“I think without a doubt that we have a problem with drug safety in this country,” Harkin said Thursday morning by phone. “Forty percent of our finished drugs come from overseas, mostly from China and India, and 80 percent of the ingredients that go into our drugs — both over the counter and prescription drugs — come from overseas. We just have an inadequate inspection system.”

The GAO found inspections of foreign drug manufacturers have improved since its similar 2007 report indicated only 8 percent of foreign establishments were subject to inspection. At the initial rate, the U.S. Food and Drug Administration would need 13 years to inspect all foreign facilities. The FDA’s inspection efforts in fiscal year 2009 represent a 27 percent increase in number of inspections it conducted previously. The GAO also notes that FDA officials understand that they remain far from achieving foreign drug inspection rates comparable to domestic inspection rates.

In addition, current types of inspections by the FDA do not generally include all parts of the drug supply chain, and holding such inspections abroad continues to pose unique challenges — including the authority to require such facilities to undergo FDA inspection.

For example, when tainted Haparin, a blood thinner often used in dialysis treatments, was distributed in the U.S. in 2007, leading to at least 81 deaths and numerous injuries, the problem was traced to a Chinese manufacturing facility that had never been inspected by the FDA. Although Herapin was made by an American company, the active ingredient had been sourced from the Chinese manufacturer, which had relied on other smaller suppliers. The tainted aspect of the drug, according to FDA reports, was likely added in China as a way to cut manufacturing costs.

And, according to FDA estimates, the number of drug products made outside of the U.S. has doubled from 2001 to 2008. In 2010, nearly 20 million shipments of food, drugs and cosmetics arrived at U.S. ports of entry — a decade earlier that number was closer to 6 million. According to the FDA, foreign facilities have grown by 185 percent, while inspection rates have decreased by nearly 57 percent.

In order to combat the existing problem and stem compounding problems that are sure to surface in future years, Harkin says the government needs to revamp old laws governing FDA inspection so that it is better equipped to secure a global supply chain — an effort very similar, he said, as to what Congress passed last year in relation to food safety.

Congressional Hearing

On Wednesday, Harkin and the full HELP Committee held hearings on government oversight of the drug supply chain, gathering testimony from FDA and GAO officials as well as advocacy groups and corporate interests.

Allan Coukell, director of medical programs for the Pew Health Group in Washington, D.C., lamented the fact that no one had yet been held accountable for the earlier incident involving the tainted Herapin.

“This incident represents a clear breach of the security of the U.S. pharmaceutical supply,” he said, adding that Congress has yet to act to update statues that govern drug manufacturing. “Numerous experts have asserted that, absent changes to the system, another such event is inevitable.

“In the case of Herapin, it appears that criminals deliberately introduced a substandard active ingredient into the supply chain. At other times, consumers may be at risk because of failures by manufacturers to comply with quality standards. Poor adherence to quality standards has been observed both in the U.S. and abroad, but the shift of manufacturing to low-cost environments with reduced oversight creates an increased risk. According to one estimate, ignoring Good Manufacturing Practices (GMPs) can save up to 25 percent of a factory’s operating costs. The expectation of inspections is an incentive for compliance with quality standards.”

In 2008, he noted, an Indian manufacturer was cited by the FDA for alleged falsification of stability testing records and use of active ingredients made at unapproved sites, according to a U.S. Department of Justice subpoena motion. And, in 2010, another Indian manufacturer was found to have falsified batch manufacturing records for an anti-platelet medicine. European Union inspectors discovered at least 70 batch-manufacturing records in the plant’s waste yard, all of which had been rewritten, and in some cases original entries changed.

In fact, Coukell added, in 2006, dozens of people in Panama died after taking cough medicine that had been made with diethylene glycol, a sweet-tasting poison solvent. It had been wrongly labeled in China and pass through a series of international brokers, who repeatedly re-labeled it, presumably without performing independent testing. Remarkably enough, it was a diethylene glycol poisoning in the U.S. in 1937 that prompted the government to enact the Federal Food, Drug and Cosmetic Act, which is the document that so many pharmaceutical experts and industry watchdogs now believe needs to be updated to reflect the circumstances of the 21st century.

Kendra Martello, assistant general counsel for Pharmaceutical Research and Manufacturers of America (PhRMA), which represents researched-based pharmaceutical and biotech companies, said her organization favors granting FDA discretion to set routine inspection intervals for foreign and domestic facilities according to risk and in lieu of the agency’s current rolling two-year schedule.

“We support providing FDA with the flexibility to prioritize inspections of foreign establishments based on the risks they present, and believe in relying on set criteria such as compliance history, time since last inspection, and volume and type of products produced, will enhance the FDA’s ability to target its inspection resources efficiently and effectively,” Martello told the lawmakers.

She also suggested that the FDA should recognize and utilize foreign inspection reports or those from accredited third parties to facilitate the often difficult task of oversight of those manufacturers.

“These inspections would not take the place of FDA inspections, which are a necessary and important part of the agency’s mandate; however, they would provide FDA with the flexibility to leverage the work of foreign regulatory bodies and maximize its resources, all without foreclosing its ability to inspect any facility.”

Deregulatory Climate

Amid national discussions on how to spur job creation and enhance the economy, calls for reviewing or eliminating government oversight and regulation of private industry have become common both in Iowa and throughout the nation as part of the 2012 Republican presidential nomination process.

In fact, while U.S. Sen. Mike Enzi, a Wyoming Republican and ranking member of the HELP Committee, noted the need for concessions in U.S. policies regarding the globalization of the pharmaceutical supply chain, he also added a caveat that such increased oversight shouldn’t hinder private industry.

“We want to make sure FDA has the tools it needs to ensure supply chain security,” Enzi said. “At the same time, I am concerned about FDA over-regulating in a way that threatens jobs and patient access to therapies.”

When Congress moves forward to address the problem, Harkin said he will push for strengthened FDA inspection authority for foreign products and facilities.

“We do need legislation and we are working on that. That’s what the hearing was about yesterday. Next year, when we turn to the reauthorization of the Prescription Drug User Fee Act, we’re going to have something in there about FDA’s authority and ability to ramp up inspections of important drugs and components,” he said.

Companies, he said, including pharmaceutical companies, have begun reaching out to lawmakers about increasing foreign inspections and oversight.

“They want this. Why? Because many of them who have sourced their goods in this country have been placed at a competitive disadvantage. They want a level playing field. If we are going to inspect here, then the drugs that come in should also be inspected,” Harkin explained.

“I think this is an area that cries out for some form of regulation and support for a leveling of the playing field. If there are Republicans that say they don’t want to regulate on this are they telling people that this is a just a case of buyer beware? When you give medicine to your kids, you don’t know if it is safe or not? Is that what they want to say?”

The GAO’s statement before the HELP Committee is embedded below:

FDA Faces Challenges Overseeing the Foreign Drug Manufacturing Supply Chain

According to the Center for Responsive Politics’ OpenSecrets blog, companies including AT&T, Exxon Mobil, Kraft, Coca-Cola and the infamous Koch Industries that are part of ALEC’s “private enterprise board” have spent millions on these tactics to influence local and national government.

“Legislators welcome their private sector counterparts to the table as equals, working in unison to solve the challenges facing our nation,” ALEC’s website states. ALEC, a conservative grouping of state legislators and corporate interests, has come under fire for drafting bills, including Arizona’s SB1070, that benefit private business interests.

The Pharmaceutical Research and Manufacturers of America (PhRMA) has spent the largest sum on lobbying –- in 2010, the drug trade group spent more than $22.74 million hired and 156 lobbyists, 59 percent more than any other company on ALEC’s board.

The congressional connection goes both ways: Of the lobbyists hired by PhRMA, the Center for Responsive Politics found, 120 were once federal employees and four were former members of Congress.

The Center for Media and Democracy, which leaked information from a whistleblower on ALEC’s role in drafting legislation, found a continuing rise in lobbying pressure from ALEC board members. Ten of the 23 companies had lobbied the EPA in 2009 while, during the first six months of 2011, eight had already done so.

The Center for Responsive Politics also noted that not only did the corporations pressure Congress directly, but individuals and political action committees (PACs) affiliated with the 23 corporations have given millions to candidates and committees.

In early August, an obscure measure called Proposition C — which prohibits the government from mandating the purchase of health insurance — passed overwhelmingly in a Missouri referendum and soon became national news. While seen by many legal scholars as a largely symbolic act of defiance, the new statute will likely lead to yet another legal showdown over the implementation of the Affordable Care Act and was seized upon by conservatives as a sign of growing disillusionment with the president’s agenda.

[Congress1] When the White House tried to downplay the measure as a “vote of no legal significance in the midst of heavy Republican primaries,” Sen. John Cornyn (R-Texas) used the response as further evidence that the Obama administration was out of touch with the American people. “This sheer arrogance and political tone deafness from the Obama White House is simply astounding,” the senator said in a statement. “Their disregard for the votes that were cast by 667,000 Missourians as ‘nothing’ is startling.”

But was Proposition C a spontaneous show of grassroots discontent or a carefully orchestrated political ploy? Clouding the picture is the close involvement of a group called the American Legislative Exchange Council (ALEC), a conservative 501(c)(3) nonprofit that brings together state legislators and representatives of major industries to craft “model legislation,” including an item called the Freedom of Choice in Health Care Act, upon which Proposition C was based. Missouri state Sen. Jane Cunningham, who sponsored the legislation to refer Proposition C to the ballot, serves as an ALEC board member, and state legislatures in Arizona and Oklahoma, which have referred similar bills to the ballot for November, also enjoyed the support of ALEC-affiliated state representatives.

“What ALEC does is they’ll get members to simply announce they’ll introduce the legislation and then claim they have a national grassroots movement of 40 states opposing health care reform,” said Charles Monaco of the Progressive States Network, which works on progressive legislation at the state level. “Industry groups saw early on that the mandate would be the place to hit comprehensive reform because it was one of the least popular aspects of the law to voters, even though it’s one of the provisions that will benefit [industry] the most.”

There are conflicting accounts of how the measure came to be introduced in 38 state legislatures, and enacted in six. One side will tell you that the health care industry — particularly the pharmaceutical companies that sit on ALEC’s Health and Human Services task force — is taking potshots at reform by manipulating state representatives; the other describes grassroots anger bubbling up to the attention of legislators. Both contain a measure of truth. Told together, they provide a window into how groups like ALEC, which are obliged by tax law to work for charitable — not private — purposes, nonetheless exercise influence on behalf of private industry over statehouses across the country.

The story of the Freedom of Choice in Health Care Act starts in Arizona, with a lone doctor who decided he’d look into health care reform “as a hobby” and never imagined his ideas would go so far.

*****

Dr. Eric Novack, an orthopedist from the Phoenix area, claims he was never too interested in politics until a number of state governments turned their attention to reforming the system around the middle of the last decade.

“We need health care reform, but seeing where the winds were blowing I felt we also needed some basic protections for patients and families to ensure that it’s kept out of the hands of politicians, their cronies who can lobby them and these so-called ‘experts,’” Novack said.

In 2006, he teamed up with Dr. Jeffrey Singer, a surgeon and expert at the conservative Goldwater Institute, to craft a state ballot proposition designed to preserve the right of patients to purchase health care directly (which did not appear to be threatened) and to prevent the state from mandating the purchase of health insurance (as then-governor Mitt Romney (R) had just done as part of Massachusetts’ comprehensive reform plan).

“They got the measure on the ballot in 2008,” said state Rep. Nancy Barto (R-Ariz.), who would later reintroduce a reworked version of the proposition in the legislature. “It took them a couple years and a lot of funds and signatures to get it on the ballot. They were outspent by a measure of five to one but still lost by only 8,500 votes.”

It was at this point in late 2008 that ALEC took notice, said Barto, who regularly attends the group’s conferences.

“Their legislation is patterned after our language in 2008,” she explained. “They called and asked about it, took our language and put it on their website as model legislation and saw we were getting real traction and started using it in their state conferences. In 2009, [ALEC HHS Task Force Director Christie] Herrera came and spoke at our Health and Human Services committee meeting in Arizona when we were moving the bill. She came and testified.”

Even before Herrera came and spoke on her bill’s behalf, however, Barto was thrilled when ALEC officially adopted the Arizona proposition as model legislation in December 2008.

*****

When asked about the role representatives of the pharmaceuticals industry, which holds three of the seven seats on ALEC’s HHS task force, played in promoting the bill, Novack insists that it became model legislation, if anything, in spite of their opinion.

“From what I heard it managed to get through because no one paid it any attention,” said Novack. “When people start and work backwards and look at who provides money to ALEC they think it was that the health care industry [that’s behind the model legislation], but it was more an issue of insignificance to them, and if they’d recognized that it’d be sweeping the country, then it’d probably not be sweeping the country. I mean, the major health insurers are the major backers of mandates!”

But since ALEC adopted model legislation for the Freedom of Choice in Health Care Act, the group has played a key role in trumpeting iterations of the bill in various states over the past year. ALEC’s Herrera has offered guidance to lawmakers in more than a dozen state legislatures on the issue. The group brags on its website that “as anti-freedom health policy — such as an individual mandate, an employer mandate, and the ‘public plan’ — surface at the state and national levels, ALEC’s Freedom of Choice in Health Care Act has become an essential tool in securing the rights of patients to make their own health care choices.”

ALEC’s task forces are better known for crafting legislation that coincides, rather than conflicts, with the interests of its private-sector members. Famous for hosting lavish conferences for state legislators who possess no staff of their own, the group pampers lawmakers while providing them the opportunity to collaborate on legislation often previously researched and introduced by the policy shops of its corporate members.

“Their conferences proceed in a very orchestrated manner with legislation that was effectively already designed before [state representatives] get there,” noted Rodger Schlinkeisen, president of Defenders of Wildlife, an environmental group that has differed with ALEC on state legislative priorities in the past. “Representatives are having a good time, playing golf. There’s no heavy lifting on the legislative side so they don’t have to do much. The ALEC staff and industry reps hold their hand and out pops this model legislation with various corporate interests in mind.”

In one case, noted by Mother Jones, ALEC drafted model “truth in sentencing” legislation that restricted parole eligibility, effectively ensuring longer prison terms for inmates. A pivotal member of the task force that crafted the bill’s language? The Corrections Corporation of America, the leader in the private corrections management industry, which stood to benefit directly from longer prison sentences.

*****

When it comes to the role of the health care industry in crafting the Freedom of Choice in Health Care Act language, however, the outsize presence of the pharmaceuticals industry on the drafting HHS committee is somewhat counterintuitive. The drug companies, represented by the Pharmaceutical Research and Manufacturers of America (PhRMA), are better known of late as the first major private health care interest to enter into an agreement with the Obama administration over comprehensive health care reform, pledging to promote reform in exchange for only a nominal knock to its bottom line and protection on other issues like drug importation and generics.

The Private Sector Executive Committee for ALEC’s HHS task force is staffed entirely by government affairs and state policy representatives for Bayer, Johnson & Johnson and PhRMA, while the Private Enterprise Board of ALEC, as a whole, is also filled with high-ranking representatives of Bayer, GlaxoSmithKleine, Johnson & Johnson and Pfizer, as well as PhRMA, which represents them all.

“The American Legislative Exchange Council is one of many legislative organizations with whom we have relationships, and in no such relationship is it ever expected that we will always agree about every topic,” noted Jeffrey Bond, Senior Vice President of State Government Affairs at PhRMA, in a statement in response to an inquiry regarding the pharmaceutical coalition’s relationship with ALEC’s health care nullification language. (Spokespeople at Johnson & Johnson and Pfizer did not respond to requests for comment.)

Others, however, see in the pharmaceutical industry’s material support for Freedom of Choice in Health Care legislation a subtle realignment of priorities within an industry that was never fully on board with the Obama administration’s reform agenda in the first place.

“Within PhRMA there was division over backing the bill to begin with,” said Paul Blumenthal of the Sunlight Foundation, which tracked the industry group’s deals with the administration during the health care reform debate. “[Then-PhRMA chief] Billy Tauzin and Jeff Kindler at Pfizer were driving the process of backing the bill and the administration, and Tauzin was ultimately driven out of PhRMA as a result. You could be seeing some of that equilibrium shift back.”

Yet apart from a degree of buyer’s remorse, health care consultants note that the drug industry’s schizophrenic actions seem less like a calculated plan than a struggle to reconcile their free-market tendencies with the fact that aspects of reform like the individual mandate stand to improve their bottom line.

“You can look at it as a mass deception by the pharmaceuticals industry,” said Peter Harbage, president of Harbage Consulting, a Sacramento-based health policy consulting firm. “But it’s not so much deception as mass confusion when you think of it from an industry point of view and the nature of something like heath reform.”

“The insurers and PhRMA folks and others — they stand to make a lot of money from coverage, even though ideologically they’re opposed to government regulation,” Harbage added. “What you’re seeing is a real push and pull in which the industry is trying to reconcile their business interests with their ideological interests. You have the large established interest groups like PhRMA tacitly accepting reform but maybe there’s a company that disagrees and might want to play it both ways. Organizations [like ALEC] create an avenue to take their shots without being public about it.”

And even though the pharmaceuticals industry promotes a lot of legislation through ALEC that benefits its bottom line, there can be a price to doing business with conservative groups, according to one industry insider.

“On this kind of thing in some ways it’s a two-way street,” said the industry insider, who declined to be identified because he represents pharmaceutical clients. “The mandate to buy insurance and the tax penalty is good for the industry. This is one place where you wouldn’t necessarily see the industry advocating. But if you’re lying down with conservative members, your funding goes to support what they’re doing as well as what you want to do.”

Indeed, ALEC’s HHS task force lists sixteen pieces of model legislation on its website that tackle issues favorable to the pharmaceutical industry, such as limiting the importation of prescription drugs, reducing drug liability, abolishing price controls on drugs, lowering state taxes on drug samples, and promoting coverage for experimental drugs. When considered from the perspective of the industry’s relationship with ALEC as a whole, one potshot with scant legal prospects against the administration’s individual mandate begins to look like a small price to pay.

*****

But what seems like a legal non-issue is still providing a lot of political fodder for partisans of comprehensive health care reform, on both sides of the aisle.

The courts will ultimately decide the limits of states’ rights when it comes to the question of the Obama administration’s new health care law, but in the meantime, Republicans are hoping it will energize conservative voters and stave off implementation in Arizona, Oklahoma and Colorado, where similar measures will be on the ballot in November.

“I guess it’s a low investment cost for a group to try to do that,” said Harbage. “You get to automatically have a conversation, and even if it ultimately loses you still had the proposition as a vehicle to motivate voters, and a lot of groups involved might think that’s a good day’s work.”

Sure, there are House Democrats who are choking on that very thought — folks like Rep. Anthony Weiner (N.Y.), who thinks parts of the bill are too conservative, and Rep. Bart Stupak (Mich.), who thinks other parts are too liberal. But the alternative is to have Democrats take to the campaign trail this year with the following message: “Yes, Congress spent most of 2009 haggling over health care as unemployment leapt, but it was just too hard to get the thing passed.” Not exactly the inspirational bulletin that wins elections.

Which leaves the question: What exactly would House Democrats be forced to swallow if they agree to adopt the Senate bill as it stands? A few biggies:

Funding: A central disagreement between House and Senate Democrats has been how to pay the tab of covering tens of millions of uninsured Americans. House leaders proposed a 5.4-percent tax hike on those earning more than $500,000 per year, while the Senate bill proposed a 40-percent tax on high-cost insurance plans. The loser here is the labor movement, which had recently negotiated a deal with Democratic leaders of both chambers to exempt union-negotiated plans from being hit by that tax for another eight years — a deal that would be nullified if the existing Senate bill becomes the final word. Even so, some of the labor leaders who pushed for that deal are already urging the House to pass the Senate proposal.

Illegal Immigrants: Members of the Hispanic Caucus lose big here. While both chambers have proposed to ban illegal immigrants from receiving subsidies on the exchanges, the Senate bill takes the strange step of also prohibiting those folks from paying full price for exchange coverage through U.S. companies using U.S. dollars. (The House bill would allow those unsubsidized purchases). The result? There will probably be more uninsured illegals making the emergency room their primary care stop — the very type of behavior that health reform was supposed to discourage.

Kids’ Care: At issue here has been the fate of the Children’s Health Insurance Program, the state-federal partnership that covers roughly 9 million low-income kids nationwide. The House has proposed to do away with CHIP at the end of 2013, while the Senate proposal would keep it alive and provide new funding through 2015. Many children’s welfare advocates, concerned that kids would lose coverage if they’re shifted to more expensive private plans on the exchange, prefer the Senate provision.

Abortion: Both the House and Senate bills include new restrictions on coverage of abortion among plans operating on the exchanges. The House provision, sponsored by Stupak, would prohibit such coverage on exchanges altogether; the Senate bill is a touch less strict, allowing abortion coverage but requiring women to write a separate check for those services to ensure that no federal funds go toward them. This allegedly leniency is the reason Stupak is threatening to vote against the Senate bill.

Anti-Trust: For more than six decades, the nation’s insurance companies have enjoyed an exemption to federal anti-trust laws, justifying the perk with the argument that sharing information encourages smaller companies to enter otherwise unknowable new markets. But critics say the exemption simply allows the companies to collude on pricing at the expense of competition. The House bill eliminates the anti-trust exemption; Senate leaders — bowing to Sen. Ben Nelson (D-Neb.), a former insurance company CEO — stripped that provision from their bill. Advantage: insurance industry.

That $80 Billion Pharmaceutical Deal: Hoping to get the nation’s drug makers to support health reform before the heavy negotiating began, Sen. Max Baucus (D-Mont.) made a pact last summer with the pharmaceutical lobby: If the drug makers put up $80 billion toward reform over the next decade, the deal went, Democrats would withhold support for a proposal allowing states to negotiate drug prices on behalf of their lowest income seniors. The White House quickly signed on, but House Democrats didn’t. Instead, Rep. Henry Waxman (D-Calif.) went ahead and included in the House bill the very provision that Baucus and Obama vowed to oppose. Adopting the Senate bill leaves the deal with Big Pharma intact. Advantage: Pfizer.

The Public Option: House liberals, behind Speaker Nancy Pelosi (D-Calif.), won a major victory in the lower-chamber bill by including a provision to create a national, not-for-profit insurance plan to compete with private companies. The Senate bill contains no such thing. This, on the surface, appears to be a big loss for House Democrats. But in reality, the merged bill would likely have dropped the provision anyways, because it doesn’t have the support of 60 senators.

All of this, of course, could change as the years go by and Congress dabbles at the edges of these provisions. But for the time being, it’s looking like the more industry-friendly Senate bill will form the backbone of health care reform.

Waxman, though, wasn’t a part of those negotiations and has said that he doesn’t feel obliged to honor a deal to which he never agreed. His latest comments, via FireDogLake, came yesterday:

“The President and the Senate made very poor deals with PhRMA,” Waxman said, explaining the deal whereby the drug industry offered $80 billion dollars in givebacks in exchange for their support for the overall bill. “Rahm (Emanuel) said that’s OK,” Waxman said, but he noted that under the deal, the industry would get millions of new customers and Americans would still pay far more than the rest of the industrialized world for prescription drugs.

“I have said that I am not bound by that agreement,” Waxman said, noting all the provisions in the House bill which go further than the PhRMA deal. … Waxman said that in the conference, where he expected the President to sit down personally, “I’m going to say, ‘Are we interested in protecting the profits of the drug companies or protecting seniors?’”

Although the House does not reconvene until Jan. 12, and the Senate is out until the Jan. 19, leaders from both chambers have returned to Washington this week to begin ironing out the differences between the chambers’ health reform bills, of which Waxman’s drug provision is just one.

As the health care bills move toward a House-Senate conference, the liberals appear poised to lose on so many other issues — including a proposed government-run insurer, a so-called Cadillac tax on expensive health plans and an independent Medicare-cutting commission — that the drug makers have come to accept that their deal may have to be modified, the lobbyists said.

Some industry lobbyists say the added costs could come to as much as $20 billion more.

The deal with Big Pharma has been controversial, not least of all because it was cut by Senate Finance Committee Chairman Max Baucus (D-Mont.) — and then endorsed by the White House — without any input from House Democrats. That move riled some lower-chamber leaders, including Rep. Henry Waxman (D-Calif.), who stuck a provision into the House bill that would break the deal by allowing states to negotiate directly with drug makers on behalf of their lowest-income seniors — one of the major differences between the two chambers’ bills that will have to be ironed out during the conference negotiations.

Of note, the $20 billion in additional concessions the industry is expecting is much less than Waxman’s provision asks. Indeed, a similar proposal shot down by the Finance Committee was estimated to save the government more than $100 billion.

Yet two days before that high-profile White House announcement, Senate Finance Committee Chairman Max Baucus (D-Mont.) was trumpeting the fact that he had negotiated the deal. There were no secrets being kept here. Indeed, here’s part of Baucus’ June 20 statement:

Senate Finance Committee Chairman Max Baucus (D-Mont.) announced he secured an $80 billion commitment from the pharmaceutical industry to reduce Medicare prescription drug costs for seniors. The deal struck by Baucus and the nation’s pharmaceutical companies with the participation of the White House includes a provision to narrow the gap in coverage, often called the “doughnut hole,” with payments from the drug companies to cover up to 50 percent of the cost of brand name medicine in Medicare’s Part D prescription drug program.

So it was Baucus to cut the deal and the White House to endorse it. OK, fine. What makes this notable is that Baucus more recently seems to have forgotten that he was the primary negotiator on behalf of the Democrats. For example, when the Finance Committee shot down an amendment to the health reform bill that would have fully closed the doughnut hole, Baucus voted against it because he said it would undermine the deal with Big Pharma — a deal he placed squarely on the shoulders of the administration.

“We have to find some other time, some other way [to close the doughnut hole],” Baucus said. “The White House did reach an agreement.”

It’s worth remembering that, as Senate leaders are now promising to close the doughnut hole 100 percent, it was those same leaders who limited their options in paying for it.

The Democratic opponents argued that the drug re-importation amendment — sponsored by Sen. Byron Dorgan (D-N.D.) and Olympia Snowe (R-Maine) — would threaten the safety of Americans. Yet, as The Washington Post’s Dana Milbank points out today, it’s difficult to argue that position with a straight face considering that a large bulk of the ingredients for the drugs manufactured domestically originate from the same countries thought to be the most unsafe.

These [safety] arguments don’t hold up well, considering that 40 percent of the active ingredients in American prescription drugs come from India and China, and that the latter slipped tainted heparin past the FDA. But fright was about the best argument opponents could use to defeat a popular proposal that would save the federal government $19 billion over 10 years.

The hypocrisy wasn’t lost on Sen. Sherrod Brown (D-Ohio), who said so on the chamber floor just before yesterday’s vote.

This is not about importing drugs from China or India or Mexico, where drug safety standards are not up to par, although American drug companies have outsourced a lot of their manufacturing to those countries and [we've] found all kinds of problems with the ingredients that they import into American drugs.

But that’s not the issue here. That only underscores the hypocrisy of U.S. drug companies in opposing the Dorgan amendment.

No matter. Pressured by the drug lobby, Senate lawmakers shot down the provision 51 to 48 — well shy of the 60 needed to pass the measure.

In a letter yesterday to GAO, Reps. Henry Waxman (D-Calif.), Charlie Rangel (D-N.Y.), Pete Stark (D-Calif.) and John Lewis (D-Ga.) voiced concerns that the companies are “artificially raising prices for certain pharmaceutical products in expectation of new reforms that could otherwise reduce prescription drug prices or price growth by encouraging patients and the government to be more efficient purchasers.”

Any price gouging is unacceptable, but anticipatory price gouging is especially offensive. We request that the GAO prepare on an expedited basis a report that analyzes recent trends in prescription drug pricing. In addition, we request that you prepare a proposal to ensure ongoing monitoring of pharmaceutical manufacturer pricing practices, and periodically report to the Congress on your findings.

Not that the pharmaceutical industry is taking the Times’ report sitting down. In a statement released Monday, Ken Johnson, senior vice president of the Pharmaceutical Research and Manufacturers of America, said the price increases represent “the natural result of market forces.”

But Baucus wasn’t the only Democrat on the panel to vote against the Democratic proposal. Sens. Robert Menendez (D-N.J.) and Tom Carper (D-Del.) were also vocal opponents of the amendment, and offered “no” votes to back their words.

It’s not tough to surmise the reasons.

New Jersey is one of the nation’s great pharmaceutical hubs, housing such drug giants as Johnson & Johnson, Merck, Wyeth and Schering-Plough. Earlier this year, Bausch and Lomb moved in as well.

As for Carper’s Delaware, it boasts the headquarters of AstraZeneca, a top-10 drug maker with revenues topping $31 billion last year.

And the industry has never been shy about showering local lawmakers with campaign cash. Indeed, Menendez has accepted more than $357,000 from the pharmaceutical industry over his congressional career, according to the Center for Responsive Politics. Carper, for his part, has taken in nearly $208,000 from drug makers, CRS reports.

Sen. Charles Schumer (D-N.Y.) pointed out yesterday that it was perfectly understandable that the drug makers, being publicly traded companies, would fight to preserve their profit margins for the sake of shareholders. But Congress, Schumer added, is bound to different interests. “We don’t represent their stockholders,” he said. “We represent our stockholders — the U.S. taxpayers.”

Someone please inform the Senate Finance Committee.