* Drug makers emerge as a super committee lobbying target
* Large volumes of deficit savings sought
By David Morgan
WASHINGTON, Oct 17 With pressure mounting for a
deficit-reduction deal in Congress, the $300 billion U.S.
pharmaceutical industry is looking a little like a ship at sea
with danger in the water below.
Drug makers have begun to emerge as a favorite target for
cost-cutting proposals from others in the healthcare sphere who
hope to avoid the fiscal knife themselves, lobbyists and
The six Democrats and six Republicans who make up the
congressional "super committee" tasked with finding at least
$1.2 trillion in deficit savings over 10 years are less than
six weeks away from their Nov. 23 deadline to designate cuts.
Analysts say any deal could include $300 billion to $500
billion in reductions from Medicare, Medicaid and other federal
health programs -- a prospect that has thousands of healthcare
lobbyists frantic to find ways to minimize damage for drug
makers, insurers, hospitals, doctors, state governments, the
elderly, the poor and the disabled.
"It's really sort of a shark tank," said Matt Salo,
executive director of the National Association of State
"You've got advocates for providers, advocates for
beneficiaries, advocates for states -- all looking for ways to
minimize harm or get something they want."
What some healthcare lobbyists want are ways to help super
committee members find large savings that don't affect their
own revenues or the benefits available to an estimated 100
million Americans who depend on Medicare and Medicaid.
"Many of the players are pointing a finger at
pharmaceuticals," said Ethan Siegal of the Washington Exchange,
a research firm that analyzes public policy for institutional
investors and businesses.
Among initiatives aimed at the pharmaceutical industry is a
proposal backed by President Barack Obama, Democratic lawmakers
and health consumer advocates that would impose drug rebates on
Medicare Part D, the program's prescription drug benefit plan.
$100 BILLION IN ONE FELL SWOOP
The White House estimates that such a move would save $135
billion over 10 years, or about 42 percent of the $320 billion
healthcare deficit savings that Obama has proposed to the super
"If you can knock off $100 billion-plus in one fell swoop,
it's a very enticing thing and it's smart for other groups to
point that out," Siegal said.
Some healthcare providers, including hospitals, also want
the super panel to lower Medicare costs by speeding the arrival
of cheaper generic drugs on the market.
State governments, hoping to avoid potential cuts in
federal spending on Medicaid, are promoting ideas that would
restrict the use of prescription drugs in the
The powerful Pharmaceutical Research and Manufacturers of
America (PhRMA) trade group vehemently rejects the rebate idea
as a failed price control. It also defends Medicare Part D as a
program with declining costs and points to U.S. government
estimates that predict average premiums for the program's drug
benefits will be 44 percent lower than expected in 2012.
Otherwise, industry officials dismiss efforts to shift the
cost-cutting burden onto its shoulders.
"We've certainly had our share of quivers pointed at us,
that's true. It's not a new phenomenon," said PhRMA Senior Vice
President Matt Bennett.
Lobbyists say the non-pharmaceutical sector of the
healthcare industry may be targeting drug makers because of a
2009 deal brokered in part by Democratic Senator Max Baucus
that many say limited the pharmaceutical industry's exposure to
the costs of healthcare reform.
Baucus is now a member of the super committee, a fact that
lobbyists say could help deflect some of the deficit-cutting
onus away from pharmaceuticals.
On Capitol Hill, healthcare lobbyists outnumber members of
Congress by more than 5 to 1, according to the Center for
Responsive Politics, a nonpartisan research group.
Data compiled by the center also shows healthcare industry
sources have donated more than $1 billion to the campaign
coffers of U.S. politicians over the decades and nearly $19
million to members of the super committee.
CIVIL WAR BETWEEN SECTORS?
Lobbyists say the pharmaceutical industry's relative
isolation contrasts with a tenuous alliance of interests
between doctors, hospitals and other providers that appears to
have muted infighting within their ranks, at least for now.
Representatives from other segments of the healthcare
industry are also arguing for a united front in making their
case to Congress.
"We all need to work together," said Alissa Fox, vice
president of the Blue Cross/Blue Shield Association. "We're all
concerned about costs and we've got to move fast."
Key to the shared interests among some segments of the
healthcare industry is the nexus of income streams that bind
many healthcare providers and insurance companies.
"As the industry integrates, it's hard to find places where
cuts don't come back to haunt you," said a healthcare lobbyist
who represents providers. "Hospitals only hurt themselves by
punishing doctors because now many of the doctors work for
them, and no one wants to cut insurers because they're a major
Providers, including physicians, are especially sensitive
to the potential knock-on effects of funding cuts to other
areas of the healthcare system after rounds of cuts in Medicaid
and Medicare reimbursements.
"You can stone us back to the Stone Age. But I don't know
that anybody's going to like what's left in the dust," said
Cindy Moran, a government relations specialist at the American
College of Radiology.
Healthcare lobbyists across the spectrum agree that their
best outcome would be for the super committee to deadlock. That
would trigger automatic spending cuts but would spare Medicaid
and amount to relatively moderate reductions in Medicare.
But the current balance of alliances could shift if the
panel showed signs of striking a deal. The super committee
discussed healthcare issues late last month, surveying
proposals from several outside sources, according to lobbyists
with contacts on the committee staff.
"You'll see civil war breaking out between industry sectors
as things evolve," said John Howard of the Washington lobby
firm Wexler & Walker. "So far, the debate hasn't crystallized
enough for people to know what cuts the super committee is
(Additional reporting by Alina Selyukh; Editing by Michele
Gershberg, Deborah Charles and Sandra Maler)