Baucus, White House in Deal With Drug Industry
Drug companies would pay for some Medicare prescriptions under $80 billion deal
By DAVID ESPO AP Special Correspondent
WASHINGTON June 20, 2009 (AP)
The Associated Press
FILE - In this April 2, 2009 file photo, Senate Finance Committee Chairman Sen. Max Baucus, D-Mont., left, and the committee's ranking Republican Sen. Charles Grassley, R-Iowa talk on Capitol Hill in Washington. (AP Photo/Susan Walsh, FILE)
The pharmaceutical industry agreed Saturday to spend $80 billion over the next decade improving drug benefits for seniors on Medicare and defraying the cost of President Barack Obama's health care legislation, capping secretive negotiations involving key lawmakers and the White House.
"This new coverage means affordable prices on prescription drugs when Medicare benefits don't cover the cost of prescriptions," Sen. Max Baucus, chairman of the Senate Finance Committee, said in a statement announcing the accord.
The deal marked a major triumph for Baucus as well as the administration. Obama praised the deal.
"The agreement by pharmaceutical companies to contribute to the health reform effort comes on the heels of the landmark pledge many health industry leaders made to me last month, when they offered to do their part to reduce health spending $2 trillion over the next decade," Obama said. "We are at a turning point in America's journey toward health care reform."
Baucus, a Montana Democrat, has been negotiating with numerous industry groups for weeks as he tries to draft legislation that meets Obama's goal of vastly expanding health coverage, has bipartisan support and does not add to the deficit.
Baucus' announcement said drug companies would pay half of the cost of brand-name drugs for seniors in the so-called doughnut hole ― a gap in coverage that is a feature of many of the plans providing prescription coverage under Medicare. Other officials said wealthier Medicare beneficiaries would not receive the same break, but there was no mention of that in the statement.
In addition, the entire cost of the drug would count toward a patient's out-of-pocket costs, meaning their insurance coverage would cover more of their expenses than otherwise.
"The existence of this gap in coverage has been a continuing injustice that has placed a great burden on many seniors," Obama said. "This deal will provide significant relief from that burden for millions of American seniors.
"Key sectors of the health care industry acknowledge what American families and businesses already know ― that the status quo is no longer sustainable," the president said.
From left, Rep. Frank Pallone Jr., D-Fla., Rep. Henry Waxman, D-Calif., House Education and Labor Committee Chairman Rep. George Miller, D-Calif., House Ways and Means Committee Chairman Rep. Charles Rangel, D-N.Y., and House Energy and Commerce Committee Chairman Rep. John Dingell, D-Mich., take part in health care news conference on Capitol Hill in Washington, Friday, June 19, 2009. (AP Photo/Susan Walsh) Collapse
Billy Tauzin, president and CEO of the Pharmaceutical Research and Manufacturers of America (PhRMA), said, "Millions of uninsured and financially struggling Americans are depending on us to accomplish comprehensive health care reform this year. Today, America's pharmaceutical research and biotechnology companies are signaling their strong support for these critically important efforts."
While none of the changes in the prescription drug program would directly lower government costs, several officials also said the industry agreed to measures that would give the Treasury more money under federal health programs. In particular, officials said drug companies would likely wind up paying pay higher rebates for certain drugs under Medicaid, the program that provides health care for the poor.
Those funds would be used to help pay for legislation expanding health insurance for millions who now lack it.
One official said the deal was agreed to late Friday night when Tauzin called Baucus. The senator's statement said the White House was involved in the agreement.
It was not clear what leverage the agreement would give Baucus with other health care providers with whom he is in negotiations.
But at a minimum, the agreement served as an effective counter to impression that the drive to enact health care legislation was sputtering.
The disclosure of negotiations came near the end of an up-and-down week for the administration and its allies on health care.
Congressional Budget Office estimates showed early versions of two major Senate bills were either too costly or failed to make a large enough dent in the ranks of the uninsured. Republicans seized on the reports as evidence that Democrats were losing traction.
They leapt again when it was disclosed that House Democrats were considering a wide array of tax increases to finance their legislation, including an income tax surcharge, a tax on employers based on the size of their payroll and a value-added tax, a form of a national sales tax.
House Democrats on Friday unveiled draft legislation they said would cover virtually all of the nation's nearly 50 million uninsured but it came without a price tag or an indication of how it would be paid for.
Major provisions of the 850-page measure would impose new responsibilities on individuals to obtain coverage and on employers to provided it. It also would end insurance company practices that deny coverage to the sick and create a new government-sponsored plan to compete with private companies.
Speaker Nancy Pelosi has said she hopes the legislation can clear the House before lawmakers leave for their annual August vacation.
Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Drug Makers Agree to Offer Medicare Discounts
Published: June 20, 2009
WASHINGTON (Bloomberg News) ― Drug makers have offered to spend $80 billion over 10 years to help older Americans afford medicines and to lower the cost of a proposed overhaul of the health care system, officials said Saturday.
In a statement, President Obama said an agreement reached between drug makers and Senator Max Baucus, a Montana Democrat who is the chairman of the Finance Committee, narrowed the “doughnut hole” in the Medicare prescription-drug program that raises costs for many seniors.
“As part of the health reform legislation that I expect Congress to enact this year,” Mr. Obama said, “pharmaceutical companies will extend discounts on prescription drugs to millions of seniors who currently are subjected to crushing out-of-pocket expenses.”
Congressional Democrats have been working on draft legislation to fulfill one of his top campaign promises: expanding health care coverage and lowering the cost of a system that makes up 17 percent of the economy.
Republicans questioned the price tag of an overhaul when the Congressional Budget Office estimated that a version of the plan being considered by Mr. Baucus’s panel would cost at least $1.6 trillion. The United States Chamber of Commerce began a campaign against the plan, criticizing provisions being proposed, like a mandate on employers to provide health insurance to their workers.
The agreement would commit companies to cover as much as 50 percent of the cost of brand-name medicines in Medicare’s Part D prescription drug program.
Under Medicare’s prescription drug benefit program, patients buy medicines through conventional or mail-order pharmacies. They pay the first $295 of costs, then the plan covers 75 percent of the purchases until the total reaches $2,700, according to Medicare’s explanation of the program. Patients must then pay all costs until spending $4,350 out of pocket. Thereafter, patients pay a small co-payment for each drug until the end of the year.
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