While proponents of the Affordable Care Act took a victory lap on the April 1 signup deadline, opposition to the state-run marketplaces continues to expand across the country through “Health Care Freedom Acts,” bills that would seek to limit state governments' cooperation with the Affordable Care Act. But the untold story, until now, is that a key White House ally in passing the Affordable Care Act may have helped lay the groundwork for these very anti-ACA legislations being introduced across the country.
Billy Tauzin, the president of the pharmaceutical lobby, couldn't help gloating while delivering a keynote speech at his final PhRMA annual meeting before his 2010 retirement. Reflecting on the industry's decision to support comprehensive healthcare reform, the mega-lobbyist quipped, “This PhRMA team is a Super Bowl championship team of advocacy.”
That comparison might be more accurate if the NFL's championship team had rigged the Super Bowl.
Publicly, PhRMA had banded together in negotiating its conditional support for the Affordable Care Act, and Tauzin, a former Louisiana congressman-turned-lobbyist, was the man responsible for protecting drug industry profits. In exchange for the industry's public support of healthcare reform, his organization extracted a series of drug pricing concessions from the White House. But privately, Salon has learned, while the industry was outwardly supporting the Affordable Care Act, it was also quietly funding a nationwide effort to derail its implementation at the state level.
Tax records show that PhRMA initiated a series of payments to the American Legislative Exchange Council with a $379,192 contribution in 2008. Tauzin's powerful lobby continued its payments to ALEC throughout its negotiations with the White House. Between 2008 and 2011, those contributions exceeded $1.25 million.
ALEC, a conservative group serving as a clearinghouse for state-level legislation, opposed the Affordable Care Act and launched its Health Care Freedom Initiative in 2008, the same year that PhRMA initiated its support. The project promised to “expose the truth about Obamacare and fight back — one state at a time.” It also armed state lawmakers with “14 specific recommendations to push back against Obamacare” and offered boilerplate legislation with its “Freedom of Choice in Health Care Act.” While publicly disclosed filings show PhRMA's support of ALEC beginning in 2008, the ALEC-PhRMA relationship may have begun earlier: In 2007, Tauzin received ALEC's Adam Smith Free Enterprise Award.
“The support PhRMA provided to ALEC was for the all-around philosophy of ALEC and the free market. It wasn't connected to the passage or defeat of the [ACA],” Tauzin told Salon. “When we finally saw the [ACA] and it didn't have the single payer system or the provisions we were concerned about, we endorsed it at the end with reservations. […] By and large we ended up endorsing the final product,” said Tauzin.
In a previously unpublished “Schedule of Contributors” tax filing, PhRMA is listed as contributing $339,000 to ALEC in 2010, making it ALEC's second largest donor after cigarette giant Reynolds American. The filing lists Pfizer, a member of the pharmaceutical lobby, as contributing an additional $136,000 on its own.
“One [of PhRMA's strategies] might be to put on a public face of saying they're on board with the administration but behind the scenes working to undermine it,” said Wendell Potter, a former insurance executive turned consumer advocate, in an interview. “There probably are some companies within PhRMA who were fine [with the ACA] and felt it was appropriate to work with the administration but even then, knowing that was the case, these companies also have bifurcated strategies to get what they want.”
Speaking on background, a former congressional staffer familiar with the Affordable Care Act negotiations said they were unaware of the pharmaceutical industry's support of ALEC.
“This is very compelling evidence that PhRMA were indeed double-dealing,” said Potter.
Despite its quiet payments to ALEC, PhRMA publicly applauded the act's passage in a March 2010 press release: “The existing barriers to quality health care simply are not acceptable. Today's important and historic vote in the House will help to expand health care coverage and services to tens of millions of Americans who are uninsured and often forced to forego needed medical treatments,” the statement said.
When asked about the appearance of double-dealing while negotiating the Affordable Care Act, PhRMA senior vice president Matthew Bennett responded, “PhRMA contributes to organizations that share PhRMA's goals of improving the quality of patients' lives, increasing the availability of life-saving and life-enhancing medical treatments, and supporting the discovery of new treatments and cures by biopharmaceutical research companies.”
Speaking on background, a PhRMA representative said that the group takes no position on ALEC's Healthcare Freedom Initiative. ALEC's “Private Enterprise Advisory Council” includes Jeffrey Bond, another PhRMA senior vice president, and Robert Jones, Pfizer's national vice president of U.S. government relations.
“ALEC took its specific position on its own,” Tauzin told Salon. “The reason we allied was around that great central theme of protecting free market health care.”
“The reason we supported ALEC, and I'd support them today for that reason, is that they represent a conservative economic view,” said Tauzin.
Tauzin also shared his trick for unifying the pharmaceutical industry during the ACA negotiations.
“There's nothing like a common threat to bring people together. [PhRMA's members] all felt the enormity of the issue and how they had to stand together. And they did so remarkably well. I didn't disguise that risk at tough moments. The unity was remarkable.”
There's every indication that the pharmaceutical lobby approved of Tauzin's strategies in negotiating the industry's support of the ACA.
Delivering opening remarks at the PhRMA 2010 conference, five days before the ACA was signed by President Obama, then-PhRMA chairman and AstraZeneca CEO David Brennan praised Tauzin's negotiating prowess.
“Over the years, Billy's consistently impressed me with his leadership, with his intelligence, with his courage and what seems to be an innate ability to get things done in a political arena where nothing comes easy,” said Brennan.
“In a year when challenges to what we were trying to do sprang up like weeds and important debates occurred in many of the 50 states […], Billy and the talented PhRMA team really met all expectations. They've done a tremendous job and I thank them from the bottom of my heart.”
Indeed, Tauzin, through PhRMA's financial underwriting of ALEC, helped culture state-level opposition to the ACA in at least 17 states, where ALEC's model legislation has now been adopted either by statutory measures or constitutional amendments. Since the Supreme Court upheld the individual mandate, it's unlikely ALEC's bills will succeed at helping states in “repealing Obamacare,” as ALEC seeks to do, but the legislation presents the possibility of high-profile court cases in states that have enacted it, potentially in time for an anti-Obamacare push before the 2016 presidential election.
In March, the Georgia House of Representatives and Senate passed their own Health Care Freedom Act, making it the latest state to move forward in a state-level opposition to the ACA. The bill is now awaiting a signature from Georgia Gov. Nathan Deal (R).
The PhRMA board appears to have appreciated Tauzin's methods. After the ACA was signed, Tauzin retired from his post. The board handed him an $11.6 million payout for his final year of work. It made him one of the highest-paid lobbyists in Washington.
Eli Clifton is a fellow with The Investigative Fund at The Nation Institute, now known as Type Investigations.