From the 1990 election cycle to the 2008 election cycle the health sector contributed over $829 million to candidates for federal office and political parties. Over the course of those 19 years Congress debated comprehensive reform of the health sector, passed a Medicare drug benefit, made various changes to Medicare and Medicaid and established and expanded access to the Children's Health Insurance Plan. A review of campaign contributions made available by the Center for Responsive Politics indicates that control of Congress, and the power exerted by that control, has been a key determinative factor in the party distribution of contributions by the health sector over the years.

Beginning in the 1990 election cycle, Democrats received a slightly larger share of health sector contributions than Republicans, despite the Republican Party's pro-business positions. This spread stays the same through the 1992 election, which included the election of the Democratic President Bill Clinton. Clinton's push for comprehensive reform of the health sector in 1993-94 and the industry's opposition to such reforms began to push their campaign contributions towards the Republicans. In 1994, Republicans surpassed Democrats in health sector contributions and retook both chambers of Congress.

The health sector didn't look back after 1994 giving overwhelmingly to the Republicans in Congress and their presidential nominees. While the previous three election cycles (1990, 1992, 1994) were all very close in the health sector contribution distribution between the parties, the 1996 election saw a full 60% of health sector contributions go to Republicans seeking office. This wide divide only increased over the years.

(Click the play button on the graphic below to see a visualization of the change in health sector contributions to the parties from 1990-2008. I'd advise selecting unique colors under the Color tab.)

The elections of 2002, 2004 and 2006 provided for the biggest health sector contribution disparities between the parties. In each of these elections Republicans pulled in over 60% of the health sector contributions to federal candidates and parties. The highest percentage came in the 2002 election cycle as Congress began to debate the inclusion of a prescription drug benefit within Medicare. In this election Republicans received 65% of health sector contributions. The resulting legislation, passed in 2003, wound up very friendly to the pharmaceutical industry. So friendly, in fact, that the chief author of the legislation, Rep. Billy Tauzin, left Congress and quickly signed on as the President and CEO of the industry's Washington lobby shop, the Pharmaceutical Research and Manufacturers of America (PhRMA).

Over the next two election cycles the industry faced a Republican Party that was largely supportive of their interests--and had recently enacted legislation that they widely supported--and a Democratic Party that sought to enact sweeping reforms of the industry and seek further cost savings from the pharmaceutical industry in the new Medicare prescription drug plan. Facing this decision, the industry stayed with the party that controlled both the Congress and the Executive Branch--the Republicans. The industry gave 62% of their campaign contributions to Republicans in the 2006 election cycle despite the overwhelming evidence of imminent Democratic victory. Majority control and the nature of the Democrats' campaign proposals kept the industry alongside the Republicans.

The 2006 election swung control of Congress to the Democrats for the first time in 12 years and with that came a major swing in campaign contributions from the health sector. Contributions shifted rapidly away from Republicans as Democrats stepped up to head the committees that would oversee and write legislation related to the health sector. The health sector had to also account for the unpopularity of the Republican Party and President George W. Bush. With almost every political prognosticator predicting another sweep for the Democrats, including the White House, the health sector had to prepare for the coming attempt to pass comprehensive health care reform, the holy grail of Democratic policy goals.

The health sector dramatically shifted their contributions from Republicans to Democrats in the 2008 election cycle. Democrats received 54% of all health sector contributions, the highest percentage they have received since the Center for Responsive Politics began tracking campaign contributions. Leading the way was presidential candidate Barack Obama. Obama, perhaps the largest recipient of health sector contributions in history, brought in over $19 million from the sector in the 2008 election cycle.

While the above graphics do not show 2010 health sector contributions the disparity between the parties has only grown. Democrats have received 58% of all health sector contributions. Republicans have fallen to their lowest percentage in recorded history. And the contributions did not come without benefits. The health sector was brought close into the discussion on comprehensive health care reform. The pharmaceutical industry, the hospital industry and doctors all signed onto legislation and helped to ultimately pass comprehensive reform. The final product included many concessions to these and other industries and cut out many long-standing Democratic policy priorities that the industries feared.

The Lord giveth and the Lord taketh away.

Billy Tauzin was bounced from his perch as President and CEO of the Pharmaceutical Research and Manufacturers of America (PhRMA) after the deals he helped strike with the White House and Sen. Max Baucus were stalled with the health care bill.

Jeff Kindler, the CEO of Pfizer, the nation's largest drug company, got a 12.5% raise after he helped block drug reimportation and other cost cutting measures by striking a deal with the White House and Sen. Max Baucus. From the Pfizer statement:

During 2009, Mr. Kindler was actively involved, through both Pfizer and external organizations, in developing and advancing U.S. and global public policies that serve the overall interests of our Company and our shareholders, as well as doctors and patients. These efforts included constructive participation in the U.S. legislative process to advance Pfizer’s goals of achieving a more rational operating environment; improving Americans’ access to quality, affordable health care; preserving the doctor/patient relationship; and enhancing policies that promote innovation. Also, through both Pfizer and external organizations, he has sought to ensure the availability of safe medicines by opposing legislation that would allow for importation of prescription drugs that could jeopardize the integrity of the drug supply chain in the U.S.

For the full story on the deal struck between the pharmaceutical companies and the White House see this article.

(hat tip to Timothy Carney at the Washington Examiner.)

Last we left off in the story of the White House-PhRMA deal the White House had made new cost cutting proposals that would affect the pharmaceutical industry. PhRMA has since put out a press release that doesn't really answer many questions about where they stand. This was before last week's health care summit:

“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.

“Throughout the health reform debate, America’s pharmaceutical research and biotechnology companies have supported proposals aimed at encouraging critically important medical research and innovation to improve the lives of patients and foster a successful life sciences sector, which supports millions of American jobs.

“We will be carefully reviewing the proposal and look forward to hearing the discussions at Thursday’s White House summit on health care reform.”

The Washington Post reports that their lobbyists are working to block the additional $10 billion in cost cutting proposed by the administration, while still remaining supportive of the Senate bill:

The Pharmaceutical Research and Manufacturers of America (PhRMA), the powerful drugmaker lobbying group, is holding back on ads for now but will continue to work closely with lawmakers and the White House on specific issues, one senior industry official said. PhRMA, which agreed to $80 billion in cuts in exchange for protection from other steps, has concerns about Obama's proposal to add another $10 billion to that amount, the official said.

Of course, the major key is the cessation of advertising by the group. PhRMA just isn't willing to put any more money on the line with so much ambiguity regarding the outcome.

This morning the White House released a new health care proposal that may be used as a blueprint for a compromise between House and Senate versions of reform. This new proposal will likely not find a receptive audience at the Pharmaceutical Research and Manufacturers of America (PhRMA)--the chief lobbying arm of the pharmaceutical industry.

Throughout 2009, PhRMA and major pharmaceutical companies crafted a deal with the White House to limit cost cutting by the industry in exchange for the industry's support, through over $100 million in television advertising, for health care reform. (The entire story behind the crafting of the deal can be read here.) The White House's new proposal contains deeper cost cuts than previously agreed to and contains regulations on the relationship between brand-name and generic drug companies that the industry opposes.

The deeper cost cuts come from an attempt to further close the "donut hole" in the Medicare Part D prescription drug program. The “donut hole” refers to the gap in coverage that occurs within Medicare Part D. For those purchasing prescription drugs through the program coverage cuts off at $2,700 spent and does not pick back up again until $6,154 is spent by the participant. The current language that was struck in the deal between the White House and the pharmaceutical industry maintains that drug companies would cover 50 percent of the cost for brand-name drugs for participants falling in the "donut hole." This change would be implemented within the year. The White House's new proposal would eliminate the "donut hole" by 2020 by making participants pay only 25 percent coinsurance with Medicare covering the other 75 percent. The White House also takes a page from the House health reform bill by providing a $250 rebate to Part D participants who fall into the "donut hole." (The House bill provides for a $500 reduction in costs for participants who fall into the "donut hole.")

Another piece of the proposal would allow the Federal Trade Commission (FTC) to regulate the interactions between brand-name and generic drug companies. At issue is the revelation that brand-name drug companies have been paying off generic drug companies for support on patent extensions for certain drugs. This means that consumers will see serious delays in the release of certain generic drugs and therefore still face the higher costs of brand-name drugs. The FTC is filing suit against the drug companies to end this practice and the White House proposal aims to give the FTC authority to regulate and end this practice. The summary of the proposal states that the White House would, "[make] anti-competitive and unlawful any agreement in which a generic drug manufacturer receives anything of value from a brand-name drug manufacturer that contains a provision in which the generic drug manufacturer agrees to limit or forego research, development, marketing, manufacturing or sales of the generic drug." The White House claims that payouts to generic drug companies cost consumers up to $35 billion over the next ten years.

PhRMA and the brand-name drug companies backing it are adamantly opposed to FTC regulation of payouts to generic companies. A previous statement from PhRMA states:

Patent settlements between brand-name and generics companies can resolve expensive patent disputes to help foster innovation and improve access to medicines so that patients can live healthier, more productive lives.

Law and public policy have always favored settlements, including patent settlements. PhRMA continues to believe that legislation that would impose a blanket ban on certain types of patent settlements or otherwise prevent them could decrease the value of patents and reduce incentives for future innovation of new medicines. This is also unnecessary because the Federal Trade Commission (FTC) and others already have the authority to review and evaluate any patent settlement agreement between a brand name company and a generic company. The courts and enforcement agencies like the FTC are in the best position to review these settlements on a case-by-case basis to ensure that they are not harmful to competition. By imposing a general ban or imposing harsh disincentives, pending legislation would effectively remove the decision-making process from this appropriate venue.

After health care negotiations stalled in January, PhRMA President and CEO Billy Tauzin abruptly resigned. Media reports on his resignation have varied from differences in style that displeased the Board of Directors and displeasure with the failure of the deal struck with the White House to be adopted after a $100 million-plus advertising binge in support of the legislation. Since Tauzin's departure, board members have continued the refrain that they will back the Senate legislation that contains the $80 billion cost cutting cap agreed to in the deal. PhRMA has yet to release a statement on the White House's apparent abandonment of the previously agreed upon deal.

At the end of last year, the White House dropped a new pile of visitor log records into the public, online record. Upon returning in January from a near month long vacation I decided to take a look at these new records. One story that I wanted some more information on was the oft-reported on deal between the White House and the pharmaceutical companies. I started looking up meetings for pharmaceutical executives, PhRMA lobbyist Billy Tauzin and so on. After a bit of searching and reading some articles from last summer two things dawned on me: 1) There was no singular resource that brought together all of the reporting and all of the data in one place and 2) No one reporting on this deal seemed to know that Sen. Max Baucus posts his schedule online.

The second point is what really crystallized the need to write this piece for me. Last summer, I dug into Baucus' publicly available schedule (which wouldn't be available if it weren't for Sunlight's efforts) examining his meetings with leaders in the health care industry. When I was looking at the White House Visitor Logs, a lot of the dates looked familiar. That's because they matched up precisely with dates in Baucus' schedule with the same actors meeting at the White House and with Baucus. Data that was available online all this time showed how closely the White House and pharmaceutical companies were coordinating with Baucus' office in crafting a health care reform bill. In researching this project I pulled every important meeting in White House Visitor Logs and Baucus' schedule, found the most relevant and revealing articles already written, looked up voting records on the Senate's web site and dug into the lobbying team hired by PhRMA using the databases of the Center for Responsive Politics (CRP). The meetings and key moments (votes, revelations) written in previous articles became a five-page time-line, which was later whittled down to include just the major meetings with the White House and Baucus' office. (Image to the right is of the original time-line.)

One of the statistics in the piece took almost a full day to research. In looking through lobbying disclosure records on CRP's web site I counted 48 outside lobbying firms hired by PhRMA in 2009. These 48 lobbying firms, plus PhRMA's in-house operation, employed 165 lobbyists registered to lobby for PhRMA. Those are some extraordinary numbers, but it doesn't tell the whole story of influence. Having spent a lot of the past year digging into former staffers turned lobbyists I figured that PhRMA would likely be employing a large number of former government officials and employees. (For previous revolving door research see: Max Baucus Health Care Lobbyist Complex, Senate Finance Committee Lobbyist Complex [Dems, GOP], Blanche Lincoln Health Care Lobbyist Complex, Max Baucus Energy & Climate Lobbyist Complex.)

Digging into 165 lobbyist profiles is not the most fun thing in the world. CRP hosts a revolving door database that lists former government positions held by lobbyists. I had to create a spreadsheet for 165 lobbyists by clicking on each individual profile and determining, based on CRP's information, whether they were a former government employee and where they worked. In each case where no revolving door profile existed I turned to Google and the web sites of the respective lobbying firm for lobbyist profiles. Many times this helped identify lobbyists with past government experience who were not listed in CRP's database. In the end, it turned out the 137 of the 165 lobbyists hired by PhRMA had previous government experience, the majority of whom worked in Congress. Below is a Google spreadsheet of some of the more pertinent former congressional staffers turned lobbyists for PhRMA:

Aside from telling a story that is vital to understanding the health care reform effort and the reasons that led to such a drawn out process, this piece sought to take information that is publicly available—and online—and provide context to that information. When we talk about government transparency we often discuss the release of raw data sets. Those data sets are meaningless if they aren't taken and placed into context for the wider public. If the White House Visitor Logs just sat in a database they would provide no benefit to the American people. Someone has to go in and pick them apart and show the relevant information in the context of a story that people can understand.

There was also a lot of support from other Sunlighters in making the totality of this piece. The video included was created by Noah Kunin; the visual timeline was created by Alison Kim; Avelino Maestas helped fact-check the article; Bill Allison and Anupama Narayanswamy edited the piece.

More than a million spectators gathered before the Capitol on a frosty January afternoon to witness the inauguration of Barack Obama, who promised in his campaign to change Washington’s mercenary culture of lobbyists, special interest influence and backroom deals. But within a few months of being sworn in, the President and his top aides were sitting down with leaders from the pharmaceutical industry to hash out a deal that they thought would make health care reform possible.

Over the following months, pharmaceutical industry lobbyists and executives met with top White House aides dozens of times to hammer out a deal that would secure industry support for the administration's health care reform agenda in exchange for the White House abandoning key elements of the president's promises to reform the pharmaceutical industry. They flooded Congress with campaign contributions, and hired dozens of former Capitol Hill insiders to push their case. How they did it—pieced together from news accounts, disclosure forms including lobbying reports and Federal Election Commission records, White House visitor logs and the schedule Sen. Max Baucus releases voluntarily—is a testament to how ingrained the grip of special interests remains in Washington.

In the 2008 campaign, Obama declared his intention to include all stakeholders as he sought to reform the nation's health care system, but also supported key Democratic health reform policies. Among these were several that targeted the pharmaceutical industry: Allowing re-importation of drugs from first world countries with lower drug prices and providing Medicare with negotiating authority over prescription drug prices in the recently enacted Part D program. These weren't just promises, Obama had already voted for both of them as a senator in 2007. (Roll Call Vote 132 and Roll Call Vote 150.)

Set to carry out this agenda were two Capitol Hill veterans, schooled in the monied Washington culture, chief of staff Rahm Emanuel and deputy chief of staff Jim Messina. Emanuel was a former fundraiser, Clinton administration official, investment banker and member of the Democratic leadership in Congress. Messina was the former campaign manager and chief of staff to the powerful Senate Finance Committee chairman Max Baucus. Both were known for their unparalleled legislative abilities.

Because of Obama's decision to develop a plan operating through the legislative process, members of Congress also played key roles. Early on, the pharmaceutical companies were told to deal directly with Senate Finance Committee chairman Max Baucus. Baucus would be the vehicle for the deal worked out behind the scenes by the White House and PhRMA.

Central to this effort was PhRMA president, CEO and top lobbyist Billy Tauzin, a longtime Democratic member of Congress who switched party affiliations after Republicans gained control of Congress in 1994. By switching parties Tauzin was able to maintain his influence and even rose to be Chairman of the House Committee on Energy & Commerce. Tauzin became the poster child of Washington’s mercenary culture. He crafted a bill to provide prescription drug access to Medicare recipients, one that provided major concessions to the pharmaceutical industry. Medicare would not be able to negotiate for lower prescription drug costs and reimportation of drugs from first world countries would not be allowed. A few months after the bill passed, Tauzin announced that he was retiring from Congress and would be taking a job helming PhRMA for a salary of $2 million.

Tauzin’s job change became fodder for a campaign ad that then presidential candidate Barack Obama ran in the spring of 2008 simply titled “Billy.” It featured the candidate, sleeves rolled up, talking to a salon of gasping Americans about the ways of Washington. “The pharmaceutical industry wrote into the prescription drug plan that Medicare could not negotiate with drug companies. And you know what, the chairman of the committee, who pushed the law through, went to work for the pharmaceutical industry making $2 million a year.” The screen fades to black to inform the viewer that, “Barack Obama is the only candidate who refuses Washington lobbyist money,” while the candidate continues his lecture, “Imagine that. That's an example of the same old game playing in Washington. You know, I don't want to learn how to play the game better, I want to put an end to the game playing.”

Aiding PhRMA in their outreach to Congress would be a squadron of lobbyists to push their health care reform priorities. Over the course of 2009, the drug industry trade group spent over $28 million on in house and hired lobbyists. Aside from PhRMA's massive in-house lobbying operation, the trade group hired 48 outside lobbying firms. The total number of lobbyists working for PhRMA in 2009 reached 165. Some 137 of those 165 lobbyists representing PhRMA were former employees of either the legislative or executive branches. Of these dozens were former congressional staffers including two former chiefs of staff to Max Baucus.

According to data compiled by the Center for Responsive Politics, drug makers contributed huge sums to congressional campaign committees during the same period—from January to the end of October (4th quarter numbers are still being totaled), industry political action committees, employees and their family members flooded lawmakers with over $8 million. Those contributions tilted heavily to Democrats over Republicans by a 57 to 42 percent margin—the first time in any election cycle going back to 1990, the first year that the Center for Responsive Politics began tracking industry giving, that Democrats were so favored. Given their majorities on Capitol Hill, and the new President’s intention to reform America’s health care system, the new tilt was perhaps not surprising.

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Key Meetings Between White House, Max Baucus and Pharmaceutical Companies [click here for a visual timeline]
March 5, 2009	Billy Tauzin, President & CEO of PhRMA and Jeff Kindler, CEO & Chairman of Pfizer, chairman-elect of the Board of PhRMA	White House
April 20, 2009	Kevin Sharer, CEO of Amgen	Sen. Max Baucus
April 20, 2009	Kevin Sharer, CEO of Amgen	White House
May 7, 2009	David Brennan, CEO of AstraZeneca, Chairman of Board of Directors of PhRMA	Sen. Max Baucus
May 8, 2009	David Brennan, CEO of AstraZeneca, Chairman of Board of Directors of PhRMA	White House
May 19, 2009	Billy Tauzin, President & CEO of PhRMA and James Hall, PhRMA lobbyist	White House
June 2, 2009	Billy Tauzin, President & CEO of PhRMA; James Hall, PhRMA lobbyist; Kevin Sharer, CEO of Amgen; Jeff Kindler, CEO & Chairman of Pfizer, chairman-elect of the Board of PhRMA; Miles White, CEO of Abbott Laboratories	White House
June 2, 2009	Billy Tauzin, President & CEO of PhRMA; Kevin Sharer, CEO of Amgen; Jeff Kindler, CEO & Chairman of Pfizer, chairman-elect of the Board of PhRMA; Miles White, CEO of Abbott Laboratories	Sen. Max Baucus
July 7, 2009	Billy Tauzin, President & CEO of PhRMA; Kevin Sharer, CEO of Amgen; Jeff Kindler, CEO & Chairman of Pfizer, chairman-elect of the Board of PhRMA; Miles White, CEO of Abbott Laboratories (David Brennan, CEO of AstraZeneca, Chairman of Board of Directors of PhRMA is also listed in visitor logs for an appointment date)	White House (Deputy Chief of Staff Jim Messina; Chief of Staff Rahm Emanuel and Max Baucus' chief of staff Jon Selib are scheduled to meet at the same time; Independent reports place Emanuel in the meeting)

On March 5, the White House held a meeting with major health care industry leaders to try to bring them to the table and see what could be done to gain their support. In attendance were Billy Tauzin, president, CEO and top lobbyist for PhRMA, Pfizer CEO Jeff Kindler, America's Health Care Plans (AHIP) Chairman Karen Ignani, Tom Donohue of the Chamber of Commerce and Robert Wood Johnson Foundations’ Risa Lavizzo-Mourey. A day before the White House meeting Tauzin appeared on CNBC touting health care reform and promising to work closely with the Obama administration. In the interview he touted it as an “optimistic plan”, acknowledging that the industry did have a few problems but was glad to have a chance to discuss these. Some were caught dumb-founded by this apparent change of heart on behalf of an industry long adverse to health care reforms.

On April 15, Jim Messina and Jon Selib, chief of staff to Senate Finance Committee chairman Max Baucus, convened a meeting at the headquarters of the Democratic Senatorial Campaign Committee (DSCC) with leaders of organized labor and health care groups, including PhRMA. At the meeting, the groups decided to form two nonprofit entities to promote reform efforts, Healthy Economy Now and Americans for Stable Quality Care, that would be almost entirely funded by PhRMA. The two groups spent $24 million on their advertising campaigns; the contract to produce and place ads went to White House Senior Advisor David Axelrod’s former firm, AKPD, which owed Axelrod $2 million.

In the next month, CEO’s from pharmaceutical companies would meet with Baucus and administration officials at least four times. These talks preceded a major public event at the White House, one critical to its strategy to promote health care reform. On May 11, PhRMA and other trade industry groups pledged cost cutting measures to the White House that would save, they claimed, upwards of $2 trillion over the next decade. President Obama announced the deal in the State Dining Room, flanked by leaders of the various trade groups; the administration followed up with a media blitz in the press and on the White House Web site.

The next day, Healthy Economy Now's PhRMA funded ad campaign ran their first advertisement in support of the health care reform process calling for the government to finally “fix” the nation's health care cost problems. While many elements of the $2 trillion cost cutting pledge fell apart, the drug industry remained committed to the process in the hopes that they could ultimately win out and defeat the provisions they most feared in closed-door meetings with the White House.

The first occurred on June 2. White House visitor logs show PhRMA’s top executives, including Tauzin, and industry CEOs met with Sarah Fenn from the White House Office of Health Care Reform. On the same day, the publicly available schedule of Senator Max Baucus shows Tauzin and the same industry CEOs met the Senate Finance Committee chairman. What ultimately resulted from these coordinated meetings would be revealed by Baucus on June 20.

In a press release featuring a statement by Tauzin, Baucus revealed that the pharmaceutical industry had accepted $80 billion in cost cutting measures to be included in the Senate Finance Committee version of the bill. According to news reports, Baucus initially proposed $100 billion in cost cutting measures, but the executives and lobbyists meeting on June 2 were able to win the lower figure.

The terms of the initial cost-cutting deal included $30 billion go directly towards closing the “donut hole” in Medicare prescription drug coverage.  The “donut hole” is a term for the gap in coverage that occurs within the Medicare prescription drug coverage. For those purchasing prescription drugs through the Medicare program coverage cuts off at $2,700 spent and does not pick back up again until $6,154 is spent by the participant. The amount proposed in the deal, 50 percent coverage for drugs within the coverage gap, however, would not completely close the “donut hole.”

In Baucus' press release, Tauzin is quoted as saying, “This is a once-in-a-lifetime opportunity and, working together, we can make this hope for a better tomorrow a reality today.” This “once-in-a-lifetime” opportunity also extended to the pharmaceutical industry's ability to blunt the long-term Democratic agenda of lowering prescription drug prices through Medicare negotiations, re-importation and quicker release of generics onto the market. After making such a grand statement of support through cost cutting proposals it was time for the pharmaceutical industry to finally force the White House and Democrats to take certain chips off the table.

Baucus proceeded with a plan to convene a bipartisan group in an effort to craft the bill desired by the White House. These participants included Democrats Kent Conrad and Jeff Bingaman and Republicans Chuck Grassley, Mike Enzi and Olympia Snowe. Baucus' decision and the need to solidify deals with groups like the pharmaceutical industry – which were reliant on Baucus producing a bill – slowed down the legislative process making it impossible for Congress to meet the White House's announced August recess deadline for passing health care reform.

Soon after, PhRMA’s big guns and industry lobbyists paid the White House another visit on July 7 and this time met with Rahm Emanuel and Jim Messina (Baucus' chief of staff Jon Selib is also listed in White House visitor logs for this meeting). In August, The Huffington Post's Ryan Grim reported on an internal memo that was drafted at that meeting that outlined the policies that would not be allowed into any final version of health care reform. These included Medicare prescription drug negotiations, drug re-importation, and the lowering of prices for drugs available through Medicare Part D and Part B. The deal would be $80 billion in cost cutting and absolutely no more.

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While the $80 billion deal was cut with Baucus' committee, other congressional committees continued to mark-up their own versions of health care reform without the knowledge that the White House was relying on Baucus to produce the final product. In the House of Representatives, the House Energy & Commerce Committee leveled a direct threat to the $80 billion deal. Energy & Commerce Chair Henry Waxman sought to include all of the provisions that PhRMA had gotten the White House and Baucus to cut out of the reform bill. These included drug reimportation, Medicare negotiating power and speedier release of generics to the market. According to previous analysis of the measures proposed by the committee, these measures would have totaled hundreds of billions in cost cuts, far exceeding the $80 billion cap agreed to by the White House, Baucus and PhRMA.

The cost cutting measures passed in the Energy & Commerce bill spooked the board of PhRMA, which included all of the CEOs involved in the deal-cutting meetings with the White House and Baucus. The board pressured Tauzin to go public with the deal to ensure that the White House would recognize it and not renege. On August 4, the Los Angeles Times, in an exclusive report, featured quotes from Tauzin claiming that a deal between the White House and PhRMA existed and that, as Tauzin put it, “The White House blessed it.” Tom Hamburger wrote in the article, “For his part, Tauzin said he had not only received the White House pledge to forswear Medicare drug price bargaining, but also a separate promise not to pursue another proposal Obama supported during the campaign: importing cheaper drugs from Canada or Europe.”

The White House's Jim Messina later confirmed Tauzin's claim, stating, “The president encouraged this approach … He wanted to bring all the parties to the table to discuss health insurance reform.”

Democratic lawmakers were furious. Rep. Raul Grijalva, chairman of the Progressive Caucus, asked, “Are industry groups going to be the ones at the table who get the first big piece of the pie and we just fight over the crust?”

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On September 7, Baucus' bill made a private circulation on the Hill; pharmaceutical industry cost-cutting did not exceed $80 billion. Five days later, the New York Times reported that PhRMA planned to spend up to $150 million in an advertising blitz in support of Baucus' bill. The Times noted that the ad spending “…would be a follow-up to the deal that drug makers struck in June with Mr. Baucus and the White House.” On September 16, Baucus released the full text of his legislation to the public.

The White House, PhRMA and Baucus still had to fight a few battles to keep the deal intact. The key amendment targeting the PhRMA deal in committee mark-up came from Sen. Bill Nelson from Florida, which has one of the largest Medicare participant populations in the nation. The pull of constituent needs clearly put Bill Nelson into a position to push for further cost cutting in Medicare prescription drug pricing. His target: closing the “donut hole” completely.

Nelson claimed that his amendment would generate $106 billion in revenue, or from PhRMA's perspective increase their cost-cutting to $186 billion.  That would be unacceptable to PhRMA, to Baucus, to the White House and to the pharmaceutical industry who had made the deal. Other Senate Democrats, Tom Carper and Robert Menendez voted with Republicans and Baucus on the committee to defeat the amendment.  It is little surprise the Carper's Delaware is home to AstraZeneca and Menendez' New Jersey is home to Merck and Bristol-Myers-Squibb, all of which lobbied for the $80 billion cap.

Senate Majority Leader Harry Reid introduced the final bill, with the cap in place, on November 19. Debate began on Dec. 3, and with it come one more attempt by members to change the terms of the deal. Senator Byron Dorgan introduced an amendment that would allow for drug re-importation, but as the date for voting drew near, the Federal Drug Administration (FDA) released a letter objecting to the proposal that echoed pharmaceutical industry talking points: “…as currently written, the resulting structure would be logistically challenging to implement and resource intensive. In addition, there are significant safety concerns.” Dorgan's amendment was defeated with numerous Democrats previously in support of reimportation switching to "no" votes.

On Christmas Eve, the bill passed the Senate with the PhRMA deal fully intact.

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New Year's Eve passed with no further action on health care reform. Public opinion regarding the health care reform bill had been slipping throughout 2009. It reached a fulcrum in the special election to replace the deceased senator Ted Kennedy in Massachusetts on January 19, 2010. Newly minted senator Scott Brown campaigned that he would be the senator to provide Republicans with the votes to filibuster the final health care reform bill. Democrats ran for cover. Despite having the largest majorities of any party since the 1970s, Democrats put the brakes on their agenda, particularly health care reform.

In the end, the pharmaceutical industry's support for health care reform would be left up in the air. After spending $100 million in advertising in support of legislation that Tauzin and key executives hoped would be a windfall for the pharmaceutical industry, the legislative process had flat-lined. In February, the board of PhRMA, split over the deal cut by Tauzin, pushed Tauzin to resign his post.

In an interview with Diane Sawyer, President Obama owed up to failures in the process of passing health care reform, “[T]he health care debate as it unfolded legitimately raised concerns not just among my opponents, but also amongst supporters that we just don't know what's going on … And it's an ugly process and it looks like there are a bunch of back room deals.”

The Washington Post reports today that the health care industry, in its attempt to influence the debate over health care reform, has hired at least 350 former government staffers and former members of Congress to lobby on the issue. With the many connections these former government workers have, particularly former members of Congress or congressional chiefs of staff, they will have near saturation coverage of the 535 current members of Congress. They also are operating with seemingly bottomless funding. The industry is currently spending $1.4 million a week on lobbying. Perhaps, the most unparrelled lobbying campaign ever.

Now the Post story has a few caveats that indicate that this lobbying campaign is probably larger than their reporting shows. For one:

The analysis identified more than 350 former government aides, each representing an average of four firms or trade groups. That tally does not include lobbyists who did not report their earlier government experience, such as PhRMA President W.J. "Billy" Tauzin, a former Republican congressman from Louisiana. Federal law does not require providing such detail.

Lobbying disclosure reports contain a field for listing prior government work, but this field is often left empty by lobbyists with government experience. If someone like Billy Tauzin, who is the poster boy for everything wrong with the revolving door, does not list his previous work as a leading lawmaker, what hope do we have for the many lesser former government workers to list their previous government work. I'd assume that the number of former government employees working in this campaign far exceeds 350.

One other aspect of the story highlights something which we've discussed here, lobbying contacts. The real problem with the revolving door is the unusual amount of access that former government officials, particularly members of Congress, have to current government officials. And that includes the ability to meet, call, or email with staffers or lawmakers to push their client's agenda. Of course, Congress does not require any disclosure of lobbying contacts, thus obscuring the role that these 350+ lobbyists are having in the process of crafting a health care reform bill that will affect everyone in the country.

If you want to see other reporting on the network of former government staffers turned health care lobbyists, we've been looking at the Senate Finance Committee -- "the central broker in the [health care] debate," according to the Post -- and the connections each lawmaker has with health care lobbyists. You can see our visualization of Senate Finance Committee Chair Max Baucus' connections or our visualization of all Senate Finance Committee Democrats and their connections. I'll be posting about the Senate Finance Committee Republicans this week.

Today, President Obama held a public event with a number of leading health industry trade associations that have previously been reticent towards efforts to reform health care. The organizations included the Pharmaceutical Researchers and Manufacturers Association (PhRMA), America's Health Insurance Plans (AHIP), the American Medical Association (AMA), the Advanced Medical Technology Association (AdvaMed) and the American Hospital Association (AHA). The public event included a promise by these industry groups, among others, to reduce health care costs by $2 trillion. It also served as a symbolic event, potentially showing the shrinking rift in between the two sides in the health reform debate. President Obama wants these organizations to temper their fire when the health reform debate begins in full, as they wield a mighty hand in the Washington lobbying game.

1st Quarter Lobbying
PhRMA	$6,910,000
American Medical Assn	$4,355,000
American Hospital Assn	$4,237,176
America's Health Insurance Plans	$2,030,000
Advanced Medical Technology Assn	$364,638

In their first quarter reporting for 2009, these five trade associations have reported  nearly $18 million in lobbying expenditures. Their expertise in reaching out to Congress is also nearly unparalleled. The five trade groups employ in their inside lobby shops at least 20 former government employees, many of whom are former congressional staffers. The head of PhRMA's lobby shop is former congressman Billy Tauzin, notorious for negotiating his current job as he was writing Medicare prescription drug benefit while in Congress. (This does not take into account the outside lobbying firms hired by these groups.)

The health care sector, on the whole, is leading the pack in lobbying expenditures this year. After three months of 2009, the sector has reported $127 million in lobbying expenditures. That is on pace to break the record $487 million spent by the sector on lobbying in 2008 and the congressional debate has yet to be fully engaged. The sector is the only other private sector that competes with the financial sector in lobbying spending. From 1997-2008, the health care sector has spent $3.4 billion on lobbying officials in Washington -- only slightly less than the financial sector ($3.6 billion). There are varying views in the health care reform community on whether this public event will help President Obama's reform effort or if it will empower the industry groups to be able to squash the pieces of reform they deem unacceptable. Jonathan Cohn, Marc Ambinder and Paul Krugman believe that this is a net benefit for reform advocates. Cohn writes, "[E]very day that these groups are saying positive things about reform in public is day they're not saying nasty things about reform in public." The American Prospect's Ezra Klein, on the other hand, takes a more cautious approach, stating, "The fact that the White House is making a big deal of their support means it would be a big deal if they lost it."

But Klein also notes that the real fight won't occur until an actual bill is dropped, which will happen in June. When the next lobbying disclosure reports come out on July 20th, we'll be able to see how much these groups are engaged in the debate. These groups have the ability to spend massive amounts of money and that is the only metric we will have to measure their lobbying campaign when the next round of disclosures are released.

We won't, however, be able to see who in Congress, or the administration, they are contacting and for what goals they are aiming. Without disclosure of contacts, it may take some time for the President and supporters and opponents of reform to see whether today's event was just a high-level photo-op, or if it actually paid off in one-way or the other.

David Sirota posted on OpenLeft yesterday on what he called "the reward method of corruption." Sirota writes, "As opposed to the Payoff Method whereby a campaign contribution is made and then a favor is legislated, the Reward Method gives a politician a goodie after a favor is done, sorta like a dog being given a treat for rolling over." This is one of two major issues raised by the revolving door between government and lobbying. (The other issue being the use of access built up over the years.)

While I don't think there is a direct answer, which Sirota was seeking, to how to stop the flow of lawmakers and staffers from government to the lobbying profession--short of greatly increasing their pay--there are some things to mitigate the effects.

First, let's look at the problem. This goes from the somewhat benign, lawmaker goes to work for a nonprofit cause not connected to private enterprise, to the wholly corrupt, the various staffers who did deals for Jack Abramoff and then were hired by his lobbying firm. But for the most part, these things fall in between, a staffer or lawmaker has a particular expertise and flips to make more money doing, essentially, the same thing they were doing in Congress.

Now perhaps the biggest fear is that, in preparation for a future career on K Street, a staffer or lawmaker will do favors, directly or indirectly, having been asked or on their own volition, to protect future hiring opportunities. The biggest example of this is Billy Tauzin, who was in talks to head the pharmaceutical industry's top lobbying shop, PhRMA, while he was writing the Medicare Prescription Drug, Improvement, and Modernization Act, the largest health care overhaul since the 1960s. Tauzin's tale included many instances of opaque situations: closed conference committees with lobbyists at the table, secret discussions for future employment, unreported meetings with lobbyists. The revelation of all of these things would have aided in providing the public with a view into Tauzin's world preemptively.

What I'm saying is that the preemptive, or real time, disclosure of a variety of items would allow the public to prevent a lawmaker from doing favors for a potential future employer. The following would be most useful:

• Real time lobbying disclosure with increased reporting requirements — We've covered this here, here and here recently. Require lobbyists to disclosure all meetings with covered officials within 24 hours. Require lobbyists to report with whom they meet and the office of the lawmaker when they are meeting with staffers. Also require specific information on positions taken on bills, appropriations, or other topics of discussion.
• Open all conference committees and require time to read conference reports — Require all conference committees to be open to the public (didn't the Democrats promise this back in 2006?) and require all conference reports to be available for 72 hours prior to consideration. (Of course, beyond this, all committees should be open and all bills should be available for 72 hours prior to consideration.)
• Increase reporting requirement for job negotiations — Currently, members of the House and some staffers must report job negotiations to the Clerk of the House, but the information is not publicly available.

As I said earlier, I don't think there is a direct way to limit government officials from leaving for a more lucrative profession outside of increasing their pay. There could be a longer "cooling off" period in the House, where it is only one year, and perhaps an extension to staff making less money than currently meets the threshold for the post-employment lobbying restriction. But that hasn't stopped lawmakers from taking positions as "consultants" and later becoming lobbyists (see: Hastert, Dennis or Daschle, Tom).

Greater transparency and disclosure would, however, be the best solution at present to provide less incentive for lawmakers and staff to act favorably for future employment. With more eyes on their actions there will be fewer Billy Tauzin's, Kevin Ring's, Michael Scanlon's, and Tony Rudy's.