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White House Backs Senators On Deal With Drug Makers

The White House, faced with flaring tempers at town hall meetings around the country, is taking sides in an emerging fight between lawmakers in Washington, supporting the Senate and the drug industry against House Democrats.

The deal last month between members of the Senate Finance Committee and the prescription drug trade group PhRMA calls for the group to pledge $80 billion over the next 10 years to reduce drug prices for seniors in the Medicare program.

"It's a big sum of money. That ought to be enough," PhRMA President and CEO Billy Tauzin says. "And it's going to cost us jobs; it's going to cost us research dollars."

At Thursday's White House briefing, press secretary Robert Gibbs defended the agreement between the Senate panel and PhRMA. Under the deal, drug companies will offer discounts to seniors who exhaust their first round of benefits under Medicare's prescription drug program.

"This will help fill that doughnut hole for millions of seniors, and some of that money will be used for health care reform," Gibbs said. "That's the goal of this agreement, and that's the goal of our White House."

House Democrats Oppose Deal

That deal didn't work for House Democrats, however. Conservative Blue Dogs threatened to vote against the bill unless it costs the government less. Liberals, however, were afraid that consumers would suffer from the cuts the Blue Dogs forced. So, they looked for another way to find savings, settling on the drug industry.

"The House of Representatives were not party to any deal with the big drug manufacturers and, instead, we believe it's important to save consumers money, and to save the government money by lowering the cost of prescription drugs," says Florida Democrat Kathy Castor, who was among those who helped come up with the House compromise.

The bill approved by the Energy and Commerce Committee would, for the first time, allow the government to directly negotiate drug prices for seniors on Medicare. It would also allow the government to develop a specific list of approved drugs under a new public plan that would be available to some people under the age of 65. Castor says the drug industry can certainly afford the extra money.

"In 2008, the largest drug companies ... banked over $100 billion," she says. "So, when they offer up a mere $8 billion per year, that's a pittance for them.

"But it would be very costly for consumers. And the overriding goal of health insurance reform is to save consumers money."

PhRMA Peeved By House Measure

The changes made by the House infuriated PhRMA, which thought it had a deal and wouldn't be asked to contribute beyond the $80 billion it already pledged. The White House agreed.

"We feel comfortable with the amount of money that has been talked about to this point," Gibbs said.

When asked directly, however, Gibbs stopped short of ruling out the additional savings in the House bill.

House Energy and Commerce Committee Chairman Henry Waxman (D-CA) says he isn't concerned that the White House is defending the deal. He says it will all be argued out when a House bill and a Senate bill are passed and in conference sometime this fall.

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