Today’s New York Times has a sympathetic portrait of PhRMA, the large drug companies association, fretting over the uncertainty they face because the health care bills leave the deals they cut with the White House and Senate in limbo.

After all, in return for the prospect of tens of millions of newly insured customers and a large degree of regulatory certainty, the pharmaceutical industry had agreed to pay a relatively small price: $8 billion a year in discounts and fees. It was a modest compromise for an industry with $246 billion in prescription drug sales last year. . . .

And just as important, the industry had received assurances from the Obama administration and some critical Congressional Democrats that long-feared proposals that might have popular appeal — including government negotiation of Medicare drug prices and allowing the import of cheaper drugs from Canada — would be tabled in return for drug makers’ support of the rest of the health care overhaul. And some industry experts say any notions of an offshore tax had also been taken off the table.

There are more deal details here, but PhRMA’s even more upset because, they claim, the Obama Administration 2011 budget blindsided them with a proposed tax on foreign profits. Oh horrors!

President Obama’s proposed budget this week, for example, includes a plan he alluded to in last week’s State of the Union address: a new tax on profits from some patents and other intangible assets parked in overseas tax havens by American companies. . . .

“Typically when a pharmaceutical company develops a new drug, it transfers it to a holding company in a tax haven like Bermuda or the Cayman Islands, usually on very favorable terms,” [a former Treasury economist] said. “There’s a tremendous amount of income taken out of the U.S. and put into the tax haven. This proposal seems targeted to just that type of situation.”

Pfizer has reported that 58 percent of its revenue came from overseas in 2008, compared with 39 percent a decade earlier. For other drug markets, overseas revenue in 2008 amounted to 46 percent for Lilly, 44 percent for Merck and 42 percent for Bristol-Myers.

Seems like a nice scam:

1. The drug maker creates and gets approval for a new drug.

2. It gains patents to insure government monopolies and/or gets 12-year approval for non-compete agreements with or against potential generics/rivals.

3. It then transfers the rights to an offshore affiliate in the Caymans.

4. The revenues/profits then nominally flow through to the "foreign" company.

5. The parent drug company, an American corporation, then evades the US taxes on these "foreign" profits.

6. Now they’re worried Obama’s proposed tax would go after those profits.

Al Capone had nothing on these guys. And Hamid Karzai is a worthy partner in comparison.

But I wonder, will the Administration do what Obama promised: put this all on national television, call in the experts, let the opposition take its shots, ask Congress to endorse it and then take the issue to the voters?