It’s Time for Big Pharma to Apologize

Last week, President Barack Obama sat down with Chuck Todd of MSNBC.  To what’s probably the best of his ability, he sought to apologize to the American people for the ObamaCare rollout debacle.

It was a pathetic showing.  The man who would stop the oceans from rising could not bring himself to admit what we already know – that he repeatedly lied to the American people in order to sell ObamaCare to a skeptical electorate and their elected representatives.

Humility is obviously not in his nature.

At this point in his second term, if you actually expected anything more from this President, shame on you.  Accountability seems to be a four-letter word at the 1600 Pennsylvania Avenue.  Just ask Steven Chu (of Solyndra fame), Eric Holder (Operatioin Fast and Furious) Susan Rice / Hillary Clinton (Benghazi) and, now, Kathleen Sebelius (ObamaCare).  Every scandal is someone else’s fault.

Blame former President George W. Bush, blame Congressional Republicans, blame the Tea Party – just don’t blame anyone who is actually in charge of anything.  If you do, the media will likely call you a racist.

While hawking his health care takeover as a literal cure for what ailed the country, Obama repeatedly said, “if you like your health care plan, you can keep it.”  What he meant to say was, “if I (and Nancy Pelosi, the SEIU, Planned Parenthood, the pharmaceutical industry and a few hundred more special interest groups) like your health care plan, you can keep it…  And this may cause your premiums and deductibles to rise, you may lose your doctor, you may lose your insurance and you are going to get a bunch of coverage you do not need or want so you can support the massive federal expansion I am launching.”

The truth wasn’t going to sell, so he lied.  And Obama has no qualms with lying to the American people.  Don’t forget, he lied about the circumstances surrounding the death of his own mother to pass this law.  His aversion to the truth – particularly regarding ObamaCare – has, at times, bordered on the pathological.  This is one of those times.

And besides, until October 1st, the media covered for his lies and dismissed conservative analysis and warnings of ObamaCare’s impending doom as well – you guessed it – racist.

But now, with policy cancellations in the millions – and many individuals and families with new coverage plans experiencing sticker shock – the American public is rightfully outraged.  So as Obama seems incapable of issuing a proper apology (or fixing the mess), perhaps the CEOs of the country’s major pharmaceuticals should fully explain their role in ObamaCare’s devastating consequences and apologize to the millions of victims.

From the genesis of ObamaCare (indeed, since before the law obtained iStock_000018168698XSmallthat moniker), representatives from the nation’s largest pharmaceutical companies have played a prominent role in shaping the law and regulations that are slowly taking over one-sixth of the American economy.  The Pharmaceutical Research and Manufacturers of America (PhRMA) – a trade association representing the who’s who of major American pharmaceutical companies – worked so closely with the White House and congressional Democrats writing the bill that the Wall Street Journal dubbed it a “story of crony capitalism.”

According to the Journal:

The joint venture was forged in secret in spring 2009 amid an uneasy mix of menace and opportunism.  The drug makers worried that health-care reform would revert to the liberal default of price controls and drug re-importation that Mr. Obama campaigned on, but they also understood that a new entitlement could be a windfall as taxpayers bought more of their products.  The White House wanted industry financial help and knew that determined business opposition could tank the bill.

So power brokers in the White House and the pharmaceutical industry began working out a deal where the industry would pay billions in rebates through the Medicare prescription drug benefit, but be protected from more costly policies such as drug re-importation.  The Wall Street Journal authors pick up the story from there:

Energy and Commerce Chairman Henry Waxman then announced that he was pocketing PhRMA’s concessions and demanding more, including re-importation.  We wrote about the double-cross in a July 16, 2009 editorial called “Big Pharma Gets Played,” noting that Mr. Tauzin’s “corporate clients and their shareholders may soon pay for his attempt to get cozy with ObamaCare.”

The White House rode to the rescue.  In September Mr. Hall informed Mr. Kindler that deputy White House chief of staff Jim Messina “is working on some very explicit language on importation to kill it in health care reform.  This has to stay quiet.”

PhRMA more than repaid the favor, with a $150 million advertising campaign coordinated with the White House political shop.  As one of Mr. Hall’s deputies put it earlier in the minutes of a meeting when the deal was being negotiated, “The WH-designated folks … would like us to start to define what ‘consensus health care reform’ means, and what it might include… . They definitely want us in the game and on the same side.”

In particular, the drug lobby would spend $70 million on two 501(c)(4) front groups called Healthy Economy Now and Americans for Stable Quality Care.  In July, Mr. Hall wrote that “Rahm asked for Harry and Louise ads thru third party. We’ve already contacted the agent.”

So there you have it.  The White House forged ObamaCare in conjunction with the pharmaceutical industry.  The industry then packaged the law in a nice $150 million advertising bow and sold it to an unwitting public.

The story does not end there, however.

Armed with this information, the National Center’s Free Enterprise Project has been at the forefront of a continuous campaign to highlight this cronyism, protect corporate shareholders, educate the American public and prevent future coordinated efforts between big business and extreme politicians that might further harm America’s free-market system.

Starting in 2010, National Center representatives took the fight directly to the CEOs of some of America’s biggest pharmaceutical corporations.  That year, National Center staff confronted then-Johnson & Johnson CEO William Weldon and then-Pfizer CEO Jeff Kindler.

We asked each CEO to provide an accounting of how much of PhRMA’s $150 million ObamaCare promotional campaign came from the company’s shareholders.  Each refused to answer.  Weldon specifically claimed that his company would suffer no reputational damage for promoting ObamaCare and that the law was good for the American people.  Kindler noted that ObamaCare was consistent with the positions his company advocated.

Under pressure from Pfizer’s board of directors, Kindler resigned is December 2010.  That’s not enough.  Kindler should apologize to every American who has lost their insurance plan and those that are paying more as a result of his actions.

In late 2010, the National Center commissioned a poll that showed corporations (and Johnson & Johnson in particular) were indeed risking damage to their reputations over their support for ObamaCare.  Armed with this poll, I confronted Johnson & Johnson CEO’s Weldon at the company’s 2011 shareholder meeting.  Standing firmly by ObamaCare, Weldon dismissed any possibility that ObamaCare might harm Americans or his company.

Weldon resigned his post at Johnson & Johnson in 2012.  Like Kindler, Weldon should also apologize to every American who has now lost their insurance plan as well as those who are paying more as a result of his actions.

Also in 2011, National Center President David Ridenour joined me at the Merck shareholder meeting where we questioned their CEO Kenneth Frazier over his company’s financial support for ObamaCare.

Frazier refused Ridenour’s request for an accounting of how much shareholder money Merck spent to promote ObamaCare.  Instead, Frazier repeated tired White House talking points about the benefits of ObamaCare and the extension of insurance benefits to millions of uninsured Americans.

Add Frazier to the list of those who should apologize to every American who has lost their insurance plan and those who are paying more as a result of his actions.

In 2012, we took our campaign against the pharmaceutical industry to the next level and confronted the CEOs of Johnson & Johnson, Pfizer, Merck and Eli Lilly.

Signs of progress emerged as the CEOs of Pfizer and Johnson & Johnson expressed some support for free-market health care reforms.  However, Merck’s CEO professed continued support for ObamaCare despite its continued unpopularity.

At the Eli Lilly shareholder meeting, company CEO Dr. John Lechleiter also expressed continued support for ObamaCare and spouted numerous liberal platitudes about the immorality of 50 million Americans going without insurance.  In a press release after the meeting, I commented that “[i]f the country continues down the big-government health care road, in a few short decades, companies such as Eli Lilly may well cease to exist.  Worse, scientists working for them will no longer be conducting cutting-edge research to cure diseases.  You don’t, after all, hear of blockbuster new drugs that cure diseases coming from nations such as Britain and Canada with government-directed health systems.  I was very disappointed that Eli Lilly has chosen this apparently suicidal path.”

Dr. Lechleiter is one more CEO who should apologize to every American who has lost their insurance plan and those that are paying more as a result of his actions.

Part of the Free Enterprise Project’s mission includes saving companies from themselves.  Corporate executives often make short-term decisions that may initially boost revenues but harm the company’s ability to compete in the long-term.  Since most CEOs do not remain with the same company for decades, they can get away with making short-sighted decisions, ignore long-term market forces and make a quick buck only to leave with a golden parachute.  They let someone else clean up the mess.  Consider that two of the major power brokers of ObamaCare – Kindler of Pfizer and Weldon of Johnson & Johnson – are no longer around to watch ObamaCare unravel.

The Wall Street Journal explained the perils of crony capitalism this way:

Crony capitalism undermines public trust in capitalism itself and risks blowback that erodes the free market that private companies need to prosper and that underlies the productivity and competitiveness of the U.S. economy.  The political benefits of cronyism are inherently temporary, but the damage it does is far more lasting.

As for Big Pharma, the lobby ultimately staved off Mr. Waxman’s revolt and avoided some truly harmful drug policies — for now.  But over the long term their products are far more vulnerable to the command-and-control central planning that will erode medical innovation.

PhRMA’s ObamaCare involvement transcends its initial $150 million advertising campaign.  In fact, PhRMA representatives were instrumental in the HHS regulations that are responsible, in part, for causing higher insurance premiums and dropped health care plans.

Much has been made of the ten sections that every health plan must cover under ObamaCare such as maternity care, emergency services, mental health and others.   That list of ten coverage areas includes prescription drug benefits; and PhRMA had a big role in shaping those regulations.  Tim Carney writing in the Washington Examiner explains that:

Congress gave HHS broad discretion on exactly what sort of coverage to mandate in those 10 areas…

HHS’s first proposed rule on prescription drug coverage required insurers to cover at least one drug in every class of drug — in short, one drug for cholesterol, one drug for epilepsy, etc.  Drugmakers wanted more.  Led by the lobby group Pharmaceutical Research and Manufacturers of America, the industry argued that HHS should require all insurers to not only cover one drug per class, but also to match the benchmark plan in their state.

And Big Pharma won.  HHS’s final rule, issued in late November 2012, required all plans to cover “the greater of” one drug per class or whatever the state’s benchmark plan covers.

So if your insurance plan met state mandates and covered one or more drug per class, it still might be illegal if it didn’t cover as much as the “benchmark” insurance plan.  PhRMA and its member companies like Eli Lilly and Pfizer care about this in part because more bare-bones prescription drug plans may cover only generic drugs and not the more costly name brand drugs covered by the benchmark plans.

The more comprehensive the drug coverage, the more expensive the premiums – thus the cancellation of many low-premium plans.

And there you have it.  In conjunction with the White House, the pharmaceutical industry fashioned ObamaCare and its accompanying regulations, received some short-term rewards for selling out, and millions of Americans are being thrown off their insurance plans as a result.  Furthermore, many new plans are much more expensive because the likes of Pfizer and Merck demanded it.

The mainstream media are often quick to blame big business for all of our societal problems.  Too many foreclosures, they blame the banks.  Perceived as conservative and rife with corporate greed, they attack Wal-Mart and big oil.  But now with a real live villain that had a direct hand in throwing millions from their health insurance roles, and artificially raising premiums through government mandates, the media is relatively silent.

Tim Carney and the Wall Street Journal deserve kudos for speaking truth to power – the progressive press owes an explanation.

Perhaps they should apologize too.

The National Center for Public Policy Research is a communications and research foundation supportive of a strong national defense and dedicated to providing free market solutions to today’s public policy problems. We believe that the principles of a free market, individual liberty and personal responsibility provide the greatest hope for meeting the challenges facing America in the 21st century.