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Congressional demands irk drugmakers

An industry with a formidable lobbying budget won't sweeten a deal it made on health overhaul.

WASHINGTON - Efforts by congressional Democrats to make drugmakers bear a larger share of the cost of a health-care overhaul are threatening to unravel a White House deal with the industry and turn one of Washington's most powerful lobbies against the legislation.

Senior administration officials, including White House chief of staff Rahm Emanuel, are warning members of Congress not to antagonize deep-pocketed drugmakers at a time when a major victory appears to be within reach, according to Democratic aides.

Under terms of the deal, struck in the summer, the companies agreed to support President Obama's health-care overhaul and provide discounts to Medicare patients in exchange for a promise that no other controls would be placed on drug prices.

Many congressional Democrats see the agreement as too generous to an industry that pulled in $40 billion in profits last year, especially at a time when lawmakers are struggling to cover the price tag of a major expansion of health-insurance coverage and to control rising health-care costs.

"I just don't know why we should be overpaying pharmaceutical companies," said Rep. Henry A. Waxman (D., Calif.), a lead author of the recently passed House health-care bill.

The industry's critics got more ammunition this week from an AARP survey that showed prices for the most popular brand-name drugs rising at their fastest rate since the seniors group started tracking the data in 2002.

The House legislation challenges the White House deal by forcing drugmakers to provide bigger discounts when the federal government buys drugs for low-income senior citizens on Medicare. The bill also would give the government new authority to negotiate lower prices for all seniors on Medicare.

Now, a bipartisan group of senators is working on another confrontation with the industry by pushing to give consumers new rights to import lower-priced prescription drugs from other countries.

The House and Senate bills will have to be reconciled before the legislation goes to Obama's desk.

Drugmakers, who have already spent $110 million lobbying Congress this year, have largely given up on the heavily Democratic House, according to industry sources.

But they are preparing to make a stand in the Senate, where Majority Leader Harry Reid (D., Nev.) plans to unveil a bill as early as this week.

If drug companies are successful in the Senate, they stand a better chance of removing the House provisions they dislike when the two versions are combined in a conference committee.

Industry lobbyists will deploy a tried-and-true strategy by turning to lawmakers from states like Indiana, Delaware, and New Jersey where drug companies are big employers.

"Somehow there seems to be a focus only on the pharmaceutical industry," Sen. Robert Menendez (D., N.J.) said. "Before you ask someone to give more, it seems to me that everybody needs to be at the table."

And they argue that Democrats risk draining away money to finance development of new medicines.

"The idea that you can squeeze more and more out of our industry without consequences is seriously shortsighted," said Ken Johnson, a senior vice president at Pharmaceutical Research and Manufacturers of America, the industry's trade group.

PhRMA, which has helped promote the Democratic health-care campaign with advertising all year, could turn against the initiative.

Last week, drugmaker AstraZeneca's CEO, David Brennan, warned at a Bloomberg event in Washington that if provisions in the House bill stay in the final legislation, his company would oppose the health-care campaign.

In the last two election cycles, drug companies have donated $24 million to members of Congress, according to data analyzed by the nonprofit Center for Responsive Politics. That is almost as much as the combined giving of the hospital, nursing-home, and health-insurance industries.

"The pharmaceutical industry has a lot of clout and a lot of friends," said Sen. Byron L. Dorgan (D., N.D.), who has pushed unsuccessfully for more than a decade to legalize more importation of lower-priced drugs from abroad.

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