From Ezra Klein:
There's been a lot of skepticism about the White House's strategy of cutting deals in which industry players voluntarily promise to save money over the next 10 years. The skepticism is simple enough: If the pharmaceutical companies are willing to save $80 billion as a favor to Barack Obama, that suggests there's a lot more than $80 billion that could, and probably should, be saved. As Nancy Pelosi told me, "The minute the drug companies settled for $80 billion, we knew it was $160 billion. Right? If they're giving away $80 billion?" A few minutes later, she suggested that maybe those agreements weren't inviolable. "The president made the agreements he made," she said. "And maybe we'll be limited by that. But maybe not!"
A front-page story in today's New York Times suggests that her optimism was misplaced. Billy Tauzin, head lobbyist for the pharmaceutical industry, hasn't liked some of the cost-saving measures moving through the House. In particular, he's worried about provisions that would allow doctors to negotiate prices with Medicare. So he sat down with a reporter and gave up the game. The deal that the pharmaceutical companies made with the White House wasn't simply to offer up $80 billion in savings. It was to offer up $80 billion in savings so long as the White House promised to protect them from anything that would extract more than $80 billion in savings.
Pressed by industry lobbyists, White House officials on Wednesday assured drug makers that the administration stood by a behind-the-scenes deal to block any Congressional effort to extract cost savings from them beyond an agreed-upon $80 billion.
Drug industry lobbyists reacted with alarm this week to a House health care overhaul measure that would allow the government to negotiate drug prices and demand additional rebates from drug manufacturers.
In response, the industry successfully demanded that the White House explicitly acknowledge for the first time that it had committed to protect drug makers from bearing further costs in the overhaul. The Obama administration had never spelled out the details of the agreement.
"We were assured: 'We need somebody to come in first. If you come in first, you will have a rock-solid deal,' " Billy Tauzin, the former Republican House member ...