Washington Editor

WASHINGTON - With Tom Daschle's sudden exit on Feb. 3 as the all-but-crowned czar over the Obama administration's health care reform plan, those on the White House budget side of the equation and key congressional power players - who already have placed stakes in the ground - now have the advantage of commanding the stage, leaders from the biotech, pharmaceutical and device industries said Friday during a forum hosted by Ernst & Young.

The president already has put Peter Orszag, director of the Office of Management and Budget, in charge of leading the health care panel at Monday afternoon's White House fiscal responsibility summit, noted Brett Loper, director of government affairs at Advamed, the trade group for the medical device and technology industry.

Orszag, who will oversee the president's budget - set to be revealed Thursday - also played a major role in getting the $19 billion devoted to health information technology and the $1.1 billion for comparative effectiveness research into the $787 billion stimulus package. (See BioWorld Today, Feb. 17, 2009.)

With the leadership positions at the new White House Office of Health Reform and Health and Human Services left vacant during the first month of the Obama administration, Orszag has emerged the leader in determining the direction of health reform so far, Loper said.

"Orszag will command the stage for a while as the budget unfolds and we begin to see policy being made in context of economics and spending instead of from authorizers who have been versed and well-prepared for a very robust debate on the policy side, which is what Daschle would have brought," said Billy Tauzin, CEO of the Pharmaceutical Research and Manufacturers of American (PhRMA), the drug industry's trade group.

The big health care power players in Congress, too, already have been in the lead of positioning their agendas, Tauzin added.

Sen. Max Baucus (D-Mont.), chairman of the Senate Finance Committee, released a white paper a week after the November 2008 election laying out his own plan, Tauzin noted. The Montana Democrat has said he plans to introduce legislation in the first part of this year.

Baucus has preempted the release of the president's budget by scheduling a hearing Wednesday to examine health care reform from a budgetary perspective.

He has called to testify the director of the Congressional Budget Office - Orszag's old job - to present options for tackling the major challenges of reform and provide details about the likely impacts of specific policy proposals to the U.S. health care system.

Sen. Edward Kennedy (D-Mass.), chairman of the Senate Health, Education, Labor and Pensions Committee, also will continue to be a major player in the health care reform debate, despite his battle with brain cancer, and is pushing to get something done this year, said James Greenwood, CEO of the Biotechnology Industry Organization (BIO).

The long-time experience of the two senators in leading the health reform charge also puts them in the advantageous positions of steering the direction for the effort, he added.

"My guess now is that you are going to see health care in piecemeal coming out in various proposals inside appropriations bills and like what we saw last week in the stimulus package and as we are going to see following the budget proposal next week," said Tauzin, a former Louisiana lawmaker, who served 13 terms in Congress before joining PhRMA.

Obama's State of the Union address Tuesday evening may provide some hints on whether the president will back the pay-as-you-go, or pay-go, policy to relieve the "gargantuan deficit," or if he will "throw that idea out the window" when it comes to health care reform, and view it more as part of the economic recovery, Greenwood said.

"I think he will most likely on Tuesday try to walk a tightrope between his clear stated goals in his campaign of providing universal coverage and the constraints on the fiscal side," Loper surmised.

While Obama's budget may contain some pay-go elements, Tauzin predicted that pay-go as a policy essentially would be tabled to give the economic stimulus plan time to work. Fiscal restraint imposed too early, he argued, could end up blocking any positive effects the stimulus plan may generate. "Generally speaking, the budget will contain some ugly deficits," Tauzin said.

"The administration is very conscious that the stimulus plan has to have a chance to work before they start getting too aggressive on fiscal restraint," he added.

Greenwood, who represented Pennsylvania's 8th District in the House from 1993 to 2005 before joining BIO, urged lawmakers not to go "back to their corners and have the same old fights we've been having year after year," on hangover political issues, such as drug price negotiations for Medicare Part D and drug reimportation.

"It would be nice if we could say we have some serious health care reform to do," Greenwood said. "Let's not begin this process by poking each other in the same eyes we've been poking each other in for many years now," he advised.

Loper noted that one recent fight about the funding for comparative effectiveness research in the stimulus package has the potential to be a "microcosm" of what is ahead for the larger health care reform debate.

He said that opponents "beat the stew" out of the proposal, "suggesting that it was almost anti-American, that it was going to lead us down the path where the government is controlling prices and decisions."

Those kinds of debates, Loper said, can reoccur "if you aren't taking a middle-of-the-road approach in a large debate about how health reform comes before the Congress over the course of the next few months."