Pharmaceutical Research and Manufacturers of America (PhRMA) President and CEO Billy Tauzin said late Thursday he was resigning effective June 30 after five years as head of one of the most powerful lobby groups in Washington.

The group, which represents Pfizer, Merck and other top drugmakers, has been one of the biggest backers of Democrats' legislation to expand access to health insurance, among other reforms.

The bottom line is: this is not good for the (healthcare) bill, said lobbying expert James Thurber, head of the Center for Congressional and Presidential studies at American University. PhRMA played a key role and without Billy Tauzin, who is trusted by both parties, there ... it doesn't help the cause for getting the reform through.

PhRMA pledged to pay $80 billion over 10 years in price cuts and other concessions as part of a deal with the Obama administration and top Senate Democrats last June. The cost was seen as a small price for the $315 billion drug industry to pay in exchange for potentially 30 million more insured customers.

In a statement, Tauzin said he had committed to serve PhRMA for more than five years and would meet his obligation this June.

Still, his departure adds uncertainty to the future of Democratic legislation currently stalled in Congress and PhRMA's deal. Despite the industry's backing, Democrats are struggling to find a path forward to pass a final measure after losing their supermajority in the Senate last month.

'STRATEGIC BLUNDER'

Tauzin, who served 26 years in the U.S. House of Representatives first as a Democrat before switching to the Republican party, was the major force behind PhRMA's deal. His group reported spending $26,150,520 in 2009 for lobbying, according to the nonpartisan Center for Responsive Politics.

His members think he gave away the farm for nothing. So he was really tossed because of a falling out with the board over miscalculating how to negotiate, a source familiar with the situation said.

Another industry source, however, said Tauzin's move was not linked to reform but rather a personality clash between the former Louisiana lawmaker and incoming PhRMA chairman, Pfizer CEO Jeffrey Kindler -- a Democrat who replaces current PhRMA chairman and AstraZeneca CEO David Brennan on March 18.

However, both PhRMA and Pfizer said the two men looked forward to working with each other.

Billy has great relations with our board members, said PhRMA Senior Vice President Ken Johnson.

Brennan added the group was grateful for Tauzin's strong leadership and many accomplishments ... including his efforts to bring about healthcare reform.

Still, Republican strategist Scott Reed cited flaws with Tauzin's approach, saying he got seduced by Obama world, and it turned out to be a strategic blunder for his industry.

It is unclear what changes, if any, PhRMA would make in pressing the case for health reform as Democrats try to ramp up support, or what impact the change could have on the industry. PhRMA's steep pockets all but guarantee its continuing role in shaping health reform negotiations going forward.

As for Tauzin, his tenure is probably best marked by his vocal support for the industry after surviving cancer. He denied his departure was due to any illness. His plans include writing a book, traveling and consulting, a PhRMA source said.

As the first-ever cancer patient to lead PhRMA as its CEO, I now believe it is time I move on, Tauzin wrote. My health is excellent and I look forward to exciting new challenges ahead.

(Additional reporting by Steve Holland, Ben Hirshler and Ransdell Pierson, editing by Matthew Lewis)

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