Big Pharma, Big Purge

A new CNN poll taken after last week’s Supreme Court ruling shows that 51% of the American people want all provisions in the health overhaul law repealed. Clearly the American people are not growing to like the law better, as President Obama promised they would. Instead, their opposition has hardened.

The inside deals with key players from throughout the health sector were a big reason the American people initially soured on the law. They saw a pattern of special deals to win special favors behind closed doors, almost always at the expense of taxpayers.

It turns out they were right: A House Energy and Commerce Committee investigation has uncovered emails and other documents detailing conversations between the White House and pharmaceutical executives that opened the door to broader health industry support for the legislation.

But now it turns out that the CEOs of the largest pharmaceutical companies who made the ObamaCare deals have been replaced since the law was enacted in March 2010.

In fact, all six of the big pharmaceutical company CEOs who led negotiations with the White House over the health overhaul law are now gone, and the head of their leading trade association also has been replaced as well.

The first to leave was Billy Tauzin, former CEO of the Pharmaceutical Research and Manufacturers of America, who announced before the health law was enacted that he would leave PhRMA. The six company CEOs who were instrumental in the negotiations with the White House all have been replaced, resigned, or retired:

Jeff Kindler of Pfizer resigned at the end of 2010. Richard Clark of Merck turned over the reins to Ken Frazier in 2011. Bill Weldon of Johnson & Johnson resigned in April of 2012.

Kevin Sharer of Amgen retired in May of 2012. David Brennan of AstraZeneca left last month. And Miles White of Abbott is the only one of the six who remains as CEO, but he is now in charge of a company that is spinning out its brand-name pharmaceutical business under a different CEO.

The replacements extend outside the pharmaceutical industry. Michael Maves, M.D., was CEO of the American Medical Association when the law was enacted in 2010 and led the organization’s endorsement of the health overhaul law. He was replaced in 2011 by James L. Madara, M.D., as the AMA’s new Executive Vice President and CEO.

There are different reasons for the CEOs’ departures, but the fact is that there is new leadership in the industry and that could make it easier for the companies to work with Congress to start a new chapter — away from fragile deals with the government and instead, toward policies that reinforce the industry’s core values of markets, innovation and competition.

Michael McCaughan of Elsevier Business Intelligence reports. “As we’ve noted before, the transition in leadership has important implications, as it helps the industry chart a new course no longer tied to the legacy of the deal on reform.”

The news comes on the heels of a memo and supporting documentation released by the House Energy and Commerce Oversight and Investigations Subcommittee, chaired by Rep. Cliff Stearns, R-Fla. The reports detail deals made between the now-departed industry executives and White House officials that led up to passage of the health overhaul law.

“The memo is part (of) an ongoing investigation the committee launched more than a year ago to shine light on a process that excluded both the American people and many of their elected representatives,” according to the committee.

“Despite the White House’s unwillingness to make these negotiations transparent, even after the fact, the investigation has uncovered a series of emails and internal documents that paint a much clearer picture of the tools and tactics used by the Obama administration to secure a narrow, partisan victory and see PPACA signed into law.”

The committee says the documents “reflect negotiating tactics used by top White House personnel including threats of public criticism and policy declarations. They also show that PhRMA was assured a ‘direct line of communication’ with the White House, and that the organization was offered private reassurances about the deal remaining intact in spite of congressional concerns.”

While the Supreme Court has left the health law standing, the battles over its future will continue into the election and beyond. If there is a change in leadership in the White House and the Senate, there will be a push to repeal the law and replace it with true market-centered health reform.

If that happens, the new leadership in the industry would make it easier to embrace new positions and chart a course that bases success on markets and competition, rather than political back-room deals.

Posted on Investor’s Business Daily, July 5, 2012.

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