can’t be opened to all ages as it would provide excellent coverage and with everyone being on its plan, the cost of premiums would drop dramatically and leave private for profit insurers trying to keep up or dying out completely.

    With the Blue Dogs and ‘G-no-P’, our chances of getting any ‘decent’ insurance reform is nil. It makes me want very much to move to Canada, France, England, Austraila or even Cuba where all medical service is part of their country’s care to its citizens. How can Cuba provide all it’s citizens with good medical care while they are one of the poorest countries in the world? [If you have not seen Michael Moore’s “Sicko” please watch it and learn – it is amazing.] If these smaller countries can have universal health care, I can’t understand why the U.S., supposedly greatest country in the world, can’t have it! Can anyone expand upon this?

    • You are so wrong. The President is not bought and paid for by anyone. This is probably the first time in history our president is honest and has only the best interests of the American people in mind (except maybe for Jimmy Carter). The man is doing what a man has to do in order to get health care for the people. The man knows how the game is played, and he’s better at it than anybody.

  14. I cannot even begin to imagine what it feels like to be Barrack Obama. Whatever he does gets attacked with so much vehemence that his attackers fail to see that there is no single policy or approach to governing that will get everybody’s approval. As we have seen with the way the insurance companies have unleashed fury on town hall health care debates, the reality of this whole thing is that there cannot be change without taking these big corporations along. Call it what you like but pragmatism is the only way anything remotely meaningful can be done in politics. If Obama had a choice, he will not be cutting these deals cause all those campaign promises will haunt him even long after he ceases to be president. Damn if he does and damn if he doesnt. I dont know about you but I dont want to be in his shoes. How can he possibly please everyone? Cut the guy some slack. What he is up against now is called reality and there is nothing more potent and disillusioning than that.

  15. As we all know, sometimes politics is not pretty. President Obama and the country needs to get health care reformed. Big Pharma were instrumental in killing the Clinton health care reform efforts. We all know that getting things passed in Washington is all about making deals. The President cannot change that within his first year in office if ever. He has his ideals: Reduce costs, guarantee choice and ensure quality care for everyone. He has stated this repeatedly. Now, he must figure out a way to get those ideals into the legislation that he will sign. Big Pharam was willing to play ball. Other’s were not. You have to play ball within the system to change the system. We should still question our leaders and advocate for our positions. But at least let them work and finesse the system to create the kind of change we elected them to give us before we start attacking them.

  16. Really, Mr. Reich? You’re so upset and fearful for our democracy…where were you and everyone else (AARP included) when George Bush permitted this “deal” with Big Pharma. As I recall, there were NO town hall meetings back then. Look, I’m no fan of the Pharmaceutical industry, but can we (please) give this president a chance to work out the most extraordinary social revolution of out time since FDR? Please?

  17. Are you really surprised that the President is bought and paid for by Special Interest? Look at all of the media coverage President Obama received during the elections. That wasn’t because he was black or saying the right things. That was because MSM wanted him to be President.

  18. Mr. Reich, why don’t you have the facts at hand before you take out your long knives for the pharma industry?

    “Let me remind you: Any bonanza for the drug industry means higher health-care costs for the rest of us”

    Mr. Reich, let me remind you…prescription medicines account for 11% of overall US health care costs (CMS, Office of the Actuary, National Health Statisitcs Group). And prescription medicines save the health care system untold billions every year, by, you know, keeping people out of doctors offices and hospitals where the lions share of health care dollars are spent and wasted. (reduced hospital stays by 206 MILLION days in a given year; CDC statistics) What you and your ilk are after is price controls, which the industry won’t allow and rightfully so. You complain that Medicare can’t negotate directly with manufacutrers on drug prices. And once again, this shows how grossly misinformed (more likely political demagoguery)you are…prices for drugs covered by Part D plans are lower, much lower on the average, than those paid by other commercial insurers. This is because manufacturers already negotiate with Part D plans and those discounts are ‘Bets Price’ exempt, meaning manufacturers can steeply discount drug prices without having to pay the price penalty to other federal programs like VA/DOD and Medicaid. Get a clue

    • I’m sure that’s the same argument the Pharma industry used to get the Senior Drug Benefit passed five years back. Frame yourself as part of the solution rather than part of the problem. Thanks for helping us control cost, without that legislation I supppose senior health care costs will still be sk-yrocketing out of control….

      • If Americans were educated they would be thanking the pharma industry. Take statin drugs (Lipitor) for example: Cost of one year of Lipitor = $600, Cost of 1 week in cardiac ICU = $60,000…for Medicare recipients guess who’s footing the bill for either outcome? We are via our tax dollars fool

    • Medicare is NOT allowed to negotiate with the pharmaceutical companies under Part D. That is part of the law. I don’t know where you get your information. You must not be on Medicare and fallen into the doughnut hole. Let me tell you, we pay full list price.

      • Dave, I absolutely do know what I’m talking about…manufacruers negotiate with Part D plans and pay rebates back to the plans based on the amont of sales of those drugs. I happen to be one of the people that do this. The rebates we pay back, sometimes as high as 70%, reduce the cost of these drugs to the plan which you pay premiums to. This is why some drugs are on your formulary and some are not, the ones that are have deals with manufacturers. And with the deal cut by the Obama administration, the doughnut whole goes away. What was your out of pocket caost before Part D? It was 100%, but of course you want everything for nothing. Your comment is endemic as far as the thinking in this country…everybody wants something for nothing. If you want high quality care and access to every pharmaceutical remedy available, then be prepared to pay for it.

  19. Money talks; nothing more!
    And, we lambast Vladimir Putin and the Russians for their authoritarianism and what do we have here; lies, deceit, hypocrisy, corruption at all levels, with our citizens in full revolt screaming their fool heads off.
    Yes Barack Obama talks the talk, but he doesn’t walk it!
    Joe Biden on the otherhand is a dunderhead.

    It’s yours!

  20. Single Payer System!! Reorg the health insurance companies. Health insuarance companies are merely middlemen who create bureaucracy, add adminstrative costs, drive up the price to make a profit. Someone doesn’t have to make money on everything in this country.

  21. If anyone needed a final confirmation that “cost-cutting” is an utter sham for Health Care Reform, this is it. There is no serious interest in fixing root causes of health problems from our leadership. Make no mistake, big Pharma is interested in life long customers – ie “sick care”, not disease prevention. Have impotence? Take this pill. Nevermind that nutrition and excersise can fix the problem without side effects. Have a shaky-leg? They’ve got a pill for that too, and they’ve got non-stop commercials to remind you in case you forgot.

    Does anyone else think it’s almost Orwellian – or at least pathetic – to see millions of seniors with their drug cocktail kits? Is that retirement with dignity, when you have a plastic tray full of chemicals to get your day started? Gee, if the government subsidizes those little pills they must be ok. Now the government is paving the way for adults and children to have their pill trays as well. Rest assured big Pharma will invent new pills for new diseases you never knew existed. They are actually forced to do this. Their only objective is to increase shareholder returns quarter after quarter. Any other stated objective is shareholder return in disguise. Don’t be fooled.

    I’m not anti-science nor anti-medicine. Certainly some drug developments are beneficial. If I have an accident, please put me under anestia. But let’s be honest, big Pharma is giant capital destruction machine. And that’s the crux of it – the general public is convinced that big Pharma, on balance, is providing us with something of value. That the government is not even willing to question this premise is very troubling indeed.

    It’s funny to hear everyone talk about health care, but few really understand what “health” means. If our nation was truly healthy, the pharma, insurance, and agro-industrial companies would be in serious financial trouble. In other words, a significant chunk of our economy is essentially parasitic. In the spirit of a health analogy – the organism eventually kills the parasite or the parasite eventually kills the organism. It’s that simple. Guess who’s winning this battle?

    • My goodness, a private enterprise that invests billions in the devlopment of it’s products wants to (gasp!!!!) increase shareholder returns!! Quick, round up the scoundrels, put a gun to their heads and tell them they have to start developing costly and commercially risky medicines and give them away for pennies on the dollar.

      That way we’ll be sure to have a robust research based pharmaceutical business in this country, which is developing cures and therpies to save and better people’s lives. (rolling eyes…) Not to mention the job creation this will lead (lol….) You have to admire the persistence of ignorance.

      • Whatever helps you sleep at night I guess. Nevermind the fact that the Pharma industry kills thousands of people every year due lack of proper oversight. You’re a sales and marketing driven culture with huge pockets to buy off the FDA, politicians, doctors, and media outlets.

        • I sleep very well at night knowing that the products my compnay develops and sells help people lead healthier and more productive lives, provides value to the health care system and that we uphold the highest ethical values while doing so.

          The question is how do you sleep at night, knowing that you’re an ignorant fool and demagogue. Oh wait, ‘ingnorance is bliss’. Go fornicate under the consent of the king yourself.

  22. It’s been happening for years and it appears it will continue to happen. I was hoping that when we elected Obama, he would change things, but his deal with Big Pharma (and the administration’s refusal to fight for single payer health care) shows that its just business as usual. We live in a corpocracy, not a democracy. The large corportions run this country and reap obscene profits so their CEOs can have several mansions, jets, and yachts. The rest of us are just fodder.

  23. I have medicare and medicare supplement insurance which takes care of my needs…but I very much believe in preventive measures to save unnecessary expensive Hi tech tests to begin with. But, I don’t want to see any premium raise in both insurances as we depend on very limited resources and not having any million or billion dollar bonus each year. Hope President obama will hear my voice and do the best to the citizens of United states of America. I have great hope with great trust in our presidents plans…I wish him well.

  24. We continue to be amazed that we write and think and argue that OBAMA is to blame for or the savior of everything. Does he have a staff? Other voices whispering in his ear? So now we drive this car to health care and assume that this steenking deal with Big Pharma must be all on Obama. Yes, the buck stops with him, but given his busy agenda and responsibilities, just who the hell suggested this deal? who pushed the President to accept it? Rahm? Others? Until we know who’s making what moves inside the oval office we’ll never give Obama the appaopriate credit or blamd for whatever happens.

    This Big Pharma thing is awful, just terrible and it has more than one pair of hands on it. I say throw the jerk out who thought he could hoodwink the president and us all and whoever it was that coerced a busy president into thinking this might work. Instead it just makes Obama look as bad as the rest. Nice going whoever you are jerk-face in the WH. You’re doing a marvelous job pulling the rug out from someone we all had hope in.

  25. Snookered again. I so wanted to trust a candidate for president that I let myself believe Obama’s campaign promises. I feel deeply disapointed and profoundly betrayed. Bush virtually turned over governance of this country to the interests of big corporations. It appears Obama is continuing the dismantling of our democracy. There is nobody in national politics the country can trust to tell the truth. America is doomed.

  26. great stuff.

    there is this specter that we’ll lose the R&D if we don’t fund the beast. Firstly, i’ve never heard of a drug developed by a millionaire (more likely a joe the pharmacology graduate getting good pay but not millions) and secondly, i can live without, prozac, the purple pill, cyalis, rogaine, xanax, heroin (don’t kid yourself, it was invented in a lab), viagra, whose benefit to mankind is at best dubious.
    the overwhelming imbalance in medical revenue distribution is an affront to Jonas Salk, Louis Pasteur and Alexander Fleming, among others.

    • Jack, actually what you don’t understand is that the revenues from the types of drugs you cite subsidizes the research for therapies that are much less (if at all) profitable to the industry. Like rare cancers, MS, altzheimers etc. Do you know why those classes of drugs aren’t profitable? B/c most people that need them are disabled, and thus covered by Medicare Part B/Medicaid which mandates certain discounts from manufacturers to the point of robbery.

      The ED, GI etc drugs you cite are lowon the totem pole of pharmacy spend…the top 5 are usually anti-neoplastics (oncology), statins (cholesterol), anti-psychotics (schizophrenia), anti-hypertensives (stroke preventio) and diabetes.

  27. I think this is a really fascinating article – and one to take into consideration considering its author. We’re talking about a man who not only has more experience on the inside dealings of Washington, DC over several administrations than any of us who are commenting on here (myself included), but a man who is a supporter of Obama and is simply questioning his actions.

    I think if we all just blindly follow whomever we elect simply because of party lines or in backlash of the last eight years – without asking questions – we are headed for a dark road…as dark as the one we just came from. We should be encouraged…especially by supporters of “change” to question our government and keep it in check. Check and Balance…that is what has gone out the window.

    Liberals and moderates who follow political ideology as blindly as right-wingers did with Bush, and attempted to do with McCain/Palin (and apparently still do, holding onto the hope SHE will run in 2012), are thinking as badly as the folks they are at odds with politically.

    Therein lies the problem with the two-party system; but I think no matter how many parties you have it won’t really make a difference. There will always be a “All people are created equal…but some are more equal than others” that comes from both sides of the ideology fence. It’s a bummer. “The People” will never have their voice truly heard – but then again, when someone who does have facts and is even questioning the practices put into motion by his own party (showing he is not writing an agenda-driven article but one that smacks of true concern) gets sand-blasted if he disagrees with people from that party. Interesting and sad.

    I don’t always agree with Robert Reich, but I respect his point of view and appreciate the candidness of this article. I don’t pretend to have any answers either, but the concerns he voiced are, in my eyes, legitimate.

  28. Though I am a progressive who would strongly prefer a single-payer system, I am cautiously defending Obama for his deal with Big Pharma. Obama has said that, if we were starting from scratch, he would opt for single-payer. I believe him. Unfortunately, this would be a Quixotic and symbolic fight, doomed to certain failure. Obama, a clever pragmatist, is fighting for the best he deal can get in the real world of American politics (where corporations are king.) It looks like Obama has come to the conclusion that there is no way to defeat both Big Pharma and Big Health Insurance, so he has decided to divide and conquer. Defeating Big Health Insurance is clearly the highest priority, so he made a deal with Big Pharma. This is smart and as moral as you can get in the dirty world of politics. It would be foolish to gamble for all or nothing when the cards are stacked against you.

    • The president needs to LEAD on the issue or quality, affordable universal health care will be doomed again! It’s this simple if you eliminate the employer based / for profit insurance model.
      1) Go to any doctor you wish
      2) Go to any hospital you wish
      3) All doctor visits are free
      4) All required (non elective) surgeries are free
      5) Patients pay for elective surgeries

      This is paid for by
      a) eliminating the 30% + cost that the insurance industry requires to administrate between the patient and the doctor / hospital
      b) Allow the government to use it’s buying power to negotiate drug prices
      c) Rescind the Bush tax cuts ONLY for the wealthiest 2% in the country.
      d) allocating the required portion of federal tax receipts to health care. Since the US spends more than the REST OF THE WORLD COMBINED on military defense, take $200 billion a year away from the defense industry. (Military expenditures for calendar year 2009: US: $952 billion, China: $160 billion, Russia: $90 billion). Just who in the hell is going to attack us and why are we soooo afraid?


    Nice job. MSM declares health care on the rocks. So all the long knives come out attacking Obama. How about directing some ire at the people actually trying to kill reform, idiots???

  30. I think the deal was brilliant. While making a deal on first read felt like I had a fur ball in my stomach, I thought about the strategy. Obama is focusing on changing the insurance regulations, which will have a much larger impact on the lives of Americans, and the economy. There is so much resistance to this alone that if he also tackled Pharma, I doubt anything would have been able to get through. Now, Obama has made a basic deal with Pharma, right now, in this bill, they won’t address the cost of drugs. In exchange, pharma is supporting the reform, cutting costs of $80 billion (insurance hasn’t agreed to anything like that), and paying for $150 million in advertising to support reform. But, the deal is just for this bill, and just for the administration. Congress can pass what they like, and after the insurance reform is passed, we can look at Pharma.

    I think it’s brilliant.

  31. I work in an outpatient mental health clinic in California. We have over 42 Part D pharmacy programs from which cognitively impaired patients annually must select “the one that is best for them.” Ah, sacred choice. This year’s formulary where critical medications are available wont be next year’s. Tell me this isnt crazy-making – for clinical staff and patients [now called “consumers” to make curtailing or withholding of care sound less heartless]. Single payer universal non-profit health care doesnt frighten me. Not having it does. How can it be worse than what we have now? Research will continue – returning to university settings – employment will rise and the sun will shine.

  32. If anything, I think Mr. Reich understates the point.

    This is a colossal sell-out. Inexcusable.

    Mr. Obama should not be listening to “pragmatists” like Rahm Emanuel.

  33. Mr. Obama should be listening to Mr. Reich. Perhaps the president is playing three dimensional chess, or not. I’m just a machinery tech, but when something is busted I try to find the most cost effective way to fix it. I don’t make a deal with the machinery manufacturer to set up ads saying how swell my process works. I admire and support the president, I just hope he does not get run over by bloody capitalism.

  34. The opposition is powerful and well-financed. They defeated Harry Truman and Hillary Clinton, two of the Democrat’s smartest politicians.

    Here is how I see Obama’s strategy:

    1) Americans deserve single-payer health insurance, and they deserve to have the government regulate the price of drugs.

    2) The single-payer battle is not winnable.

    3) A fight for major health-insurance reform with a public option would be second best. However, even this second-best option is in trouble, mostly because of the Blue Dog Democrats.

    4) Health-insurance reform is starting to look impossible, especially if the insurance companies team up with Big Pharma. Obama, forced into a tough choice, decides health insurance is a far bigger problem than the prescription drug problem. Deciding to divide and conquer, he tells the pharmaceutical companies he will protect them if they support health insurance reform. They agree.

    5) With a little luck, Americans get a big chunk of what they deserve.

    FDR made some even uglier compromises, but he is now the great hero of progressives. Let’s give Obama a little slack. He’s just being realistic.

  35. Ha ha! Anyone who believed Obama when he said there would be no lobbyist influence in his administration, well, they are fools! Obama just sucked up to one of the biggest lobbying groups of all, namely, big pharmacy. What a charlatan this guy is. But that is the Chicago way, thuggery in all its glory.

    I’m glad Obama keeps blatantly going back on so many of the promises he made during the campaign. It shows him to be what he truly is, a two-faced liar. The guy is a disgrace, and anyone that voted for him deserves this abomination that passes for a President.

    Well, the good news is he likely will not even finish one term. The quicker he is gone, the better.

  36. Robert, your camparison to Big Pharma’s tv advertising budget to McCains expenditure on tv advertising shows the enormous sum that Nig Pharma is investing. But let’s be fair. Obama outspent McCain 4:1 on tv advertising. Using this comparison makes Big Pharmas investment look paltry.
    What us more telling here is taking a trip down memory lane and watching the people who worked for the health industry and Goldman Sachs pour money into Obamas campaign.
    Of all the candidates he was they knew would play ball.
    This is payback time to the health industry and Wall street.
    Some things don’t change.
    Who were the candidates these people did not donate to?
    They are the ones who don’t play ball.

  37. Why the F— are you blaming the pharma companies?

    They are just doing what they need to do to survive in the face of a hostile government.

    The blame weighs 98.3% on the people who are using their office and their public trust to force an industry to bend to their will for their political purposes.

    You know, we heard so much from the left about GWB’s “gift” to big pharma in the form of Medicare Part D. Now, with a market 3-4x as large, Obama is going to extend the same “gift” in a blatant quid pro quo and we won’t hear a peep from the f—— hypocrites on the left.

    (and no, it is not hypocritical to condem Obama for making a deal Bush did because Obama and the Dems slammed that aspect of Medicare Part D ruthlessly, and Obama campaigned on negotiating lower drug policies. Also, Republicans at least pretend to be friends of big business, so a sop to them should be expected).

  38. How exactly is another massive handout to Big Pharma going to “bend the cost curve”?

    Talk about completely undermining the basis of your argument for reform.

  39. The above commentators are carrying on the best debate I have seen so far.
    There are both sides to the information Robert Reich presented in his editorial.
    It is important that the pharmaceutical companies are aboard but also that they
    not be allowed to play like the cat that keeps checking to see if it can get more.
    Is there extortion in the sense of an implied threat? Perhaps it is more of a matter of the memory of the role played by the pharmaceutical industry in the Clinton administration. But I am sure that if Obama didn’t make this deal the industry would keep coming back, coming back.

  40. This is a good discussion. Keeping Obama’s
    having said that he loves capitalism let us consider the reality of what that implies. For anything to happen that is a commodity, someone must see a market and also have capital available. Now for “pure capitalism” in the sense of Friedman, lobbyists are also a commodity that leverages legislation which is another commodity. Obama said “He is keeping lobbyists out of the White House” which is probably what he is doing because according to the game, in the Senate is where they belong.
    How does this lead to Pharma? Well the most important life saving medicines such as Metropolol for blood pressure I have been getting have already been bargained down to small change by the Insurance companies and by Medicare. To be honest with the situation
    they have these huge plants but now such much more is known about “food as medicine” teaching people to use food from plants rather than food made in plants. For upkeep and overhead they have to make their bust by trying out the new experimentals just passed by the FDA and continue to hope the FDA is not yet seen as a commodity.

  41. Having worked over 20 years for big pharma, I know what they are most afraid of:

    1. Medicare (government’s) power to negotiate drug prices

    2. Drug reimportation (where prices in the USA market match prices of Canada)

    3. They want increased patent protection

    What I want to know, “Are these the Three things promised to them by the Obama Adminstration in exchange for their support and advertising Pro-ObamaCare”?

    If so, it is a disgrace that it wasn’t public and there wasn’t Congressional Debate. Instead it looks as if these negotiations and deals were done behind closed doors. You can call it brilliant and those who do are leading us down a very dark and crooked path.

    Michael, you talk the Corporate talk and it wouldn’t surprise me if you were on the Sussman team or an industry lobbyist. Truth is, the pharma industry is all about the bottom line and enriching the Executive Leadership Team along with the larger share holders. They want patent extensions so they can continue to make Billions off brand names and charge the government (medicare, medicaid, tricare, etc) high prices.

    What other industries do you know that have 12 year or more patent protections? Why should Big Pharma get all the Goodies when it overcharges the American Taxpayer? We are talking about an industry that makes the majority of its profits on you and I along with the rest of the American taxpayer! At least with other industries, I am not paying for other people’s goods.

    Pharma doesn’t deserve special treatment. Their research will continue regardless.

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